Zero To A Hundred – Episode 22: Cash Flow Optimization: How Calculum Helps Businesses Negotiate Better Payment Terms With Eric Zager

Accelerators! 🚀

Today, we’re bringing you game-changing insights with Eric Zager, co-founder of Calculum, a company revolutionizing cash flow management for businesses. Eric shares strategies on how to optimize payment terms to improve cash flow, reduce expenses, and even boost profitability. Learn how businesses—big and small—can leverage data and AI to get the best terms from suppliers and make cash work smarter.

What’s on the Menu:

💼 How adjusting payment terms can boost your bottom line.

🔍 Using AI to negotiate with suppliers and cut costs.

💡 Real-world strategies for transforming cash flow management for any business.

Why Tune In?

Eric breaks down innovative approaches to working capital and cash flow management that every entrepreneur should know. If you’re looking to increase profitability and reduce cash flow issues, this episode is packed with actionable advice.

💬 Gem from Eric:

“Optimizing payment terms isn’t just a finance tactic—it’s a strategy to drive business growth.”

Get in Touch with Eric:

📧 Learn more at Calculum.ai for insights on optimizing cash flow through data-driven payment terms.

Don’t miss out—hit that subscribe button and let’s take your business from zero to a hundred! 💥

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Listen to the podcast here

Cash Flow Optimization: How Calculum Helps Businesses Negotiate Better Payment Terms With Eric Zager

NIn this episode, I am excited to introduce our guest, Eric Zager, who is the Cofounder of Calculum. They are a supply chain finance expert and let’s just say he’s worked for some big organizations such as the US Army, as well as Marriott in procurement and logistics. You’re going to learn a lot of very interesting things on how to save your business money, ways in which maybe you didn’t know you could actually do, such as controlling your supply chain using AI to negotiate pricing and virtual card payments.

I am the Founder of BoxFi. We are the nation’s leading payment consultant, providing business growth solutions through payment processing. I’m very excited to share the network that I have built over my multi-year entrepreneurial career to help you grow your business and become more profitable. Ladies and gentlemen, let’s accelerate together.

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Eric, thank you for joining us.

Thank you for having me.

We’re going to have a very interesting conversation and what we typically talk about with financial management, etc., we’re thinking a little outside the box and we’re ratcheting up going to the next level. I would love for you to walk the audience through what Calculum does and how it supports the growth of their business.

About Calculum

Every company across the world, no matter what their size is, what their industry is, what their geography is, is all about focusing on working capital. What that means is the cashflow and the tradeoff between payables, receivables and inventory. It’s a common goal that companies have, which is optimizing this working capital. That is something that we focus on here at Calculum. We mainly focus on payables and receivables, not so much the inventory side, but how corporates can optimize this and make sure that they’re paying on the right payment terms to their suppliers and receiving the correct payment terms from their customers.

Talk to me about what right payment terms are actually.

Nowadays, even the largest companies in the world are determining what the payment terms should be with their suppliers on an arbitrary basis, most likely usually in Excel without a database. For the very wealthy Fortune 500 companies, they’re hiring consultants like McKinsey to come in and analyze the top 200. After a few months and $500,000, they are presented with a PowerPoint on what those payment terms should be for strategic suppliers.

However, for the majority in bulk of their suppliers and for companies across the board, minus those Fortune 500s, they have an arbitrary term, let’s say it’s net 30, net 60, net 90. There’s not really any science or analytics behind that term, what that payment term should be. That’s what we’ve developed in Calculum. It is changing the way that these terms are determined. We have a database that has over 3 million suppliers where we look at instances of the supplier accepting payment terms or similar suppliers with similar attributes, meaning the region, the industry, the company size and what they’re accepting from other customers. We are helping to even the playing field amongst buyers so no buyers are indirectly financing their competition.

Cash Flow Optimization

It’s interesting because I’ve heard people talk in finance before, in lending before about floating money. You wait longer to pay someone and this is with a lot of the larger companies because you make some interest on the money. I don’t think that’s what’s going on here, but I’d love for you to take a deep dive on how controlling when you’re making the payment actually impacts your capital as a company. How it impacts your bottom line and your cashflow, because that’s really what we’re talking about here. I’d love for the audience to have a deeper understanding of how that works.

When we’re talking about working capital or mainly focusing on the balance sheet rather than the income statement, so looking at those accounts payables and accounts receivables as well as inventory. For this case, we could focus on payables and receivables. When you optimize that, as you said, paying your suppliers when they should be paid and receiving money when you should from your customers, it makes for a case where you’re financially healthy as the company goes. Especially with mid-market and smaller companies, the number one reason these companies go under is because of cashflow issues. That’s why it’s so important to make sure that your cashflow is optimized.

When it comes to the cash conversion cycle, it really depends on the industry and the geography of the buying organization as to what that number should be. The optimal would be a cash conversion cycle of zero, but that’s not the case. It really depends on the industry. In some industries, their receivables are quite instantaneous, like in retail. Some industries, like software, don’t have much inventory. It really varies depending on the industry that they’re operating in.

How are you defining a supplier?

It could be anything.

Is that service?

For us, a supplier is all business that you’re doing with somebody providing something for the direct material of what you’re producing or indirect. Everything from your telecom providers to utility bills to consultants, so the whole gambit.

Your supplier could not only be physical products at a restaurant or parts for a car dealership, but they could be your service providers that are working along with your business or your or your utilities. Anything that helps you operate the business.

Yes, all spend.

You talked a little bit about 30, 60, 90, which we’re all familiar with as business owners. How does deciding when in that scale to pay impact the price that you are paying?

Yes, that’s a tradeoff and there really two lever levers that you can pull. On our platform, what we provide and a lot of the companies now, they have these calculations on Excel and we’re really trying to get companies out of Excel where there’s a tradeoff between payment terms and price. During COVID, what we were seeing is a lot more companies focused on better pricing rather than cashflow because money was cheap. Fast forward to 2024, with the interest rate environment we see across the globe, companies are a lot more focused on working capital and extending terms and, in some cases, taking concessions with paying higher prices in exchange for longer terms.

Now again, it’s up to the criteria of the corporate goals and the vision there. Are they more focused on cashflow or income? Where we come into play is the intelligence. We can tell you what those payment terms are that the suppliers are accepting. Let’s say working capital or cashflow is not a focus, but rather better pricing is you can at least use the intelligence to be able to go to the supplier and say, “We know the nicer buyer. We know you’re accepting terms at X level and we are way below that tier. We would like to use this as leverage to get better pricing.”

Give me a monetary example. Let’s say you’re a hotel and we’re talking about bed linens and towels. How would you go in and help them assess what they’re paying, when the right time is to pay and what the term should actually be?

Yes. It’s a good example. I actually used to work for a smaller hotel company called Scholar Hotels and they were competing with some of the larger players in town. Let’s say we’re analyzing this smaller hotel company and they’re buying towels and linens for all of their properties on day 30 and they’re paying let’s say $100,000 a month for these materials. That’s just a made-up scenario.

Our platform has the data from other ownership groups, larger franchise owners of these hotels that have much more properties or just better payment terms in general. We see that they’re getting the same treatment from that supplier, but they’re paying on day 90. That smaller supplier is indirectly financing that competitor of theirs. Sometimes, there are other factors here that we need to take into account, like there might be some discounts that that buyer is getting that the other one is not, but having the intelligence to see where you align with your peer group is something that is new to the field of working capital optimization and just how companies are now determining their payment terms.

In that example, are you saying that the smaller company, let’s say they’re paying on day 30, but the larger company is paying on day 90 and they’re paying the same price, that the smaller company is subsidizing that?

Yeah, they’re allowing that larger company to use that cashflow for those extra 60 days, if, in this example, 30 versus 90, to do whatever they want with that cash. You can calculate their cost savings by looking at the buyer’s weighted average cost of capital. You can determine that as the cost savings in that sense.

The big companies do this and we’re all aware that the big companies, a lot of times, have more preferential pricing. They have a treasury department that is focused on looking at their P&L or their balance sheet on a daily basis. They’re working through these terms directly with a lot of these suppliers. How does a service like Calculum help some of the smaller businesses, like the hotel we were giving the example of, implement a service like this so it could help their restaurant or their car dealership?

We actually work with mostly large Fortune 500, Fortune 1,000 companies, but we developed this platform. Our vision is really to bring it to the mid-market and even smaller companies. What we’d like to do is open up the database for these smaller companies where they can get it and know exactly what is being accepted on the market because they’re getting squeezed. We know this because we see it from the larger companies. How it works for us, it’s a similar process. There’s not something different where we would approach a smaller one versus a bigger one when it comes to the analysis process. What is taken into account is the sustainability of supplier relationships and also the leverage that comes with each negotiation.

One added benefit of the platform that we’ve developed is telling you where your low-hanging fruits are and who to approach first. We don’t want to push our clients towards conversations where there’s likely not going to be much success. That is why we develop models to estimate which ones would be more successful or not. Also, looking at the tradeoff between payment methods as well, not just looking at payment terms.

At the end of the day, our goal isn’t just extending payment terms. It’s about finding the right payment term and aligning that with corporate goals, along with just extending terms, looking at the vehicle of the payment. Are companies using dynamic discounting? Are they using a virtual card to pay that supplier? Are they participating in a supply chain finance program? On the receivable side, are they participating in factoring, which is the opposite of supply chain finance?

Dynamic Discounting

You talked about dynamic discounting.

Dynamic discounting is very simple to understand and there are no limitations. Any buyer can use it. As we said earlier, it’s the tradeoff between pricing concessions and the payment terms, so paying earlier in exchange for a discount. Let’s say we’re paying at net 60 days. We can go to the supplier and say, “We’ll pay net 10 for a 1% discount or 2% discount.”

There’s another way to play that. You could pay earlier for a discount or you could pay later and you have that money to play with if you had that additional money. Let’s say, have you ever taken a merchant where they’re paying on day 10 or day 30 and extended them out to day 90 so they can have more cashflow for a longer period of time?

We actually see that as the vast majority of cases. Dynamic discounting is getting less and less popular compared to payment term extension and/or participating in supply chain finance programs or vCard acceptance, which has aspects of that as well, especially with the interest rates becoming more popular to extend terms.

Supply Chain Financing And Virtual Card Payment

Our audience are business owners, merchants and entrepreneurs. They’re doing well in their business and are working with many different suppliers of various types. How could they engage in something like supply chain financing programs to help them increase their profitability? What does that structure look like?

With regards to supply chain finance, I mentioned before that dynamic discounting has no barriers to having that program set up. The opposite of that is supply chain finance, where there are a few barriers where it’s pretty much geared towards investment grade buyers, whereas it’s going to be more limiting for the smaller buyers in the market. Something that would be more attractive to some of the smaller buyers, maybe with a double B or lower credit rating would be participating in a vCard program. We partner with companies like MasterCard to be able to bring this to the market with intelligence and sharing with you which suppliers are already accepting virtual card as payment from other buyers.

What is virtual card payment?

It’s very similar to how we use credit cards at the store, where customers will pay a supplier and they’ll typically get a rebate as well, 1%. With that, you have payment terms, like how we have it. We pay it at the end of the month. On average, when you go to the grocery store and you’re using a credit card, you’re not paying for those groceries until day 40, day 45. It works in a very similar way with virtual card. They are more accepted here in the United States. We work a lot with European companies and we see it not as popular across the pond.

What would qualify you as a business owner for something like one of those virtual card programs? I think it probably has a direct tie into what you said about businesses that are investment-grade businesses versus those that are not. How does the grading system work to impact your ability to access that?

The criteria to get into virtual card is not as strict as supply chain finance, but it’s more geared towards retail suppliers. Where Calculum comes in, we’re strictly a data company, so we can simulate virtual card programs along with supply chain finance and dynamic discounting. At the end of the day, we just have partners that fulfill that, that do the payment processing portion of that because we don’t have any limitation because we’re a data company. When it comes to currency, geography, and industry size of supplier, there’s no limit, but we work with these other partners that fulfill on that virtual card supply chain finance.

Reducing Utilities Expense

I want to dive into something that you said in the beginning about reducing costs or extending payment terms. Let’s talk about utilities in particular. What can you, as a business owner, do to reduce your expenses for utilities through using a program?

That’s one of the few where it’s very difficult to negotiate on that, along with insurance, because utilities, they say, “You don’t want to pay this time, then we shut off your utilities.” It’s usually a monopoly in these towns and it’s very difficult, along with insurance. If you don’t pay your premium before the coverage period, they will just cut your insurance. You’re not covered.

Typically, how we work with our clients is when we first onboard them and integrate their data to our platform, we exclude those utility payments. We exclude those insurance payments as well as tax authorities. It’s almost impossible across the world for your local and national tax authorities to be extended for their payment terms. They have a payment deadline.

Cash Flow Conversion

Talk to me about your cashflow conversion cycle of zero. What does that mean to a business owner? I think if I heard you correctly, you said you can’t really achieve it, but that’s what you’re working towards.

You can achieve it. It varies, depending on what it should be on your peer group. Really, you should be comparing to peer group and not to a cash conversion cycle of zero. In the ideal world, every company would have a cash conversion cycle of zero. In reality, we’ll probably never get there. I can explain a little bit more about what that is. When companies are publicly traded, these financials are available and Wall Street looks at these metrics to determine the financial health of companies. It’s a way for companies to get a higher stock price by optimizing this cycle.

There’s really three components of the cash conversion cycle. It’s looking at, on average, the payment terms you have with your suppliers or DPO, Days Payable Outstanding. The payment terms you’re receiving from customers or DSO, which stands for Days Sales Outstanding and, on average, how long it takes you to move inventory off your shelves, which is DIO or Days Inventory Outstanding. Cash conversion cycle is the DSO plus the inventory minus the payables. It’s basically how long it takes you to go from cash to cash at the end of the day.

Some companies do this very well. In the retail space, there are several that have negative cash conversion. I know Procter and Gamble are very sophisticated with this. You can look this up. It’s all public information, but they have cash conversion cycle in the negative 40s, I believe, because they are focused on this and they wanted to maximize the payment terms that they have with suppliers and reduce the receivables as well as inventory.

How do you get to a negative? Is that your receivables or just coming in earlier than you would typically have?

Yeah, we can take an example of a store. Let’s say they pay all their suppliers on day 30. They get paid immediately day zero. On average, their inventory is on their shelves for 25 days. That would be a conversion cycle of 25 days in inventory plus zero days on receivables and then minus 30 days paying those suppliers. That’s a cash conversion cycle of negative five.

Talk to me about how once you get to that zero or that into those negative terms, how that helps to improve your P&L, your income statement.

You’re correct the first time when you say balance sheet because these are looking at balance. Balance sheet is the accounts payable and accounts receivable. If they were focused on this, this is theoretical, if they’re in a negative cash conversion cycle and they are more focused on cost savings, reducing cogs, they could say, “We can afford to pay longer, maybe get into a slightly positive cash conversion cycle in exchange for discounts.” It’s really the tradeoff there.

Supply Chain Intelligence

Let’s take the information that you have and we’ve talked about it from a general standpoint. We’ve given some specific examples. I want to talk about the supply chain intelligence and how taking that supply chain intelligence can help you improve the bottom line, but also include aspects like ESG, DEI, etc.

Yes. It’s a focus now more than ever, especially since COVID where there are all these supply chain disruptions. These companies want to know everything they can about their suppliers’ risk analysis, knowing what’s going on in their supply chain. We have some clients that are just interested in working with us because of the intelligence where they’re happy with where their payment terms are, but they say, “We don’t know everything we can about our suppliers, especially when it comes to financial risk analysis.”

This is where we come in. A lot of the intelligence points that we’ve seen are quite popular, even with the companies which are the top of their field in payment terms or data points like looking at the credit risk of a supplier, looking at how much it costs for them to borrow money, what the supplier’s cost of debt is, along with their weighted average cost of capital. It’s to see not just the financial health but how likely they would be to participate in one of their supply chain finance programs. With that, it gives them a little leverage as well to be able to ask for certain things from the supplier if they participate on the supply chain finance program.

When you’re diving into that, you’re actually getting a really intimate look into the health of that supplier’s business and their need for capital. You can use your knowledge of their need for capital to operate their business to negotiate better pricing on your business behalf.

You can’t tie the two together. I should clarify for my last statement, you can’t tie the two together saying, “We’re extending payment terms because we have a supply chain finance program,” but it’s a way for companies to be able to offer cheaper financing and support their suppliers in these SEF programs because they assume the credit rating of the buyer and along with that, their cost of debt. A lot of times, it’s smaller suppliers with a higher cost of debt participating in these SEF programs to get cheaper debts and get their money much sooner than they otherwise would have from these buyers.

A restaurant group that’s got 100 restaurants within their portfolio and they’re buying their fruit or the vegetables from a specific supplier, is it them providing the finance to the supplier?

There’s a third party there. There is a bank that’s involved or a supply chain finance platform like Orbian where they work with them and offer the financing on behalf of the buyer. There’s a lot of work that goes into that and setting them up and onboarding, but then it operates as a line of credit for the supplier to be able to use as they need.

Let’s use a real-time example. One of the new merchants that we’re working with right now has, let’s say, over 10 med spa locations and they buy a lot of product, whether that is injectables, skincare products and other medical equipment for their 10-plus locations and they’re expanding to more locations throughout the US. What is a way in which that med spa could engage your services to help them save money?

When it comes to saving money, which means reducing cogs and pricing, looking at more of the income statement, it’s using the intelligence to know of instances where you’re paying earlier with your suppliers and using that as leverage to get better pricing or knowing that you deal with the same supplier multiple times throughout the year and paying them at different instances or dealing with different suppliers, which you may or may not know were related under the same ultimate parent.

You’re using that intelligence and the organization of that to be able to negotiate not just terms, but also pricing or quantity with that vendor on that parent level, on all the transactions all at once. There’s not just cost savings but also harmonization and cleansing of the ERP system so that it’s not all over the place. We work with a lot of companies that sometimes have dozens of ERP systems, so it’s a real mess with them. With the smaller companies, it might not be as big of an issue with the organization of that, but I have seen it with some of our smaller clients where they’re paying day 34, day 36, day 38, different times throughout the year because procurement or the purchasing officers aren’t as focused on paying on the correct day. A lot of times, they pay early.

I think this parallels with my next question. You work with a lot of restaurants and car dealerships that have a lot of supplies that they’re constantly sourcing and high cost of goods. Talk to me about how them working with a company like yours to reduce those expenses. How you actually go in, you audit them and you save them money.

How the process works is once a company is engaged with us and there’s a mutual interest in working together, we typically do a test and show them after we sign a mutual NDA. We show them what their working capital opportunity is. Their whole supply chain, we’re getting around 95% match rate on all their suppliers and this is both direct and indirect suppliers, everything from utilities to their direct materials like towels in the hotel.

From there, they can see what they can expect, the data depth that we have on their suppliers and who we are able to match. From there, we work with them if they choose to sign up for a subscription with their platform, showing them who the low-hanging fruits are and customizing a game plan for their category managers, their negotiators, their buyers and also involving accounts payable or the CFO to then optimize the payment terms and make sure that we’re going after what the corporate goal is. Is it cost savings? Is it working capital? We are then working with them on an action plan. We provide all the scripts needed to go after the suppliers, what to say in the negotiation and then a way to track it so that the CFO can forecast how much cashflow is expected to come in, how much has already been realized and so forth.

Working With AI

You’re doing this audit and you’re doing this audit based on the information and data that you have and you’re now using AI to analyze that. How is that AI really supporting what you are doing to add value that you are adding to the businesses that you’re working with?

To clarify, the data that we need comes from the ERP system and that’s the first ingredient in the process.

What does ERP stand for?

Enterprise Resource Planning. These companies that we work with, a lot of times, as I mentioned, have multiple ERP systems. This is where they’re going through all these procurement officers and category managers and managing the relationships and purchasing products. They house all the data of who their suppliers are, their payment terms, what they are buying, what’s the category, as well as how much they’re spending and in what currency that spend is.

With that data, it’s then extracted and uploaded securely and anonymized to our platform. From there, we then provide 10X the amount of data out. There’s AI in this process in a few different parts. One is on the categorization and normalization of the input data from the ERP system. Another part is on the data enrichment, so looking for firmographics as well as financials that are publicly available using AI in that case.

I should mention that we do not use AI when it comes to the payment terms. Everything is in-house there between our four walls because it’s something that we’re very wary about, sharing this sensitive and confidential information that’s only housed in our client’s ERP systems with an open-ended AI model. We do use llms, Large Language Models, to write scripts. The scripts I mentioned earlier about the negotiations, are about ten different strategies and those scripts are determined with AI.

Business Commonalities

Let’s take any business. Whether you’re a nail salon and you’ve got multiple locations, you’re a car dealership, you have multiple locations, restaurants, etc. Are there commonalities that all of these businesses should be looking at right out of the gate?

Payment terms, working capital. As I said in the beginning, this is something that’s shared across every business. Paying suppliers, receiving money from customers and inventory management, making sure that your inventory is not on your shelf for 90 days, 120 days because that’s dead money sitting there. You also want to make sure that you have enough inventory there to fulfill orders. That’s the inventory part. Payment terms is on the other two ends, which are what we focus on mainly. No matter what business you’re in, it should be a focus. It’s just as important as pricing. As I mentioned earlier, the number one reason small businesses go under is because of cashflow issues.

I would think that the cashflow issues would be linked directly to sometimes that inventory sitting on their shelves for too long. What are some of the creative ways you’ve seen companies that have had that stagnant 60, 90, 120-day inventory on their shelves start to liquidate the Inventory?

It’s a good question and it’s something very important. There are solutions out there for that. We focus on the payables and receivables. It is something where we have partners that focus more on the DIO or Days Inventory Outstanding optimization, but there are a lot more factors that go into that. I can introduce anybody interested in inventory to those parties that are more better at speaking on that question.

I actually have a new clothing manufacturing company that we’re doing payments for. I’d love to have that discussion about some of their inventory that’s a bit stagnant. There are probably some cool things that that group could do there. Let’s move into something that is obscure but really important to specific industries, but that’s talking about regulations and legislation that’s impacting payment terms, particularly agriculture and food. For companies that you work with, how do you help them navigate the rules and optimize their working capital?

Regulations And Legislation

It’s a hot topic right now and this is our focus, our business is payment terms. We have a team look at laws globally. We’re a global company. We have clients in Asia, Europe, Latin America and North America. It’s a complicated topic to stay on top of because there are so many new laws, especially in the last few years, that are coming down the pipeline. I know Columbia just initiated a new law. There are laws in the UK around dealing with the government.

In the EU, especially France, there are strict regulations, especially when you’re dealing with SMEs or Small and Medium Enterprises, which every country has a different definition of. That’s something that our platform does depending on where the supplier is determining, “Is this an SME according to the definitions of that country?” What are the legislations around if it’s only tied to the SME status or in general for the country or tied to the industry within the country?

As you said, that’s typically what we see here in the United States, especially around the dairy industry and construction. The US really operates as 50 different countries. These are typically determined at the state level. We have all this legislation on the platform, and it’s applied to those suppliers that hit those criteria. The platform can determine, “Is this enforced or is this recommended? Is this a very long law?” The last sentence says, “Unless otherwise agreed upon by both parties,” in which case, at the end of the day, it’s a recommendation. We have all these laws and we suggest to our clients if they want to be in compliance with this enforced law, we can cap it and make sure that they’re not suggesting terms that are not in compliance with their local laws.

You had mentioned something and I want to make sure I heard this clearly. Did you say construction?

I see in the United States that there are more laws surrounding construction and dairy. There’s really not much else in the United States that we can say is a pattern throughout the 50 states by dealing with construction, subcontractors, and government contracts. I used to work in the federal government in the United States here and they have a strict 30-day payment for all suppliers and that’s federal law. In dairy, it makes sense because it’s partial product and that’s very well regulated, not just in the United States, but you’re not going to buy milk that expired 40 days ago and pay for it then. There’s a much faster payment when it comes to perishable goods, generally.

Walk me through what are some of the smaller companies that you work with. What’s the general size and what are some of the larger companies that you work with so our audience can get a sense of where they might fit in your supply chain and if it’s a good fit for their company or not?

We have no limit. We have companies as small as $10 million in revenue a year all the way up to the biggest companies in the world and billions of dollars. We’re providing data. Data is, as I say, the cliché, the new gold. What they do with the data is where the value comes. It’s the actions taken with the data. Where we come in is providing that data to them. How they utilize that, whether it’s for improving the income statement or the balance sheet or just their overall supply chain intelligence, is up to the end user.

I would say each one of our clients has a different approach and value that they pull from the platform. There’s a lot that we can provide there, but we have some power users that use it all. I would say a lot of our users really have one focus, which is like, “This is why we work with Calculum.” Whether it’s SME flagging, whether it’s the legislations, whether it’s improving payment terms, whether it’s in overall looking at cost of debt and expanding their supply chain finance programs, seeing which suppliers offer a virtual card, there are many different value adds when it comes to the data we provide.

Would a plastic surgeon or a dermatologist, a very large operation, be the type of business that you could help as well?

It depends on what they’re buying and what their spend is. If they’re buying from larger companies and even smaller medium-sized companies., 100%, especially if they have a lot of subscriptions. A lot of just indirect spend, they could. The one place where it’s much harder is when you deal with payments to individuals, call them contractors, individual painter. That’s not part of a company. For them, it’s much more difficult to gather intelligence on those individuals. It’s really a different realm. It’s not really B2B there, so I would say it depends on their spend.

You and I, again, will offline this because this is so fascinating. I love added value aspects of businesses like yours for the type of audience that we have because it’s completely outside the box. I was not even aware that this existed, but I got some plastic surgeons, dermatologists and med spas. I definitely think you should be having conversations with who are my payments clients, who I know you could save money from what you’ve described. Before we go into our rapid-fire section, what I would love for you to explain is how your audit works and then what your subscription model looks like.

Audit And Subscription Model

The audit, meaning the process of the analysis?

That is correct.

The analysis is very simple because there’s no IT integration. It’s really dealing with accounts payable and procurement or the contracting officers or whoever’s doing the purchasing. It’s really a project that they own because they have the supplier relationships. We need a few data points from their side, such as who the supplier is, where they’re located, and what payment terms they have now. Also, what are they actually paying? Do they have 30-day payment terms and they’re paying on day 25 or they’re paying late on day 35? That’s important. We also need how much they’re spending and in what currency. Lastly is, what’s the commodity or category that they’re purchasing? With that data, it’s then enriched and anonymized, encrypted and then enriched.

The platform shows every supplier that they do business with throughout the fiscal year and they can go through it. We help them customize it in the first few months. It’s really a handholding training, making sure that everything is exactly how they want for their approach. It’s a self-service tool. As they get new suppliers that they’re looking at, they can send them our way. We earmark them as potential suppliers. Before that relationship starts, they can determine that payment term.

When it comes to the payment model, for us, it is a subscription model where it operates on an annual subscription because there’s no ERP integration. It’s very straightforward. It’s a yearly fee and it’s based on the value that the platform can provide. We’re always looking to add value and not cost more than the value we can provide to the income statement or the balance sheet.

Rapid Fire

We’re going to run into the rapid-fire section, so you’re going to give me quick answers off the cuff and you don’t know these questions, so it’ll be even more fun. Rabbit or turtle?

Rabbit.

Is there a favorite movie or streaming series that you are watching or have watched that you recommend?

My girlfriend just had me watch The Mandalorian and I was surprised. It was quite good. It kept me entertained there.

What is a book that you’ve read that has had the biggest influence on your life?

12 Rules for Life by Jordan Peterson. I was in France and I saw somebody else reading that book in French, so it’s making its way around the globe. He is a very famous Canadian psychologist.

I’m a reader, so that is one thing that I’m going to pick up and put on the list. Talk to me. What is something that you disagree with in your industry now?

It’s all about extending payment terms because it’s very important that there’s sustainability in the supply chain and there are a lot of suppliers, maybe some of your audience can identify with this, that can’t afford to be squeezed anymore by these big companies. We’re seeing some industries approach 180. I’ve even seen 360 days, which is one-year payment between receiving the product to when that supplier gets paid.

I’m actually not a fan of just pushing payment terms. It should be the correct term, not just pushing terms for the sake of pushing terms to improve the balance sheet. There’s a sensitive relationship going on between suppliers and buyers and it’s a relationship that should be enhanced and not just one sided like we’ve been seeing with some of the big players in this field. This is something I disagree with.

Give me two money-saving strategies for our audience for 2024.

I’m a cashflow person, so I will flip this around a little bit. I think, personally, everybody should focus on their cashflow. I’m a big fan of credit cards, so I use them all the time, even to pay my rent. I pay the fee. Sometimes, I get zero-interest credit cards and I like to extend my payment terms personally out. In terms of cash saving, I would say avoid Starbucks every day. It adds up if you’re going there seven days a week,

$5 a coffee.

I really like the coffee machines. They’re very good. You can get a nice good coffee for $1.

I’ve got one of those. Two more questions. One, let’s say you’re a business doing $10 million a year in revenue and I walk through your front door and I hand you a $300,000 check. How would you advise that business owner to invest that $300,000 into their business to help grow over the next 12 months?

It depends on what the industry is of the business. I’m speaking for Calculum, as you said, you’ve never heard of this before. This is something new that we’ve developed for the market and I haven’t seen anything exactly like it, yet now, I’m sure we’ll have some competitors in the future, but our main competitor now, I like to say, is Excel.

Where I would spend that $300,000 is on outreach and educating the market that this exists because companies aren’t necessarily going out and seeking our solution. It’s more of a bystander of focusing on working capital, but this solution didn’t exist until a few years ago. For us, it’s going out and doing education for people, introducing us to the market, meeting people in person. I like to visit our clients, also go to conferences and meet companies that could use this because we’re doing something new.

Your last question. Who are two key people in your life who have helped you advance to the level of success that you’re at?

Number one would be Oliver Belin, my cofounder of Calculum. I met him through a mutual friend down here in Florida. This was over COVID. Before COVID, I was working for Marriott International. You may remember, nobody was going to hotels for over a year. All these hotels shut down. I know a lot of my colleagues, including myself, moved down to South Florida because the hotels were open. I did not go back into the hospitality industry. I was thankful to be introduced to Oliver through a mutual friend. He has been a big impact on my life.

The other person, I would say, is my mom as well. I know that’s cliché, but she’s helped me grow a lot as a person and I learned different facets of life because it’s important to be a well-rounded person. This life gets very complicated. There’s a lot of nuances to all of our lives and it’s important to take a wide scope with that, taking a step back from your life and analyzing it. My mother helps me do that.

Eric, tell the audience where they can reach you if they have questions, comments, or complaints. No complaints. Just questions.

You can reach us at Calculum. We’re based in Miami. If you’re ever here, please feel free to come by. Come by the office and reach out. You can also reach us online. Our email is Sales@Calculum.ai and we’ll reach out to you. We can set up a call and give you a demo. We do a complimentary analysis before you decide if you think it’s a good fit to show you what your opportunity is and then you can move forward from there. Our goal, especially if you’re a small business owner, we want to give this to you at a very affordable price because we want to have this grow in the market and we know that small businesses need working capital optimization the most and we want to be here to support that for you.

Eric Zager, thank you for joining us on the show.

Thank you for having me.

Important Links

• Calculum
• 12 Rules for Life
• Calculum Email

About Eric Zager

Eric Zager co-founded Calculum alongside Oliver Belin, a supply chain finance expert. Drawing from his experience in the U.S. Navy and with Marriott International, Eric integrates a unique blend of expertise into his role at Calculum.

A proud graduate of Penn State University, he emphasizes the fusion of technology and finance with strategic insights. Originally hailing from Lower Merion, PA, Eric now resides in Miami, where Calculum’s headquarters is located.