Okay, let's get started. Good morning. My name is John Taylorson. Thank you very much for joining us this morning on this webinar about trade credits. I'll introduce everybody very briefly, but they'll talk about themselves in a moment more. We have Hugh Thomas from Puffin Produce who's chairing and facilitating this today. He'll be doing the proper professional introduction in a moment. We have Sean Purrington from Avenue Insurance. We have Phil Mills from Old Mill Accountants and Financial Services. And we have Alan Thomas, the regional manager for Development Bank Wales. Hugh, why are we all here? Yeah, thank you, John. Just an introduction to start with, I'm Hugh Thomas, the manager director of Puffin Produce. It's my kind of day job. My other role is that I'm on the Food and Drink Wales Industry Board. We've been working with the industry in Wales and acting as a bridge to the Welsh Government for the last four or five years. And one of the work streams that we've developed that we feel is of help to the industry in Wales is a kind of financial work stream that we feel that the Welsh Government can have a role in improving the skills within the sector. And out of that work, the Welsh Government commissioned a block of activity that is being delivered by Dick, Sir House and John Taylorson, and then the grant delivering this work on behalf of the Welsh Government. And that is the Investor Ready program, which helps businesses improve their financial skills. So this seminar is part of that kind of block of work and that block of assistance. So I hope that gives you a bit of context in how we all, how we arrive here today. You know, and I'm no expert in trade finance, so I'll come to the rest of the panel on that. But, you know, welcome to everybody and I hope you sir, good meeting. William, thank you Hugh. Great, so trade credit insurance. Since the middle of March and the massive changes in our trading environment, food and drink producers, processors and marketeers had to deal with a very different world. For many, it has been great news where the likes of delivered grocers, online retailers and food takeaway businesses have gained new business. Many others, it's been quite a different story. No hospitality means that hospitality, be they pubs, hotels, restaurants, sector, stopped overnight. Brewers who focused on the on-trade either stopped or had to switch and try and retail with various levels of success. But the same applied for countless other categories of meat, fish, cheese and dairy and delivered food, van sales or struggling. Some of the companies in this supply chain have managed to recover some revenue by switching their business to more retail consumer orientated stuff.  In either case, coming back to food service and hospitality is going to be very different. Trade credit insurance is a key element for many companies operating in this area. Either because the companies have decided themselves to supply customers needs to be insured or because they use invoice finance and that too relies on insurance cover being available. Why would trade credit insurance be a problem? Well, the first rule I was applied to insurance is generally, if you can afford it, you probably don't need it. If you need it, you probably can't afford it. And with companies like Outradius and others just withdrawing cover overnight for the hospitality sector, this has put a lot of companies in a difficult position. But too many companies, perhaps think like me and think insurance is only in value. If you can claim on it, yet the reality is that insurance claims should be a last resort. If anything ever did go wrong to the extent you needed to make a claim, it's because it's a showstopper. Also, is it worth a thought that if insurance premiums are so high for an activity, is it still a good idea for the reward that's gonna come from that activity or is the risk premium worth the risk? So today we're gonna try and talk about, first of all, what trade credit insurance is and who's it for and why is it important? And also then what the alternatives might be. And it's not just about what we might be supplying and whether or not it's got trade trade cover, but what we can also do as food and drink companies to ensure that there's good cover on us. So without further ado, Sean, can I kick off with you with perhaps a better explanation of what trade credit insurance is? Well, that's not a bad start, John, at all. That's very good. So my name's Sean Purrington. I'm the managing director of Avenue. We're a credit insurance broker. That's all we do. We place credit insurance policies. The market, as John quite rightly points out, is very distressed right now. And it's certainly worth exploring what credit insurance is and what's driving credit insurer behavior right now. So some of the people on the call may already have a credit insurance policy that's relatively popular. They're not compulsory like some insurances. They're very discretionary. And essentially what a credit insurance policy does is it protects you from a loss where you've extended goods, supplied services on a basis of trade credit. So that could be insolvency or it could be just a protracted default situation where your customer can pay you in theory but just won't pay you. So the idea behind this is that the insurance policy is there as a facility that can cover a truly unexpected loss. So the surprise loss, the names that we hear about that go bust on a regular basis, certainly in retail if you look at companies like Cath Kitts and Laura Ashley, these are the businesses that have been struggling for some time and are no great surprise when they do fail. The benefit of the credit insurance policy is the loss that happens if no one saw coming. So in some ways what you can see the insurance companies as, and there are around about 15 insurers that operate in this space. They're bookmakers, they're taking bets. They're saying in turn for your wager which is the premium that you pay under the policy, I bet that that company isn't essentially going to go bust or fail. And the insurer is calculating the odds accordingly. I think what's happening now is that because of the outlook for all sectors, not just the food and drink and hospitality sector, insurance cover is much more difficult to get. It's not impossible. You just have to work harder to get where you need to be. So one of the things where we use trade credit insurance in the past has been to smooth cash flows and sort of make business possible that otherwise would have been either high risk or difficult to finance. How much would you ordinarily expect to pay and what do you think the cost of this is going to be in the future? Yeah, we get asked that question a lot, John. How much does credit insurance cost? And it does vary on a number of different factors. The first is your turnover because that is clearly the amount of turnover you're supplying or generating on credit terms is going to drive the pricing because that's where the risk is. So if you would ask me to give you an average price, and of course there's no such thing as an average price in reality, but the average price would be something like, I don't know, 0.2% of turnover. So if you're turning over 10 million pounds, 0.2% of that is about 20,000 pounds. Does that give you cover on all your customers? You would normally get a policy that would ask you to apply for a credit limit on the customers that you require cover on. And I think that's the nub of the issue, isn't it? It's as a credit insurance policy holder, if I apply for a credit limit on a particular buyer in your sector, will I get cover? So just to expand that point, our sister company is Mitchels and Butler's. So we were recently asked by Mitchels and Butler's to front up to the credit insurance markets and just make sure that the insurers were still offering cover on supplies into M&P. And of course they were, but not as much as they were giving three months ago. So they didn't withdraw it, they just reduced it back? Yes, yes. I should say to everybody, it was rather a miss of me. Everybody who's on this call can participate by using the Q and Q and question and answer function on Zoom and we'll try and capture those points as we go along. Just coming back to you, Sean, for a second, that business about working capital and reducing the headspace that you have on trade credit insurance, what do you normally find your companies do if it's reduced or withdrawn altogether? So because the market is to the risk market, the risk environment is changed so dramatically, insurers are underwriting differently and what they're looking for now. So previously they would have looked and factored in in a substantial way, public domain financials. And the problem at the moment is that they're just too old. They just don't represent the current trading position. So if you file 31, 12, 18 as your last filing, they're almost 18 months out of date and they're only gonna age. So what we're doing at the moment with our customers and we have a number of customers in the food and drink sector, everything from fruit and veg wholesale through to gourmet food companies, to poultry farms, we're actually helping them get up-to-date financials on their customer. So is that using management accounts to support their trade credit position? Absolutely. The insurers are looking at up-to-date financials. They're looking at liquidity in the business. They're looking at forward plans, confirmed orders and just making sure that the exposure that they're running is a reflection of what the customer needs because as you can imagine, there are a number of companies that are holding big credit lines on organizations and entities that they don't really need. So it's about dialogue. It's about dialogue. And what do companies themselves, what sort of things should they be putting in place if, for example, they don't have trade credit insurance at the moment, but they maybe should think about how do we cover this risk? And from your point of view, what would they need to get in order before they came to you to get trade cover? Yeah, so if you haven't got trade credit insurance, the next best thing really is an information report, isn't it, from a status agency and credit-safe experience done in Brass Street, others are available. It's the next best thing. Some of our customers will also have in the past moved from essentially bad debt provisioning, so setting aside some of their sales every month, every quarter to cover the risk of a loss. They've moved on from that and taken that insurance instead. So there are a number of other mitigants, but insurance is really going to give you that cast-iron guarantee that if all goes horribly wrong, you are going to get paid and most of your loss is going to get made up, so. And of course, the other way round is, is that you want your suppliers to be able to supply you. So if they need trade credit insurance, what can you do as a food and drink company to make sure that you're insurable? Yeah, so this is a really interesting point and we're doing a lot of work in this space right now. So we're helping our customers get their credit rating back on an even keel with the insurers. And it's the same principle, as you know, it's the insurers will want up-to-date financials so I want to know your liquidity position moving forward. I want to know a bit more about your banking facilities, your outlook, your strategy. Are you, as you were saying earlier, moving into new product lines or new services? So, you know, is that going to be a factor in your in the balance sheet moving forward? And then fundamentally, it's just working out who to speak to at the insurance company to make sure you get a fair, you know, a fair hearing. And like any good accountant will tell you, it's about how you communicate the messages behind the numbers too. Yeah, OK. So turning to Alan, I mean, one of the key issues here then with trade credit insurance is this, if you haven't got it, the other alternatives are to make sure that you've got enough working capital in the system so that you can extend that credit facility. What's the attitude at the moment with all these bounce back symbols and the others? I mean, if somebody turns up on your doorstep at the moment, Alan, expecting more working capital, what's the response going to be? Well, good morning, everybody. Without stating the obvious with the amount of liquidity that's in the system at the moment, it will be debt liquidity. We'd be very surprised if somebody come very early looking for cash flow finance at this moment in time. It's one of the hardest lens. It's one of the most difficult ones to highest risk. And the first question would be, well, why haven't you taken advantage of what's in the marketplace and got money from Sibyl's Pibles bounce back or whatever was available? And there was a lot available, there still is. And I know a lot of companies have taken that money and it's sitting on deposit and that's not wrong. That's they are preparing to bounce back and keep their employees and get back into trade. If you haven't done that, then that's the first obvious question. Why didn't you do that? And if you like, there's a question mark over management. If you haven't done that, if there's a plausible story, why you didn't do that and why the cash flow need is now because bigger contracts come in different terms, then it's a little bit like Sean was saying, you've got to prepare. So you've got to come in with your figures up to date, with the figures on the people you're supplying and the contracts you're taking, so that we've got a credible plausible story to believe how the money is going to be repaid and what term it's going to be repaid in. And also, I guess, if you come in showing everything's insured, so there is no chance of bad debts.  They go into happen, they got profit on them and you've got your supplies to do them. The terms are reasonable and you will be paid, but then if you're not going to be paid, then insurance wouldn't do any harm. We are expecting really cash flow funding to be more of a requirement. Not this winter really, probably next year, next March, next April, next May, when all those direct habits starting start hitting of all the loans that have been taken. That's going to be a challenge, let's be honest, because if the marketplace is really strong, then we probably can help. If the marketplace isn't strong, then cash isn't going to be highly available. We already see the high street now, drawing back high street banks for liquidity because they're looking at what bad debts they're going to have on their balance sheets coming forward. So you've got to prepare, you've got to have a plausible story and have it all you were figures up to date and answer all the questions before you come in. If you're going underprepared, then actually you can set hairs running and get the wrong answers. So the message there is that coming to you too soon without doing the preparation may actually spoil your chances of getting the support if you actually need it. Yes, that's right, I mean, you can come back cause you can again and again and in a development bank we will always talk to you. But if you come in sort of half cocked and you haven't got all the information, then actually puts a big question mark over your ability as a management team or the way you've thought it through. There will be some companies out there Alan that don't know that they've got bad debt yet. The businesses that were furloughed and there was a bit of trade credit sort of left not sorted out. What's your attitude or what's your feeling about how much trouble is yet to come out of the woodwork for the guys that you're dealing with? That's quite a difficult one. As you said, some sectors have done it's some parts of food and drink have done really well. It's been really good for them. Other parts, it's gone into a kind of dormant state and it's going to come back out. Now, there will be a lot of debtors parked and agreed and it's a two way street cause you'll have agreed with you or credit does, you know, look, we'll have to pay these when we get back or we pay a bit on the pound and we get going. There is going to be some pain, isn't there? You can just concede that there's going to be pain. However, you know, it's all about communication there that you have communicated with your customers, your customers are communicating with you so that if you have a particularly big exposure to somebody that we feel has got problems, you can come back and say, yes, but look, I've got their up to date management accounts, I've got their cash flows and actually I know their bank facilities are being supported, so we believe you're going to be paid. Also, I guess you've got to write in a reasonable amount of bad debt into your forward forecasting because if you're going to put everything's going to be hanky-dory and 100% paid, then we'll probably just par it back and then if it doesn't make sense, then you don't get the facility, I guess. So in a way you're doing what Shaun is doing is that you're assessing some of the risk in there as well and it should really be, as we call it, management by no surprises. Yes, that's a fair way to put it. I mean, forecasting is difficult in this circumstance. That is one of the most difficult things and when it's something we're challenged on, when we see a set of forecasts, what's this based on? We need you to substantiate your forecast by saying, this is based on, this customer have said they want this level of supplies, this one's this one and also we've gone all our way up and got our figures but then we've parred them back because we think it won't quite come to that. And anything you can do to put behind that as evidence of why those sales have come in and the timings of them just makes them more credible and makes you first in the queue to hopefully get the facility you're after. Brilliant. Thanks, Alan. Before I come to Phil, we've had some questions come in. We've got, well, two really ones about really is just a sophisticated form of brokering but also what does the credit insurance cover? Is it all risk or selected specific risks? Shaun, do you want to just pick up on those sort of that issue about what are you getting cover for and that point about it being individual companies that you might find that you are out of your portfolio of customers that you can't get cover on all of them? Yeah, so the risk that's firstly the easier one, the risks that covered are essentially your invoices. Your invoices, there has to be an invoice for the dispatches that you've made and it has to be within the terms of the policy so the credit terms will be specified and the policy, et cetera, et cetera. So there's no performance risk. It's just the invoices that are covered under the policy. So if the goods go missing or if there's something that happens in the supply chain further back in that chain, there's no cover. It's just the invoices that are covered. Can you cover specific risks? Yes, you can. You can look at your ledger and you can say, actually, maybe I just want to cover this particular customer or these five or these 10 or everything above 50,000 pounds. It can be done. So if you get a big customer, a big new customer, and I'll remind everybody of the old ledgers I was taught many years ago by a rather hardened cheese maker that said there's no such thing as a new customer. There's just somebody else's bad debt about this. But if you do get that new surprise wonder customer, you can go and get some insurance cover on that if you feel you need it. You can, you can. I mean, if you come to me and say, I've got a 10 million pound order now to supply Virgin Atlantic, you're not going to get it. It's still down to the quality and the underlying quality of the credit risk and it will be more expensive because the insurer is naturally going to charge a little bit more just to focus on one risk. They do like to see a whole portfolio, but it can be done. It's certainly going to be done again. Okay. I mean, not to do you out of a job, Sean, but turning to Phil, there's more than one way of managing these sort of risks, isn't there, Phil? And particularly from primary producers, and you deal with a lot of those guys, pooling risk, you know, I'm thinking of co-ops, farm groups and the like. They can access markets collectively that they couldn't perhaps handle the risk on individually. Yeah, I think that's right, John. I think there's a few things that I'd sort of point to for the businesses out there that are kind of struggling or scratching their heads on some of these bits. Insurance can play a really important role, but actually we've been talking about no surprises and we talked about communication. Well, getting to know your supply chain a bit better. One of the things that we've seen, which has been really impressive actually in a way, as a result of the crisis that we've faced, is that actually conversations that weren't happening that should have been happening in the supply chain have started to kind of take off. And you've got, you almost had two categories of clients, those that were gonna go and bury their head in the sand and hope for the best. And those that were on the phone to all of their supply chain backwards and forwards and saying, look, how are things? What have you got lined up? Have we got stuff coming in? Are you okay? Where is that at? Okay, we're gonna get that shipment. Right, now it's gone out the door. How are you gonna pay? Where are you at? Have you taken a civil loan? And so I don't disagree that trying to get hold of your Equifax, your Dunham Bradstreet, your reports to get information on your supply chain is important, but actually let's not forget that we've got ready access to the supply chain because we're working with them all day, every day. I had you point that Alan raised about some of that credit history being historical and we were in a very fast-moving situation. What would you advise people to do to be aware of the current risk? Yeah, I think that's really interesting. And as an accountant, it wouldn't surprise you to learn that I want people to have up-to-date financial information that they can use to run their business every day. And not everybody has that, which is a source of frustration, as you might imagine. And the truth is, you probably have worked out now that you need to have that. I think you've then got to try and have that conversation, as I said. And some of you, you've got to take it with a pinch of salt, okay, because you're perhaps talking directly to whoever it is and seeking to understand how they're going as a business. But I think there is a greater degree of collaboration than we've seen in the past, a greater willingness to share information about what's going on and asking some of those challenging questions is absolutely what's been expected. And you would expect that the businesses you were working with have answers. Because actually, I'm very firm in the belief that the food industry has got to emerge out of this as a collective and gearing up as a collective, restocking as a collective. It's going to be something that we're going to have to kind of take carefully with. I'd also encourage people to be thinking about managing their credit exposure. I've got clients that would look at a discount for payment upon delivery. So they're cutting that need out immediately and they're shortening their working capital cycle immediately. You've got notoriously businesses that I work with are poor at imposing credit limits on the people that they work with. So rather than relying on the insurance to catch it, actually have you assessed what you're comfortable in giving? But Phil, most food and drink producers and the speakers formally won myself. It was a bit of a vulgar subject mentioning the money. I mean, it's all about the food and its loveliness and it's rather vulgar to talk about the price and how soon do you think you might pay? And hence why I'm not going to admit to how many thousands of dollars I was certainly down on the game because we thought we had a lovely customer and they turned out to be less than lovely. Now, yes, the point was made about you can make a provision for bad debt, but that's a provision that's still coming out of your pocket. Should I have gone open book or something as a way of ensuring that there was a closer relationship and that price and terms were discussed earlier? Yeah, that's a real challenge, John. And as you know, there are not a lot of contracts out there for a lot of the business that's written in food and drink that, you know, because people don't get down to the kind of formality because it is all about the story of your lovely product. I don't have an easy answer to that. I think that there is an opportunity with what has happened for a greater transparency and actually some just open conversations about what we're doing in business with one another. And so I do think there's been a shift in what people are willing to kind of talk about and to open up about. And actually for some people, it's probably about taking that leap from saying, I am the owner of this brilliant food brand that has got this provenance to I am in business. Yeah, give us your money. And I've got to make this work for me. But by the way, I've got this fantastic food brand that's got this provenance behind it. And I want to kind of promote that. So I think that, you know, let's not be naive. You can't sell your fantastic food brand if you've got no cash. And some of those tough conversations, I think, have got to happen. But we've seen, particularly with retailers and with online, people paying much quicker. I mean, the great thing about online is it's money up front is, I don't know if that's insurable, Sean, when you do sell online, particularly with some of the new, I won't name names, it's some of the more interesting online retailers who act as aggregators of demand and your money is not usually up for more than seven or 14 days, but your money is out. Yeah, that's insurable, that's covered. Obviously cash sales aren't, there's no need. But yeah, online sales aggregators, online merchants, of course, yeah. Because you can, there's some people who've been borrowing against that as well. I don't know, Alan, what the attitude of the bank is, but I presume that you want to see more different channels in future to market rather than people wandering up with a big retailer and that being the bulk of their business. It's probably always been the case spread in your risk, which is easier said than done, because obviously most businesses have some key contracts, and we kind of understand that. But yes, if you can spread your risk, if you can spread your payment terms, if for new clients you can get, look, yes, we're willing to supply you, but it's gonna have to be performer initially for so long to try to get some knowledge of them, understand how they work. And if when they're paying performer, actually performer already turns out to be 10 days and then we get to 20, then actually you do have to think, well, how much am I gonna commit to these people? How much of a bad debt am I willing to take? Or am I willing to go and borrow against this? So it's my debt then. It's my debt in my name and possibly some personal liability. So it's kind of those eye-opening understanding what you're getting into. But yeah, if you can spread your risk, it's great, but it is difficult. We kind of understand that and a lot of businesses have some big key contracts and they've had them for years. But then you do need to get very close to those customers to understand them, to really listen to everything that's going on. At the moment, as I said earlier, they should be liquid. There shouldn't be any reason for them not to be paying you. I think it's further down the line that the liquidity may become a problem. But if they're negotiating really hard for longer terms at the moment, you've got to either cover yourself through insurance or something or you've got to ask a question. Why are they doing that at this point? And sometimes it's really hard to turn business out because that's turning your own turnover off, if you like. But it's better than getting the bad debt that could be very critical to your business. Shaun, I was talking to a landlord of a pub, I know, strangely, this week who has just started back and has got 30% of the volume that he would otherwise have had and he doesn't get trade credit terms at the moment. Now, if he'd had trade credit terms previously, you'd have expected that insurance to go back in place, but it's not going back in place at the moment. There's talk of a government scheme to try and do something about that at the moment. Well, this is the big news story. This is the White Knight. About a month ago, the government announced that they were going to provide what we call some reinsurance support to the mainline insurers. So the value of about 10 billion, it's 10 billion of support. So it's a behind-the-scenes arrangement between the insurers and the government. No extra cost to the policyholder, to the insured, and the way it works essentially is that the government has said to the insurers, you must come back on cover where you've previously withdrawn cover due to COVID-19 related issues. So certainly in the food and drink sector, hospitality would be an industry or a sub-sector that would certainly benefit, for example, from the government scheme. What's the catch? Well, the catch is that you have to reapply for the credit limit that you require. So it's not automatically reinstated. You have to go back to the insurer and say, I now need cover, and here are my confirmed orders moving forward. But it's great news. It was announced a month ago. It was sent to the European Commission for rubber stamping. Rubber stamping. A month later, we're still waiting, but I was told yesterday that finalisation will be in a couple of days. So you heard it here first. So what will that mean? That'll mean that where you did have trade credit cover, you should be able to get it reinstated. Reinstated, yeah. It doesn't make a bad risk, a good risk. So what the government is saying to the insurers, if you were going to pull cover anyway, because of the financials, because you'd had overdues reported on that particular customer and the outlook was serious and severe, that you cannot come back on cover. It has to be COVID-19-related. So that there's an element of interpretation there, because as we know, hospitality sector's been difficult in any case. Yeah, but there's clearly been a number of what I would call mass exercises where great swathes of cover has been removed on a sub-sector and that's unacceptable to government and that's going to be one of the focus points. I think that's where it's got bogged down with the European Commission is the interpretation. What do you mean by COVID-19 related? But importantly, you have to have a credit insurance policy to qualify. So if you're already a user, you can access the scheme. Just on that point then, where companies have had a policy, their board has said, we will only sell or supply people who we can get trade cover on and that trade cover is effectively removed because you can't get insurance. What's it, you know, will this make any difference to that and what are their alternatives? Is there a higher premium for more risk? I think at the moment, it's back to the bookmaker point, you know, I think all bets are off and there are just some risks that are just too great for only insurer to bear. But this scheme should enable the insurers to come back on risk and it's backdated until the 1st of April, by the way. So if you had a limit board after the 1st of April, it could potentially be reinstated and it runs until the end of the year and there's a review point in September and the government will then decide whether to roll it forward for another few months depending on where we are with the economic environment. So it's not a magic wand because there are conditions attaching, but cover's available, there's no extra cost. It has to be good news. Okay, and before I come to Phil about the pricing of credit into individual customers or products, the fact that the hospitality is coming back, Sean, this all, now, and obviously this autumn and the run-up to Christmas, if they come back and they're not the same company that they were before, if they've, you know, a couple of pubs have been bought up by another and they're in a different company, so it's a newer company. How are you gonna get trade cover on those guys? Well, that feels to me like a new application. So that's about presenting, you know, as Alan was saying, presenting the numbers, the detail to the insurer with a view to getting cover. So if there have been changes to the business, if they restructured, if they've got new owners, private equity, it's a reset and I think you would go again and say... And the new co is more likely to be difficult to get cover on than an established business. Yeah, I mean, what you need to watch out for and maybe Phil has a view on this is pre-packed situations, you know, where organisations have gone bust under a pre-packed situation, dumped their suppliers and started again and hoping everything is going well. We've had some famous ones of those in the food and drink. Yeah, I'm aware of that. I've experienced one myself a few years ago, with a wits out of Chelsea, literally overnight, pre-packed and back up and running, but they hadn't paid the previous suppliers their bills and they were flogging their stuff. So that's, you know, are we going to... Well, that's a question for Phil, really. Are we going to see more of that or less of that, Phil? More insolvency. Yeah, and pre-packs and people coming, springing back as the new improved version. Yes, simply. Could you just let us know which ones in the food and drink sector, so we know... Yeah, and look, it was already a... It's already been an industry with pretty fine margins, is what I would say.  Then there is only one possible outcome. And the government, with the support, which, you know, by the way, I think, in terms of speed of delivery, has been impressive thus far, has taken the bet that they will support enough businesses that they will be able to soften the scarring in the Bank of England's words and allow enough business to continue such that they can mop up some of the kind of casualties, truthfully, and that's the pretty tough reality. You did mention a point on pricing, and pricing your bad debt into what was going on. I was sort of thinking about it, and the truth is you need, as any business, to understand the price that you are going to sell at and what that is going to deliver. I've been thinking about this quite a lot recently, and it's bloody difficult, and forgive the language, but I'm an accountant sat here scratching my head because I look at spreadsheets all of the time, and trying to work through with businesses. But when you factor in what my bad debt look like, what do I understand about the new furlough scheme, and how that's being phased out, and therefore what my employees might cost me, and therefore what is my cost of production? What, if anything, is a VAT change going to do for me in terms of possible demand down the chain, or am I in a hospitality myself, and do I understand what's going to happen in terms of the kind of VAT position? Do I understand my cash flow position to make up my VAT bill next year that's been deferred? Have I remembered that I've got VAT coming back in to charge this quarter? Am I subsidising my whole business model with a grant that I've been given, or a bounce back loan that I've been given? That's a really good point, though, because surely a lot of characteristics of a food and drink business is that it's cyclical, but we often have a lead up to Christmas, hence why we have so many insolvences in February, and they crystallise out then. The only problem is that, as Alan was asking us to do earlier, you've got to try and forecast for what the cycle is going to be and whether it's the same cycle as we had last year, and therefore how much working capital we're going to need, so we don't know how many customers we're going to have or when they're going to rock up. Yeah, and the best advice that I've got is that you've got to understand two things. You've got to understand your profit and loss and your cash flow. You can't do one. You've got to do both. You've got to have a best crack and you've got to re-look at it every week, every month to understand what you think it is starting to look like, and that is a tiresome exercise, and there are some tools out there that will help you, but you've got to do that. Tiresome exercise? This doesn't sound like an accountant. I mean, I relish the opportunity to... I was going to say... Very good. Yeah, I mean, obviously, I've been known to be a bit of a spreadsheet monkey myself, but I mean, it does come back to this business about forecasting and before you even go near a bank or an insurer at the moment, it sounds very much as if forecasting and being able to articulate what your business needs are and how you're managing them and how you're pricing in either the upcoming costs of unfurlowing staff or the cost of potential bad debt and or how you're going to manage that risk, which is handy because next Tuesday at 8 o'clock in the morning, we're having another one of these sessions where we're going to be talking about forecasting and managing and mitigating for financial risk. Why would you want to miss that? But anyway, that's the plug for next week. I think actually, I mean, we should really ask everybody, in fact, Andy Richardson has asked me to ask you all. With you had access to the government today, what would be on your wish list for things that they could do to actually make a big difference in the food and drink sector and trade credit availability today? Sean, would you like to kick off with that one? Well, we haven't mentioned the B word and Brexit, I guess, needs to be resolved. It seems to be, you know, taking secondary... I don't think we've got time for that one today, Sean. No, but I think making a resolution on Brexit for the food and drink sector and making sure that... The certainty or the uncertainty that it's providing. Yeah, a decision and a resolution, I suppose. So from an insurer's point of view, is that uncertainty about Brexit and whether or not you're trading outside of the sterling zone? Yeah. Does that make a difference to your insurability? Yeah, it does. I mean, remember, the market was distressed before COVID. There were some serious risks on the horizon and insolvencies were arising. So it's not all about just COVID. It is about other issues like Brexit too. Yeah, yeah. And we've got winter coming and Christmas and chilled storage space at a premium, et cetera, et cetera. Alan, what would you... You've got access to the government. What would you ask them to do for us all at the moment, please? The Welsh government or UK government? Well, firstly, I echo what I think Phil said, that they have reacted quickly. They have helped. It's been phenomenal actually, the amount of liquidity they've put in. I think possibly now they need to start listening to specific food areas and specific people like yourselves, possibly, to say what is the specific areas of support that's needed, because it's been blanket up until now. Everybody can have X. Everybody can furlough. The other business is, they cannot operate with the two metre or the metre distancing. It just doesn't make any sense. They've got to stay closed. And it's now become more specific to different areas of how we can support those. Blanket, I think, is finished, because the trouble with that is is people actually taking support that don't need it. And I think it needs now to be more specific to certain areas that actually because of the criteria or where we are at the moment, they can't trade or if they can't trade, they just lose more money. So it's about looking at specific areas and getting some expertise in to say, look, this is where you need to channel your money now. So it becomes sort of more detailed, more granular down to certain areas rather than blanket now. And with that, and the sort of mopping up of those problems, it does beg the question if we're going to see more mergers and acquisitions. Are you in the, do you think they'll be funding where two wrongs particularly could make a right if they can get economies of scope and scale in place? Well, I don't know if funding is what will be needed because what I think if that's going to happen in some of the larger businesses have now war chests, even if those war chests are debt war chests but very reasonably cheap debt, they can use those to come together. They would make sense to a certain extent. And if you can understand the philosophy, why it's going to make sense, then yeah, we would look at those opportunities because yeah, there could be some good opportunities out there, but it would be good actually. Sorry to say the same thing. If they come together, obviously it's going to be well planned, but also that they're putting their own money on the table as well as trying to get debt into it. And a more targeted response from the government for those cases that start to emerge is finding it difficult to trade on in the current circumstance. Yeah, yes, indeed. Hugh, you've been sat listening and taking notes, I noticed. What's your thoughts and what would you have us all do as a result of today and what you've heard? Yeah, I suppose my message to the government is that, as we're speaking personally from a public perspective, a lot of companies that supply the large retailers have done well through this crisis. I think it's, you know, we've got to do whatever we can to help the businesses that are struggling, but there are some businesses that were pressed week before this, so it's going to return on. Plus that does then create gaps in the market, opportunities for other businesses. So one of the things I would say to the government is make sure you keep supporting the sector to grow and develop as well, even though the support services that were in place before the crisis, make sure that the same energy in those services as well. But you've spoken in the past about the need for financial literacy and for businesses to take more interest in their finance, and I think the message from Sean, Phil and Alan have all been, if you want to come and make a case to us, you've got to be coherent. What can be done about that, Hugh? You know, that's what the public business is built on. We've got a, what we call a predictive model that runs a kind of year ahead and we do weekly property losses. Everything is absolutely reconciled with the penny. We can probably predict our profit for the next 12 months within 5% and our cash flow from that as well. We're lucky that we sell relatively reliable blocks of potatoes to the big retailers so we can forecast pretty easily. But that gives us absolutely, a finite financial control and that allows us to drive efficiency, controller, capex, all the things that we need to do. It's a kind of, those businesses that are starting off, I can't under-emphasise how important that is in this business. It's almost been a lesson to me in the last 8 to 9 years that we've got better in that and how much control that gives you and what confidence it gives the banks if you want to borrow from a new project and these other things. When you're delivering financial numbers to a bank every month, they're exactly what you said they were going to be. That gives confidence and that allows you to grow and build partnerships. Do you think the government or agencies give us enough information about the marketplace at the moment and coming back to Sean's point about being able to go and check on companies and ensure that you know what the risks are that you're taking. Is there anything that can be done in that area at all? I think that's a different one isn't it because everybody knows their own sectors. As soon as the government tries to get into understanding it's very difficult for them to do that isn't it? Companies working in sector know the players, they know the kind of environment that those guys are working within. There is a responsibility for businesses as well to understand where they are. I think that's coming through from the three other panelists today is understanding your supply chain if you don't mean talking and communication. I think it's one of the keys to it. Brilliant, thanks Hugh. So guys, any final points you want to make in terms of the top tip that we would send everybody away with? Sean, top tip? Well it has to be if you're not currently a user of credit insurance take a fresh look. Phil, top tip? Take your last year's accounts make sure you actually understood those and try and work out from there all those pages at the back that you never read which you've got a lot of information in what does that look like next month, the month after and for the next year? That ability to understand your business in the direction of travel. Because entrepreneurs don't want to do it they want to run the business because that's the exciting bit and we get that. Darling we're artists, it's so vulgar talking about people. Alan, Alan! Top tip before us please? I guess it's to say be prepared but also be honest and don't be worried about coming to have a conversation with your bank manager with a bank advisor, with your accountant be honest and understand where your marketplace lies where you think it's going and if you need to borrow make a good case for that but do think of it from the other side think what's going to make that guy think earlier the other side this is what I want to support this is what I want to get behind so try to think of it from both sides and not sort of just oh yeah I've got this opportunity everything's going to be wonderful you've got to put it in the context of where the marketplace is at this moment in place moment in time and we are still lending by the way I know I can over a bit there whether we are still lending. No that's brilliant that's great gentlemen I think all of you I have to say this morning it's been personally I think it's been great we've got some real insights appreciate the questions that we've had from the other side of the panel just remind everybody that next Tuesday at eight o'clock we're doing our managing forecasting and managing or mitigating financial risk seminar so hopefully we can get lots of people signed up for that one and lots of great questions thank you Hugh for the food board for instigating this I hope everybody has a lovely day once again thank you all very much indeed for your time and attention Thank you all Thank you


Hello and welcome to this session. This is Professor Farhad in which we would look at an accounting for leases and specifically we're going to be looking from a less seized perspective. So we're going to look at this problem and answer the following question. Is this an operating lease or a finance lease? And we're going to journalize the entries at the commencement of the lease and any related entries for 20x1 and 20x2. So let's go ahead and take a look at this accounting for leases exercise. Adam entered into an uncancellable lease with Maggie medical equipment. So Adam is the less see and Maggie is the less sore. The commencement date of the lease is June 1st 20x1. The annual lease payments starting at the commencement date of the lease. So this is basically an annuity due because immediately Adam will have to make the first payment of $20,471.94. A bargain purchase option 4000 bingo. If there's a bargain purchase option, it means we are dealing with a finance lease. So basically we can have answered the first question. Why? Because bargain purchase option is one of the five criteria. As long as you meet one, it will become a finance lease. We just met this one. The lease term is five years. Economic life of the asset is 10. Now this is important. Although the lease term is five, the economic life is 10. We're going to see later and I'll explain it later. We're going to be using the 10 year to depreciate and I'll explain why we'll use the 10 year life. The less source costs the $60,000. We don't care about this information for now because we are doing accounting for the last C. The fair value of the asset is $91,000. It means if Maggie wants the salad today, she will charge $91,000. The less sort implicit rate is eight, which we already know. The less incremental rate is eight. They're the same. But since we know the less sort, it's good enough. And Adam uses reversing entries. So what we're going to do next, we're going to compute the lease liability for Adam and we're going to prepare an amortization schedule and journalize the entries, at least the first two, three entries to be familiar with how to we, how do we journalize entries for LSE? Before we proceed any further, I have a public announcement about my company, farhatlectures.com. Farhat accounting lectures is a supplemental educational tool that's going to help you with your CPA exam preparation, as well as your accounting courses. My CPA material is aligned with your CPA review course, such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses, broken down by chapter and topics. My resources consist of lectures, multiple choice questions, true false questions, as well as exercises. Go ahead, start your free trial today. No obligation, no credit card required. So let's go ahead and start by establishing the liability because when you have a lease, you're going to debit an asset and credit a liability. So the question is, how much is the liability? Well, let's see. We're going to compute the present value of the payments, the present value of the payments, which are again, they are an annuity due payment plus guaranteed residual value. There is no guaranteed residual value here. Adam is not guaranteeing anything. The present value of a guaranteed residual value, but we don't have any, the present value of a bargain purchase. We do have a bargain purchase. We compute the present value of that. Let's go ahead and do that. We're going to use n equal to five, i equal to eight. The lease term is five years. The interest rate we are using is eight. Therefore, we're going to first compute the present value of the rental payment, which is the factor is 4.31213. Again, you are using the present value of an annuity due. So the present value is 88,280. Then we find the present value of the bargain purchase, which is $4,000 times the present value factor of one. Now, in your textbook, in your CPA review course, there could be a little bit of rounding, but all in all, the present value or the total is 91,000. So this is going to be the liability that's Adam's going to put on his books and start to amortize as well as not amortize, start to account for the interest expense and the reduction of that liability. And we're going to be amortizing, which is the depreciation of the asset. What I'm going to do now, I'm going to switch to an Excel sheet and show you the amortization schedule and show you the journal entries and explain their impact and their importance. So this is the amortization schedule starting with the lease liability of 91,000. I just showed you how we compute this. So what we do first, it's let's journalize the entry for that 90,000. For that 90,000, what we're going to do, we're going to debit right of use asset, which is the asset and credit the liability of 91,000. So this is the journal entry for the 90,000. Now, what happened is immediately Adam made a payment of 20,472. So immediately this payment would reduce the balance for the liability of 20,472. And there will be no interest component because this payment was made on the same date. So therefore the balance after we make this payment for Adam will be 70,582. Let's journalize the entry for the payment. Again, there is no interest component. Therefore, Adam will debit the lease liability would reduce the liability and will credit cash. And that's the payment. Now, Adam will have to close their books at 12, 31, 20x1. So from June 1st, 20x1 till 12, 31, 20x1, there are seven months. And what's going to happen? Adam will have to accrue any interest for that period. So now we're going to accrue the interest. Well, to accrue the interest, let's first compute kind of two lines of the table, just to make sure we understand how to do it. Now the payment will be always be the same, 20,472. So on June 1st, 20x2, Adam will have to make the payment. Of this payment, how much is interest? Well, how do we compute the interest? We are going to take the balance of the liability as of the beginning of the period times the interest rate. And the interest rate happens to be 8%, which will become to 5,642. And the remainder, which will be the amount, which is 20,472 minus the interest payment, is the amount that's going to reduce the liability. Then we'll have the new balance for the liability, which will be 55,698, which it means it went down. Then June 1st, 20x3 will make another cash payment. The interest expense will be $4,456 rounding. And it's based on the prior balance times 8%. And since we paid $20,471, $4,455 is interest, the remaining is receivable. And we keep on going. Now this is the interest for the whole year. But now we have to stop at December 31st of every year and compute the accrued interest. Therefore, what's going to happen at December 31st at 20x1? We're going to have to debit interest expense $32,91, credit lease liability $32,91. Now where did this $32,91 came from? Well, it's the interest expense for the full year times $712. Why $712? Again, June, July, August, September, October, November, and December. Be careful. This is June 1st date. Therefore, this is the interest expense and the interest liability. And I also told you that Adam uses reversing entries for simplicity. It means the following day after the financial statements in quote are technically issued. Okay, what's going to happen is we showed the expense, we showed the liability. Adam will go back and reverse this. Reverse means the exact opposite. We'll debit the liability, we'll debit the liability, and we'll credit the expense to remove its effect. Why it's for simplicity. We can keep it if we want to, but for simplicity, we can do that. Are we done yet? And the answer is no, we are not done at all. What's going to happen is Adam's going to have to book depreciation, depreciation expense or amortization basically amortize the asset. How much are we going to amortizing the asset? We're going to be amortizing the asset over 10 years. Why over 10 years? Why over 10 years? I'll have to explain why over 10 years. Because if you remember, we had the lease term of five years. That's the lease term, but we have a bargain purchase and we expect to exercise their bargain purchase. And this is why we consider the lease as a finance lease. Therefore, we technically own the asset for 10 years because we're going to have it. We're going to own it. Therefore, what's going to happen, we're going to take the 91,000 divided by 10, which is yearly, then multiplied by 712 because we need to only account for 712 because from June 1st till the end of the year. So this is the amortization expense. Then on June 1st, what's going to happen is we are going to have to make the payment. The payment will be 20,472. Of this amount, 5,642 will be interest expense and the lease liability will be 14,830. And this is basically all coming from the table. So this is everything that I did here is based on this entry in the table. And that's why it's very important that you know how to journalize the table. Now, again, at the end of 20x2, at the end of 20x2, what do we have to do? We have to book another seven months of interest, then we reverse it, then we book the depreciation. Also here we have to book, you know, we could also book another five months of depreciation if we want to bring our, you know, we could book another five months of depreciation if we want to bring our books up to date if we are publishing any financial statements for that matter. But we're assuming we are not. Then let's complete the table. Again, we're going to have interest liability, interest on the liability 3174, which is the prior balance times 8%. The remaining is the principal, the balance will go down. Again, the last payment, the last full payment will have interest and interest in principle. And notice the interest is going down because the balance is going down. The reduction in the liability is going up. Okay, notice 14, 16, 17, 18, more of the payment is going toward the liability. And the last payment is 4000, which is for the bargain purchase. And as a result, the balance will go down for the liability will equal to zero. Because remember, we discounted, we included this 4000 bargain purchase in the 91,000. What should you do now? You should go to far hat lectures and work MCQs, true false. Look at additional exercises. Leases are an important topic. Why? Because it's going to involve time value of money. It's going to involve a liability like situation. It's going to involve journal entries. It's going to involve an amortization schedule. And this is for the less see. So make sure you understand the less see in the next session, you would look at the same example dealing with the less source. So you would see how the less see that the transaction, you would see how the less sorted the transaction and you can compare them side by side. Actually, I have it right here in the Excel sheet. What should you do now? Again, study hard, stay safe. Good luck. The CPA exam is worth it.


I know I don't like hookup culture because I've done it. Please don't do something you don't want to do What's your favorite drug you've ever done? Yeah, but I don't do drugs. I don't know there. I'm still looking either I was having an answer Yeah, just on a day-to-day basis. Yeah, she clearly loves it. Anyways, I do feel like my personality is coming back guys But it's like that she talks down. It's like my personality. Yeah, entirely tenor. The character development that you had in this past year Oh, yeah, mine. I just say it's incredible. I haven't finally getting it checked off. She used to have a PhD maturity Okay, do you know what that means?  I don't have a repetitive sense of humor in the sense Like I don't like watching the same thing over and over and I think it's money a and B I was like by the end of before I got to check I was like I spent my screen time was like ten hours a day Like I just don't need to be spending more time on my phone I knew I would get addicted as soon as I got it once it got to the space that it's in now But then I just thought of any way and now my screen time's actually gone down I'm at average six hours and 12 minutes last week, which is so low to me. I like have a problem I have no idea that you have that bad.  Okay, like I could scroll through there That is something I do know about you because I like go through like I like only radical reddit stuff Yeah, okay.  No, but like it's same concept. Okay before we continue on their conversation I do want to say I'm starting a new series and I said drinking with Kinsey Jessica said cocktails with Kinsey with a K I think that's cute. Yeah, I mean you could also do with the state doesn't have to necessarily be K But I can't really sounds better. You know, I know I couldn't agree more You work up the title in the comments below. I'll have friends over we're gonna answer some questions I also get a lot of questions from you guys to have like normal people on my stuff Well by normal I mean like people who would say just don't share their entire lives on the internet You're normal I just do it for you. I have this theory that people who say that just like what I call themselves Because like they're like we want I want like a normal account if you were set to wait It does this and this and I'm like look at their bio and it's like No one who works at a toy Get a Dominic on I've never called on You're probably my own right now, I know three years and whatever here, but who's that anyways We're gonna keep ranch waters tonight And I just want to apologize on behalf of myself in the state of Texas because there is a severe shortage of topo Chico's of regular soda ones. They have like the twisted tangerine, which like I think is gross So in ranch water, I get asked this all the time It's not a tequila soda because what it truly is is we all go to kill a lot of tequila topo Chico lime juice lime. There you go. That's what a ranch water is so Like tequila soda all but not the same thing, okay? It's kind of like a square in a breath table like one can be the other the other I can't you know what I mean? So anyways, it's like a Texas drink every bar here knows it you go I'll say you can't you can't you can't you can't sometimes there are some bars And I'm sure they do it but like for the most part you can't order them. Yeah when I was in Florida I was like trying to do the best drink to get at the bars. No, I think that's I love them But like here's the thing about ranch water if you have had it and you hate it You probably got a bad one. Oh, yeah, and it is really easy to make about I will say that's there Um, if you live in Dallas happy sour, I will say has incredible ranch waters I will say they used to kid like serve them in the topo cheap. Yeah, I haven't remained and now I have them in this So I feel a little bit gypped but anyways, we're gonna start our drinks. We're gonna be answering some questions I'm having Jessica on today because she's my co-founder of the okay our new clothing company wearing the Dallas stuff right now So cute so Jessica right with the pants on so sorry you're also included in that Um, it's available now at lunch today So the dial set is available the totes available. Please go shop. So we don't cry ourselves to sleep Also, our both of our podcasts came out today. Yeah Thursday We answered all sorts of questions some kind of juicy questions on Kensi's podcast really answered some like yeah What's happening questions? Well, we tell you also one we tell you exactly how much it costs to start and then two We I go it's not really all about the business. It's more of like my Extreme fear failure that I've realized that I have yeah. Yeah. Yeah. I'm gonna start by making some drinks.  Yeah, I'm sure some people do you really why not me? I don't know. Actually, it's kind of expensive. It'd be nice to cut that cost. Yeah, I'm right There's a lot of questions about handling a friendship breakup and then also just handling like growing apart from friends Especially in college. It's like a case-by-case situation like yeah I don't think there's like one blanket answer for that Like I think like sometimes like distance is what makes you guys grow apart and that just kind of happens really naturally But like if you're like in this still in the same space, but like you're just like in different phases of life Like again, I think those things kind of happen naturally And if it comes up in conversation that your friends like hey like I feel like we're not, you know hanging out as much Whatever you can kind of just be like listen like it's totally not intentional But I'm still like we don't have the same interests right now So like I know we still both like doing X and why don't we make workout classes our thing when you have a plan Like make people like less innately like clingy I think because when you have a set that okay, we're gonna do like Monday Wednesdays We have like our Pilates in the morning because like that's the one thing we like doing together still But then it's like the rest of your life is still separate Like it then maybe eventually you guys stop doing workout classes together and that really is only like an hour every day So it's not that much anyway But yeah, it's like find a commonality between the two of you and if there isn't one like I feel like you would Mutually not want to be friends. So like you would think that also it's totally normal Like I think I have this issue where I don't like change a relationship So I would like to stay friends with every single person that I've ever met my entire life forever And that also holding back big time a lot of people that I hung out with in college We had a lot in common when I was in college But like naturally I you change a lot and you're not the same anymore And like I really don't have anything in common with some of the people that like I loved dearly from college Yeah, yeah, like we have different lives now like we just have grown apart and like it's just kind of how it is It's just different, but I would say this is a really common Topic I think that's even talked about like between like my friends of like you Postgrad and then you also naturally often times like So next thing is next we have to we're gonna rim these with like um a Taheen-ish sort of it's like a chili powder because I don't have to heat right now I don't know where I left it moving to a new state top three tips to feel confident Um some of you may know I moved to Dallas in September 2021 just like almost six months ago crazy Obviously moved here and I knew Kenzie so that I didn't know one person so I didn't really I was like starting off with nothing I feel like mostly but we'll actually know some people do just yeah Especially if you like postgraduate a new job like sometimes it's just you know, you don't know anybody Yeah, um, I would say like to feel was it to feel comfortable confident I would say Solidify your routine the fuck don't be afraid like I think it's important to like find your coffee shop find your thing Like find your grocery store like those things sound kind of dumb But like those things from here like I like I love the whole foods that I go to I like that I know where everything is like every like Monday and Thursday when I go to the grocery store like I like that's my place and like I go to Lollipop or I get a matcha like there is Routine in my life, and I like having things like that Better consistent, and I would say like find your workout class to find your things and then obviously you're probably not gonna like me You're why friends in the grocery store, but even if you're not meeting people there I think it like builds confidence like this is your place Because when you don't have a thing that's your own like I think it can feel like overwet me But like once you realize like cities aren't like are only as big as you like make them You know like it doesn't have to be this quick There's a thousand places I could be going like find your place like find your what you enjoy What you want to be around and then did the rest kind of I think will follow from that as for making friends in a new city I Don't know what I Mostly hang out with Kenzie and her friends because I'm like but I think that's advice like you make one friend And then you meet them through that you look you just got lucky because you like my friend Yeah, that's true. Also. I think I'm just listening to relax my friends are the best That's true. Tanks just did a podcast and she was talking about Good people know good people. Yeah, and so you find one good person like one good co-worker And you're like hey like do you have girlfriends like can we all go out like can I hang out with you guys like kind of I like this thing is like if you live by with one of your co-workers Like I don't think it's weird to be if someone came out to me and we're like hey Can I hang out with you and your friends? I think oh my god great like another person that you enjoy Because you know when you guys especially in post-grad because like there's not one person who like doesn't really want new friends Yeah, I really know like especially if you guys are getting along well like why would they not want to hang out with you? Yeah Okay, these look so cute guys. They look really good. Let me get a cute little pic really quick Um, I love this for us insert yourself Especially I think I'm like you'll know you vibe with someone so like yes, you feel like you're not five and don't do that But like well the other thing too like when I moved to LA It's like yes I did know a lot of people but like the people that I ended up hanging out with were not the people I knew when I originally moved and I would meet I met like probably I met so many different people Before Really finding like my group there Yeah, and I think you meet one person and then you meet another person do that and then you meet another person Yeah, I'm in like naturally you just keep going and going and then eventually you're gonna find your group of people Someone told me this too and this is specifically about LA and I actually couldn't agree more And I think maybe times are different for people But you know first week you're moving somewhere Up to like LA to a place you really like wanted to move to Is your honeymoon year? So you're like doing all the things for the first time second year You hate it because you're like what am I doing and the newness has worn off Third year is when you've like found your people and made it your home Okay, and I think that's a lot of people's like phases of anything new so it's important to keep in mind You know fair. Yeah, we did cheers cheers to the okay. Please bye. Thank you. Make eye contact I'm so sorry. Okay. Um also so many questions about how to make friends in new cities I'm joined by Geneva chat. I'm not kidding people actually make friends there How often join the people who met in the Geneva chat? I meet people who met in Geneva Exactly like it's not weird join the Geneva chat. I added so many new cities yesterday Oh, you're definitely not weird No, it's not great at all and there's so many cities like join it That's uh basically a big group chat We have one home and then a bunch of different rooms and girls in different cities You guys need to join it and you will make friends. You have something in common Which is me but like more than that if you follow me, we probably have something in common Oh, yeah, you know what I'm interested in so it's like everyone has something in common Yeah, and everyone we met is so cool. Yes Yes, I agree. I hide my friends up to chase their dreams, but I don't get the same energy to myself help.  Yeah, I was gonna say like um I say like I'm like I'm worthy of like love and compassion from other people like I am smart and I am Love and I've tend that I like great and I write them down every single day because I like I struggle really badly with anxiety and I like having things that that's like a very grounding Technique for me and something that like just works really well. So I will do that in the morning I write them down in my journal. I write the same 10 down 10 affirmations.  Okay. Um, obviously brevity housewife merch That's great. What a nice friend. I know. What a nice friend Someone's hitting me a brevity housewife. That is such a good idea. I'm trying to think okay Like it depends if she's a drinker or like likes to host I think the best thing you can do is get like a cute mixer or cute bar wear Oh, you know what don't actually gotten these for Christmas like last year. Oh cute oven. They're so incredible. What are they 5 2? I love the fact is a 52 or 52. Uh, yeah food 52. That's target. Oh, just this is Nordstrom. Oh, yeah Yeah, I don't know why I'm liking on this anyways. I love these though Like they're really kind of a myth or a cute like serving board You have to think about what they're gonna be using when they're serving but ultimately obviously brevity housewife merch A lot of stuff is sold out. We restocked a pink crew, but um, we have like the hats and like certain things from certain vendors How to make friends who are truly rooting for you. You know what I'm thinking about this I would have always said that I have friends who are really supportive and I think online I've had friends who are incredibly supportive But I don't know if it's just that like my friends now are the most supportive people in the entire world Like literally flying out to my new york show. Yeah, I would say maybe between like at a certain age You know that I wouldn't have felt that way. Yeah, um, but I think How to make friends who are truly rooting for you John I recorded with a friendship coach once and it was so interesting She said there was some study and of the top qualities that a good friend can have it's self-confidence Like the number one. Yeah, which is so interesting But also so true because that solves all of like cleanest problems all your children are like secure Yes, pettiness drama Jealousy and I think everyone has like some sort of jealousy to an extent But like it just depends on how you act on it and like I don't think that like I wouldn't say I'm an incredibly jealous person. I say that because I recorded with this girl Who's talking about how that we demonize the emotion of jealousy and then I was like she actually won me over with the argument I think you just have to find people who are Securing themselves. Yeah, I think also like you have like that's it's like people say this all the time And you have to be the type of friend you want to have like you can't like Expect your friends to be acting some type of way when you're not acting that type of way And I think also like some things aren't as like like you would realize when like you didn't have supportive friends Yeah, right like your friends are probably more supportive than you think I guess what I'm trying to say like once you once those people type people aren't around You'd be like wow I really didn't have such supportive friends and you kind of have to like count the little things and like the support Doesn't necessarily mean like like texting you all the time I'm so proud of you. It's like showing up when you'd like like showing up someone's house and having a coffee Like remembering things about them like and also just remembering that like that goes to like love languages Like some people show things differently. So and we talk to your friends about it If you feel like your friends are being supportive just be like hey like I had this thing It really hurt like I had this event or I had this really cool thing I got this promotion and I really I told you guys that I really feel like you weren't like Like let's go celebrate with drinks like it doesn't have to be something like that But feeling I wanted some sort of response and I didn't get one that really hurt my feelings Like I feel like if the roles are reversed and why you guys said that to me I would have responded in that sort of way I just think communication like it's just a key to like literally everything I think literally being like I'm an incredibly blood blood person I think that I like and maybe like a little bit too vocal about the way that I feel But I would rather be more vocal about the way that I feel than not vocal enough Because like when I like someone someone doesn't like rise me the wrong way or whatever Like I would let them know just because like I don't think it's hot Like then you're just stewing and like some sort of emotion about it And you don't want to like stew it your friends. They're not supportive They don't like me like if you just tell them like oh my god I'm so sorry that obviously wasn't our intention like yeah, like let's go do something Let's go celebrate or like next time something like this happens will be better Like I just think that you ought to communicate that because maybe they just have no idea You know I look maybe they just don't know that that's how you're feeling Yeah People aren't mind readers like it's it's it's unfortunately Yeah, and like I know everyone we wish that people were but and it's kind of hard to talk about your feelings That seems like an awkward thing to bring up But sooner that then stew would not and be mad at your friends or something I make sure you're also celebrating your friends like if you want that you need to give that too But if you know anything about the enneagram, I'm a threwing too So I am the achiever and the supporter So I'm going to overachieve that I want to help all my friends overachieve What I've noticed with myself though is that I definitely like really believe in myself and I'm like I can do it And I definitely have confidence to go after things obviously like I've I've done stuff However, I do I have some like scarcity mindset that I've noticed of like oh well like they can do that But like I couldn't do that like there's not room for you. Yeah, there's not room for me Like I'm more supportive or I'm like, oh my friends could do that But like I couldn't do that When also like actually just like statistic like numbers wise it doesn't even make sense But like I definitely think that like other people can do it for whatever reason I'm either not deserving or just not gonna happen in my life or because I've had harder things happen They're just gonna continue to happen. They're not gonna happen other people like things like that. So, um, you know, my my answer is therapy I think that's typically is a confidence thing. Yeah, I agree Um and like self-worth thing like you have to believe that you were deserving I never go on dates slash talk to guys. I feel like I'm not doing my 20s, right? Welcome to club I don't do that either to be clear Like I don't do that either. It's just it's rough out here Okay, I don't know if you're saying like you like you don't want to be and because I think what she said was like I let him do my 20s wrong. So like if you don't want to Please don't do something you don't want to do like no matter like what you feel like is right or wrong like I feel this Well, I feel like I say this to all the time. I feel like I'm wrong We're like everyone it's like thinks it's like I'm so weird because I just don't want to but I've just done it Like and it's not how I have never do it again, but I'm like I just see how much happier I am personally Yeah, not dating someone and granted like obviously I'm not dating the right people but like I definitely feel Yeah, like that type of way like I feel like I'm like I definitely feel like I'm the weird one Yeah, yeah, I think that like it's just because of culture like dating culture with the culture It's like it's just huge right now I appreciate the off I think for a while like it was kind of taboo for girls to talk about like hook up and dating culture Yeah, and I think like take talking stuff like a lot in social media in general So I normalized it which it should be normalized But now it's kind of like meaning the direction of like If you go culture is old is the only way to do it and that's also not true or like dating Like you don't like you don't have to do anything you don't want to do And I think that like find things that you enjoy doing and like you just have to be like secure in those decisions I feel like it's self-confidence and security is just kind of like the key to like most of these things because When you feel uncertain about like the like the way you're behaving or feelings that you're having It's probably just because you're not confident in your decisions And like you if something's making you feel good like you feel good in the space that you're in Don't change that because like the like culture like because culture is telling you to do something different This is probably the one thing that I like second-guess what myself really yeah Because it's the thing that I think about the most of like am I wrong like because I don't like and I was talking Strong about this the other day it's like it's I know I don't like hook up culture because I've done it Like it's just not but like I don't dislike hook up culture as a whole I don't like it myself for my yeah But like whatever everyone else I don't care But I do feel weird like I just because I'm not really like for taking in it right right right And like that's definitely like not the normal thing But then I'm like I I always think about with myself when I'm like spiraling in this Like if a friend came to me and said this I would be like then just don't do it Who cares like I would like that's so not a big deal. Yeah at all But um, I feel that way sometimes too, but I just don't think that I don't know. I think you just have to like really do what you want to do Yeah, I think it's like a good point to say like what would you say to your friend?  The reason I know I don't like for myself because I've done it like it's not like I'm not against it at all It's not it's just like yeah, like for me. I just don't like it like I don't know Yeah, I think that's totally fair. Just like you have to be secure whenever decision you make and whatever decision you make should make you feel Happy and and I would say this is like the power that he's secure in my life Yeah, it's like not my decision, but like I just know that it's like So I made this video where I like turned on into a texan and they want me to recreate it with you But the thing is you already like country like you like a lot of things I would just have to take you I would have to do like simple life with you Like you need to go on a farm like mean or something So we'll get on to that being more confident and meeting men So this isn't something that I am that I feel and if someone send me a tip It's like I don't really oh, I think again I think all this is just like general security you have to have because like yeah when you look like I think about They're probably nervous to meet you think yeah, I would refer to tanks reverse box theory Um, it shouldn't be about you know, how do you feel about them or how do they feel about you? How do you feel about them? Yeah, that's true. Stop giving men so much power like they have enough power on this world They don't need you to give them more. That's very true. Like it's it's just not that easier to have than that also like I I'm not saying it like I I am Quick to practice But it's really have to keep reminding ourselves like we're hot shit like all of us collectively as women like We're badass is like we Like deserve to be in the positions that we're in and if you're like fully confident in that about yourself Or like at least like fake it so you make it, you know If you're not feeling that like walk into a situation where you're like Even if I don't totally believe this to be true Like I'm pretending that it is and I think like then you just kind of like you're lucky It's like it makes it easier to walk in that but that was my tips Have a deal with constant final interview rejections as a soon-to-be graduate. Oh I can't tell you guys how many interviews I've gone on in the past six months And I still don't have a job and I have a bachelor's degree. I'm fully qualified You guys it's just it's not us. It's them. It's the market. It's the job situation right now I promise it's probably not you and I would say like I'm finding peace in the fact that people around me are still You know being like you like the good things coming You know like but also you just it's really it's not you like the situations are like I can't even tell you the places I've got rejected from like It's not you postcard life is so hard in so many spaces But I think like jobs it's like it feels scary because like it's your first like Thing that's like yours in adulthood like Yeah, and so it getting rejected or like it just it's a huge huge huge ego bruise Because it's like this is your first and it's kind of like yours and then it's like no no no no no And it hurts really bad And I think it's just kind of like you just have to realize like think about how many people are graduating right now And are applying for the same job as you it's so not about you as a person or your personality or your qualifications Like it's and also like I hate to say this but like jobs right now We're like 99% of just like it's networking and people that you know And even in like I'm in spaces where I'm like I like my dad works in business So if I've gotten connects and had interviews and I'm still getting rejected and it's like so there's really like it is It's just it's such a numbers game and a lot of companies are Downsizing a lot of companies that had to take like people have to take major pay cuts Like a lot of stuff is still going on post COVID that companies are just kind of like getting their foot in again So I think that like don't take it personally and also like make sure that you're like Just like being yourself because like the the best like the thing that I like Find peace in is like if they don't like me like that just sucks. Well, it doesn't even have to be Yeah, I mean like they're lost but it doesn't have to be they don't like you like I actually think to say about that's the first thing when I think about rejection Like rejection is obviously never fun, but you think about it in the way of like let's say you are auditioning for a play All right, it doesn't matter how talented you are and how good you are Let's say they're looking for a five foot four girl with Pale skin and dark hair and you're looking for like a whatever They're looking for like a specific type to fill a specific role right not that like jobs You're looking for like appearances, but like sometimes they are looking for The most random thing that someone just fits into better and like they just fit into it like the business culture better Whatever, it doesn't mean it's really they're better or worse than you It's just like you could be not what they're looking for. It doesn't mean that you're not qualified You're not good enough none of that the other thing I will say obviously like I'm not I haven't had to apply for jobs Really like ever since graduating obviously, but as far as rejection goes There's not one thing that I have been rejected from whether it's a career opportunity um Something that I've lost business wise Something a break off like there's not one thing that has to do with rejection that I've lost that I still wish I had now Or that I ever There every single time I've been rejected there has come a moment where I'm a thank god I was rejected and I look by that now. So when I don't get something that I want in current day I just think I know that will come and it helps me So much it helps a lot of breakups too just thinking like I know one day. I'll be so grateful for this um It helps a ton how to deal with changing like there's a lot of questions about like changing faith and like navigating faith changes in Your 20 years when I feel like the first episode that we recorded for my podcast We kind of went into This about a little I think we I don't know if we so much talk I feel like we thought we went in a lot more than we did. Yeah, we didn't yeah I would say like my therapist I've talked about this a lot because I have kind of This thing where I'm like especially for me like with Christianity. I felt like I lived in such a black and white space for so long And Like I felt like if I wasn't believing everything I was believing nothing and that was because I was always told to me Which like it in fact is not like fiddledly true And so like for me, it's just kind of like what are my pillars like what are these What are the things that I like I know that I believe to be true And like I just I try to like focus on that instead of like what what do I not agree with anymore? And I think that that's like a hard thing to do But it's like okay for me It's like Jesus like that that my belief in like Jesus die when the cross hasn't changed Like that's still a pillar for me and like all identifying what I still actually believe to be true And like building my faith around that because like the reality of the situation is like Your faith is your faith like it's nobody else's faith And you kind of have to walk in it like the way that you feel the most comfortable and the most at peace And so like if there are things that like you've attached to your faith that you like no longer agree with like it Is okay to discard those like for me like there are so many like small things that I Like picked up along the way that I just don't agree with anymore And for me, I was like, okay, but if I don't believe that to be true Then like I'm not a Christian anymore and that's just not true Like don't people tell you that like you have to believe a certain thing or align with a certain belief system political party, whatever it is like your faith like is actually just your faith It is nobody else's and just like try to like focus on like what what are your core values? Like what do you believe to be true still and I feel like build your relationship with your faith around that That's not me. I think when people ask these questions too They're talking a lot more about church than they ever are about their like faith and belief systems because I think I say that too And I'm like, I don't necessarily I think my faith has been detrimentally hurt by the church the church Yeah, which like I also there's been great things that have come from that too. Look, I'm whatever I say this every single time But that's reality of most of the people that even Exist at this point if you've ever been a part of a church or anything like that. So, um I don't know like I'm talking to dog about this on Facebook Till really late last night and I think it's just like you Figuring it out on your own But for me the hardest part was taking a step back because I was so almost brainwashed into thinking I have to be asked or whatever a certain way because I know if I take a break or I take a step back But these people are going to be talking about me to these people Look, I promise you right now this video is being said around like yeah, and we say that all the time And it's like I don't look at this like bubble of like Hating anyone or hating anything or being angry or anything like that so much energy to hate Yeah, like I don't feel that way. I don't just I don't recognize really unhealthy things For me that were not good for me in an experience that I was in and having to like take a step back and heal And then eventually I'm sure I'll kind of get back on track, but like I to this whole time carefully. I have no idea where I'm at Like I'm very all over the place. I'm very like I just know I don't want to be a part of this right now Um, but I think for me the biggest the hardest part was letting myself actually change my mind and take a step back Yeah, and be like I don't know if this is exactly for me and also I feel like it was just it was really scary to be like something that I feel like I've built my life on the past Two years and but my life around and I was told I needed to do and be in whatever it was really scary To take a step back and I feel like oftentimes you talk about this all the time Like you're taught the only way to eat communities and there they like tell you this Yeah, um and like I've never had better community than I have right now And it has actually nothing to do with church. In fact, like most people that I know are probably on the same page as us So, yeah, I think it's also hard when you I said this about my Home church too like when I was younger like it's it was so hard for me to like quote unquote leave because I know How they talked about yeah, because we heard it once you're in so because I was in so deep I was in the most, you know in our most circle whatever which is a cool other issue But um you hear going to talk people like oh, they've fallen off the path or you know They've walked away from their faith the verbates they use in the way that they describe people who No longer to subscribe to their personal belief system. They like have all of the they're like ostracized and they're like Oh, well, they're not here anymore And it's like just because somebody doesn't believe what you believe to be sure anymore It doesn't mean you get to like speak about them like that But I think that's why it's so much harder to leave because you're like, I know exactly what they're saying about me Yeah, and like for me too in our podcast episode came out like I said that I know people are talking about me And I literally got feedback that that was exact someone called mix that I was going off the rails like There was so much and it was I was validated in that but also I don't care anymore because like why do you want to You know receive feedback from people that you don't agree with anymore. Yeah, their opinions should be more You don't want to be like if you're like you don't want to like live your life like them Like you shouldn't want to receive feedback positive or negative from them. Yeah, and I think like and that's hard to That's I'm not saying that it's easy like it's still person people say those things like I acknowledge that It hurts your feelings for sure But just like a reassurance for yourself is like you don't want to be like them, right?  There's two of them. And there's the best episode. They're so good Um and she was talking about like she's like listen I took a big and she also has a good answer and follow if you guys are dealing with and struggling with any of this And again, I say this like it's I when I say this stuff too. I'm like I could change my mind in a year I could remind mine in six months. I could change my mind like whatever I was listening to stuff this week that I was like maybe I can come back like you just things change, right? But she was talking about how like she took a step back from her Faith in church or whatever around my age for like two or three years And she thinks the best thing I ever did for myself and my faith. So like I don't know. I think Obviously like faith in general is a polarizing topic and it's not We could have been less polarizing with Christianity. I think like At all. I think you should just yeah like us too. I mean I think it's just too personal to like make polarizing statements in general. Yeah, I agree But it's just it is definitely a really hard thing I will say I was so terrified of making that change in my life for so long And it's crazy like I think about that all the time how I mean It's totally different space now and so much more confident and feeling so much better about my life and myself and everything about it Yeah, so I will say it does get easier Like I would say for myself. I found it to get here Same with me like I think also like you have to like Because I think for someone like I was kind of like walking their motions of things that I didn't agree with And you'll find so much freedom and being like this is actually what I want to be doing And I was just Lily was just saying this weekend each day. I am the happiest have ever been in my life I'm pursuing the things that I've wanted to pursue for so long Like I have such great friends of my relationships with people that I don't even live near have never been better Like so many aspects of my life are the best that they've ever been And like I think a lot of that has to do with like me shedding things that just like weren't serving me anymore Which could apply you can put anything anything. Yeah, you like you shouldn't be like allowing yourself to Be like crippled by beliefs or things or people that like aren't serving you anymore And like you have to be putting yourself first in those sorts of situations Like I fully believe that like I think there are so many aspects of life in which like you have to be selfish Yeah, and if you're in a a group or a setting that's telling you like oh, they're not going to understand you Or they're not going to get it or they're not like that is toxic toxic That's actually like I'm not going to go as hard to say like these things are cold at all But I am saying that is a cold mentality. Totally It's all or nothing and like we're right in there and group think and like all these things and like that is all happy So I would just keep that in mind But a lot of like I had like a lot of self-compassion throughout Oh, because it was crazy how like you could totally not agree with something But you still are beating yourself up for it. Like yes, I would never think that of someone else But all of a sudden I'm a problem and I think a lot of it goes to like you hear people talk about people Yeah, that's a huge thing like I think it was hard church is a lot of like negative talk with it That like isn't publicized obviously and the way they speak about people that are outside their walls Obviously, we're inside their walls makes you feel like insiders worse. Yeah, that's probably true I honestly wish like I I think if I ever go back I will stay Like I will keep a very big distance. That's cowboy boots that aren't too expensive Morena Lambert's line Um, yeah, you really need some you need to get to go as I need to go Oh, okay last one. This one's crazy Went on a few dates with a co-worker and then he ghosted. What do I do when I see him? I don't know what you do.  That's so mean That's actually like so disrespectful people.  I'm really sorry people Some people like Gen Z is like pro-ghosting to some degree. Yeah, people who pro-ghosting. I'm not mean not mean You guys think one day whatever but past that one day is totally on the video after one day. No, thank you Um, what do you say bro? I'm so sorry. Honestly, Jenny doesn't exist. No, I no, I don't think that I can just be totally normal Okay, because if you show that you're bothered it's yeah, yeah, that's why when you ever like, okay This is a very good like life tip.    Not me Um, so like some things have happened. Yeah, it's definitely something's happening I'll play some things some things have happened. Um, I might bring it back though. I like really was going strong And I came with a little bit of a tiktok star this week. I need a date. So yeah, I'll get back on that It's hard to talk because like for any people. All right guys, that is it. I hope you guys enjoyed today's video Please go shop the okai and let me know if you guys like this series It's really disposing here in my kitchen. These are the things that we talk about. So that's true Hope you guys enjoyed we'll have the okai linked below I'll have just a couple links below for podcasts all that I went on it today So you guys can go listen cheers Like new york is just you're there and someone's like, oh you want to hop on the pod tomorrow and it's like There's just in the city. Yeah. Yeah. Yeah stay in the flow No, I feel and then you had a recent life change.  It was really unexpected.