How Controllers Build Trust: Ben Yeh on Cash Flow, Margin Control, and Finance-Field Alignment

Rishi Srivastava (00:00)
What does full cycle accounting really look like in construction? In this episode, controller Ben Yeh breaks down how he’s cut receivables from 600,000 to near zero, built smarter cashflow forecasts, and turned finance and field teams into true partners.

Rishi Srivastava (00:15)
Welcome to Finance at the JobSite, the podcast where construction finance meets the field. I’m your host Rishi Srivastava, founder of Beiing Human. In each episode, I sit down with construction CFOs, controllers, owners, project managers, IT leaders, ERP consultants, and industry experts to uncover how they connect the back office with the field, choose and implement technology, manage cash flow, and drive profitable projects.

Whether you are running the numbers, leading the team, or designing the systems that keep projects moving, this is your place to learn what’s working, what’s broken, and what’s next in construction finance.

Rishi Srivastava (00:53)
Today our guest is Ben Yeh. Ben, welcome.

Ben Yeh (00:56)
Thanks. Thanks for having me on.

Rishi Srivastava (00:57)
Could you tell us a little bit about yourself?

Ben Yeh (00:59)
Yeah, so I am a construction accounting controller. I’ve been in this industry for the last six years. actually moving to a new role ⁓ next week. Prior to that, I was in public accounting with a large firm with some smaller firms, specializing mostly on the tax side, experience with payroll processing and sales tax, some financial statement reviews, not audit so much, but.

I’m married, a couple kids. I coach youth athletics in my downtime. Love to do DIY and home renovation type of stuff. So it’s just kind of a little broad background about me.

Rishi Srivastava (01:35)
Thank you. Section one here is on the controller’s playbook. You’ve managed everything from AIA billings to certified payrolls. What does full cycle accounting mean in a construction context and where do most teams struggle?

Ben Yeh (01:50)
Yeah. So when I use the term full cycle, I use it kind of in two contexts. And when I think about full cycle accounting, generally speaking, I am thinking about a process. so different processes have their own cycle. So accounts payable has its own cycle. Accounts receivable has its own cycle. Payroll has a cycle weekly. has a cycle quarterly. It has a cycle annually.

And so it’s, when we talk about full cycle accounting in total for the construction industry, we’re talking about all of the payroll, all of the accounts receivables, all of the accounts payables, filtering through to financial statements at month end, to managing the work in process, job cost reporting, and then following that through the year to…

Insurance audits working with the external CPA. So really it’s just about soup to nuts. It’s the entire process and the entire function of accounting and finance where I think a lot of small businesses struggle with that and and I face those same struggles is managing the day-to-day needs and priorities of what do I have to get done?

right now to make sure I’m staying on top of those transactions, the very bottom of the cycle, right? The drivers, the accounts, ⁓ entering our invoices, getting our payroll done every week, making sure invoices go out. So all those day-to-day tasks with then wanting to have a crisp and efficient close and year-end tasks that don’t take forever and making sure that all of those things are getting done.

in as efficient and timely manner as possible. And so there’s always kind of that tug of war between daily tasks and month end tasks or daily and month end and annual tasks. So it’s just a lot of prioritization and time management and depending on your team, how you’re structured, it can just kind of be a challenge. So if you’re a real lean company, small company where you only have one or two people in that department,

⁓ It’s just a relies on a lot of communication relies on a lot of planning and understanding your systems streamlining things. So we use, you know, Being Human as a great option for our AP automation. So that really helps being able to do things in a batch process that can kind of help us get caught up with things when something unexpected pops up in the middle of all those processes. So yeah.

Time management, process management, priority management is definitely a challenge and I think it’s something kind of like patience that you just work on all the time and you just try to get better all the time.

Rishi Srivastava (04:27)
At Strait Mechanical, you transitioned to a new accounting system and payroll provider. What triggered that change and what lessons did you learn leading that implementation?

Ben Yeh (04:39)
Yeah, so the system was in place initially before I came on board. it had been at least initially implemented with the idea that their previous office manager was kind of going to lead that. She had experience with the system and she’s what I would consider to be a full cycle or a full charge bookkeeper. So someone who is

not necessarily a CPA, but someone who’s really good with the debits and credits, really good with transactions, they know their stuff. This is a pro. you know, when it comes to the system specifically, the big motivation for it was some of the construction specific functionality. The big things were integrated AIA billings, so we didn’t have to manually do those outside of

QuickBooks. So schedule of values, change orders, all of those things are integrated right into the accounting system. And then they had an integrated payroll provider. We could do our certified payroll reports right out of the system. So a lot of these things that using just a very, very generic accounting software, you had these significant added manual processes.

that we were able to then over time automate and use foundation software for.

lessons learned from that I would say kind of Just to sum it up the lesson learned is there’s always another lesson and I think every time we Every time I implemented something new There was something else. I’m looking at some other way to address it and it’s like okay. I’ve completed this now. Where can I go next and

within accounting systems, there’s almost always another step. There’s almost always somewhere else you can go. that was just a really interesting component of my role over the last five years is to have that opportunity to really explore and implement new things within that system over an extended period of time. And I will say,

The value of customer service is huge. it’s just a confirmation working with our particular ERP system. They have a great user’s guide, but they also have a really, really responsive tech support team. And that made things so much easier in learning new functionalities of, hey, this is how I’m doing this right now. Is there a better way to do this in the system?

And they were always really, really willing to get on the phone with us, even and to take feedback from me as well about some of the offerings that they’ve had, about some of the integrations that they offer and where they’re going with integrations. so just a really great reminder of some of those things that, you know, there’s always a way to keep going down the road and

just a major confirmation of my own opinion of years and years and years that customer service really matters. can keep a client for a long time. Sometimes you don’t think it matters, sometimes it’s kind of the last thing you think of, but it’s really what keeps people with you is if you’re able to offer that kind of support, people are gonna continue to use your system and keep using your products.

and bring other people to you and recommend it.

Rishi Srivastava (07:48)
Yeah, yeah. You know, getting a new customer versus keeping an old customer, you know, it’s keeping an old customer is so much easier. You just dedicate yourself, you know, to them.

Ben Yeh (07:58)
Yeah. Yep.

Rishi Srivastava (08:00)
When you build SOPs for both controller and project management functions, how do you balance financial control with field flexibility?

Ben Yeh (08:10)
I would say that my, the primary response to that is I just stay out of the field. I try to look at the processes within the constraints of reality. And I’ve really enjoyed the opportunity that I’ve had to work very closely with the project management team at Strait Mechanical and really

being able to build an understanding of what is happening in the field and how we go about bidding our jobs, how we go about buying things, how we go about managing our manpower. And so I try to take that knowledge and have an understanding for reality is a certain thing. And as much as we might want to change reality to a more efficient process, sometimes we’re limited. And so

I try to keep in mind those limitations and build the processes for the project managers for things that are more directly related to the accounting and finance function and let them, I’m not the expert in project management, let them manage projects and the procedures that I’m writing for them or I’m helping them to develop are

more with regards to our technical solutions, our organizational structure, and how we’re managing files and sharing resources within the office. I would say that’s probably the guiding principle is recognize reality, and sort of stay out of the areas where you know you don’t have that control.

Rishi Srivastava (09:36)
I mean, does demand a lot of understanding and flexibility from

How do you approach forecasting cash flow when revenue, manpower, and margin targets are all moving pieces?

Ben Yeh (09:50)
I think your question answers itself in a sense that it is all moving. It really is a ⁓ very flexible situation. It’s always changing. When I first started with the company, I did not have a lot of historical data. Because the old QuickBooks information

wasn’t readily available at the office. had been done on a different system and so I didn’t really have first-person access to it. And over time, as I got into the company, as I got implemented, as I was seeing things moving,

I started sort of taking inventory of those moving pieces. It’s like, what are we taking into consideration every month? How regular are those collections? they’re not, right? So how can we do our best to use that to forecast? And that has been an ever evolving mission in the last five and a half years. And when

This probably my second year, partway through my second year, I started using a week by week cash flow forecast. And we would enter into that, just to kind of sum it up, I had all of our outstanding receivables. I kind of sorted our cash flow into a few different categories. regular payments that were all on a periodic basis, things that we knew.

our estimated accounts payables payments based on the collections we were going to have in that month or that week. Then kind of a catch-all category for our sort of debit and credit card transactions that we knew were kind of going to flex a little bit. But over time they sort of averaged out every week. And so that week-to-week approach is able to give us a pretty good window into about 60 days.

So our collections window is approximately 60 days, some of our invoices being a little quicker. And so by looking at each individual project and our collections for each individual project, I’m able to shift those collections a little bit based on, hey, we know these guys pay us a little faster. Oh, we know these guys pay us a little slower. And we’re able to get a pretty good handle on cashflow coming in and out on that 60 day basis.

And over time what we’ve done is expanded that and we’ve worked hand in hand with the project managers to try and have a better idea, you know, six months out of what are we billing next month? What are we billing the month after that? Looking then historically at how much of our revenues on a monthly basis do we

we pass back out through our subcontractors or our materials vendors, what I just call our pass through collections. And that has averaged right around 50%. And so we now have much more accurate forecasting out to say six months where we can look at our projected invoicing and we say historically about half of that is going to get paid out to our vendors.

And so the other half is kind of what we have to work with for payroll for that month, for our loan payments. And so we have at least a good ballpark for cashflow, even out to six months now. And beyond that, in all reality, beyond that, it’s so flexible in the construction industry. have projects. We have one particular project that we started, gosh, a year ago.

at this point, has effectively been on hold for a year. We were out there for two months and due to, whether it’s engineering challenges or just kind of the pace of specific tasks being done, concrete pours or some combination of that, right? Where things have been changing in the design process, we’ve literally just been on hold on this project for a year and we did not anticipate that at all.

We thought it would be two to three months. And so we have significant changes, months and months where a million dollars worth of revenue has shifted. so trying to go out past six months with any kind of accuracy at all, other than just a very, very ballpark type of, yeah, we have a good amount of work. Beyond that.

Six months is about as far as we can go with any accuracy.

Rishi Srivastava (14:05)
You know, when cashflow forecasting, I think about weather know, it’s really hard to predict weather, you know. There’s so much stuff goes into it, every factor imaginable in construction comes into play when you’re forecasting cashflow,

Ben Yeh (14:09)
Yeah.

Yeah, thankfully I think I think it’s a little bit better than the weather. I know here in Colorado they can’t get three days right. So I feel pretty good about about 60.

Rishi Srivastava (14:24)
you

Yeah

the next section here Ben is on processes and change. worked with both smaller contractors and mid-size manufacturers. do process design and systems thinking differ between those environments?

Ben Yeh (14:44)
Yeah, the biggest systems difference, I would say, between the more construction side and then the manufacturing side, we have… So on the manufacturing side, it was actually still a project-based accounting in that it was all custom manufacturing. It was not, you know, widget one, widget two, widget three, and we’re going to make a million of them every year. It was…

custom dimensions, ⁓ millwork products for different stores. So it could be the same customer, but they have two different locations that have totally different dimensions. They’re going to have different departments or they’re going to be structured totally differently. And so each store unit is ⁓ its own project. And then within that project, there are all of these individual components.

even though the project is still project-based accounting, it’s not standard cost model, are looking at manufacturing has much more inventory clearly. With construction on a smaller scale, don’t buy for inventory. The only thing we buy that isn’t being shipped basically directly for a specific job to that job site is

⁓ gloves, safety equipment sometimes, we’ll have cut proof gloves, we’ll have some hard hats, we’ll have sometimes really basic stuff like our PVC glue or things like that and that gets used up so fast that we don’t even maintain it as an inventory account. We just purchase it and it’s immediately out on job sites.

So inventory is a big piece of it. That’s probably your driving factor between the manufacturing and the contracting environment. In that particular manufacturing environment, they had station-based systems that could allocate their materials right from that CNC machine, right from their paint station.

And so there was a lot more integrated systems where transactions and inventory allocation was happening right there at that point. There was no delay in it. was a real time system. And with contractor, with the construction accounting, we’re dealing far more with invoices as they come in.

and the payroll every week. So it’s much more, I would say, of more periodic and more batch process, much less real time. And so you want to have a system that is capable of those real time transactions from the hardware that’s out there where they’re actually recording that. I’m saying, yeah, I have this sheet of this product item. It’s got to feed into that system.

Whereas for us it’s more about… It’s less about the transactions. The transactions are…

not driving the hardware, if that makes sense. It’s more of a standard transaction model where it’s a little less important to have that hardware and software in integration. Though I will say with Foundation and other ERPs, there are construction project management softwares out there that have more of a real-time

functionality to them and they integrate with Foundation. very similarly to how that machine operator is entering the material code and the job code and the quantity and they’re allocating it right there at their station. Some of these integrations in these systems do allow for that real-time time card entry, real-time

delivery receipts, so the packing slips and being able to receive those against purchase orders and receive that invoice right in the field. there are some ways and sometimes where that is actually able to be used in construction. That’s not how we’ve done it in the places I’ve been.

Rishi Srivastava (18:28)
What advice would you give to construction firms considering switching accounting systems or ERPs?

Ben Yeh (18:34)
So two things I would say that I would center on. Number one is spend the time on the research. You can make a switch at any time that you want. You can make a switch at a quarter. You can make a switch at a month. You can make a switch at the end of a year. Do the research. Set up your list, your must-haves, and try to

Really have a good understanding of what it is that you need and what it is that you want most. What is the biggest problems you’re trying to solve with your existing system before you pick a new system to go to. Take the time, do those demos, understand the product you’re moving to. And then number two is set yourself up for a clean break. Make sure that you are taking the time

to have really, really clean books that will transfer over the most efficiently that you can. So for example, cleaning out vendor numbers or customer numbers that aren’t in business anymore or that you know you’re not gonna be reusing. Why transfer over 2,000 vendors when you know that four or 500 of them are unnecessary?

Right? So do we really need to have every restaurant we’ve ever purchased from as a vendor? Or can we have a vendor called restaurant? Whereas, and then description, we put what we purchased. We put the description of, you know, what we did there. And, you know, similar for something like gas stations. Right? Do I need to have every single possible gas station, you know, name, set up, maverick?

Rishi Srivastava (20:07)
Thank you.

Ben Yeh (20:10)
on, do I have to have

all of those vendors or can I just have gas station? Especially with the amount of detail that the bank transactions have, if you really want to go look at that you can see it on the bank detail and if you’re doing any kind of importing of that bank detail it’s going to be in the transaction detail. So those are two that I’ve done over years and years and even back to my public accounting days where setting up

QuickBooks for small businesses, it’s like just call it restaurant or call it fast food. You know, have two different categories based on what you’re doing, right? know, maybe it’s fast food tends to get done when you’re on the road or restaurant maybe is for when you’re having a company event or something like that. But simplify things, clean up the system before you transfer. It’s going to make it much cleaner if you try to

clean it up afterwards, you’re running into a situation where now you’ve got kind of strange numbering process where you’ve, you now have vendor number one, vendor number five, vendor number seven, eight, nine, ten, and you’re skipping vendor numbers because you’ve deactivated a bunch and it just becomes messy. Why make a mess in the new system?

and then clean it up when you could just clean it up in the old one and your new system is just crisp and clean and organized and ready to go.

Rishi Srivastava (21:30)
Actually, I really like that vendor number example. If you clean it in the old system, you’re not going to have those gaps in the new

During your time at high country, you rebuilt the estimating tool to make bids more consistent and competitive What role should finance play in shaping pre-construction decisions?

Ben Yeh (21:50)
So I’m going to give you the standard CPA answer of it depends. So really in the end, the operations team and that can, you know, that can vary in its structure, obviously from company to company, industry to industry. They need to have processes in place to bid and execute and evaluate their performance. And so the bid process,

Rishi Srivastava (21:56)
you

Ben Yeh (22:14)
really is just the first component of that. some companies are going to have really good systems within their ops department where they already have a history of we’re evaluating every project when we get to the end of it. We have a process in place to do that. We are really actively managing projects as we go through.

⁓ against that bid. And so if you have a company that has a bid to sort of active management to end of project evaluation process, if they have a really good process there, the finance department really their role is just give them the data. Our job is to get you the data correct and on time.

Beyond that, you have a company that doesn’t have as established of a procedure, the finance team can be a really good resource to work with. Again, not dictate, not necessarily even drive it, but can drive the process, I should say. But the finance team can drive the conversation with that operations team that says, hey, your bids

don’t match up to the data that I can give you from the system. So you’re bidding it in, you’re speaking one language here, but the information that I can provide you is in a totally different language. How can we bring those together? Either by just speaking the same language to start with. So let’s get the bid process and the feedback. Let’s get them in the same language. Or do we have some sort of a Rosetta Stone process where I can, we can translate it. How do we

translate back and forth in an efficient manner. And so those things, I think even then I think that cooperation has to be driven by the C-suite. It has to be driven by ownership to say, hey, we have a mismatch in those languages and we as ownership, we see that this is a problem. Let’s get everybody on the same page.

If finance tries to drive it on their own or operations tries to drive it on their own, you don’t always have a really cooperative environment. Some companies do a much better job of it than others. Some companies have very, very separate finance team, operations team, and the only interaction is all the way somewhere at the top where everything kind of mingles together. So you have to drive that.

mesh and that cooperation from the top and really create an environment where that’s really cooperative.

Rishi Srivastava (24:38)
Make sense? Cash flow, costing, and profitability. You’ve cut aged receivables from $600,000 to under in just 45 days ENT Electric. What specific levers or communication tactics made that possible?

Ben Yeh (24:54)
So this is kind of an interesting question because the answer is something that I use a lot ⁓ both in business and in my personal life. And the answer to me is just pick up the phone. Make a phone call. Far too often today I think we get in this habit of wanting to just send an email. And if I’ve sent my email, then I’m done. Then I’ll figure it out when they reply.

And oftentimes a five or 10 minute phone call can save a week’s worth of emailing back and forth, trying to figure out what is missing, what is the process that we are short on, what step, what checkbox didn’t we check? And that really was the driver. I looked at our accounts receivables, and I said, okay, why aren’t these being paid? I’m not sure.

I understand, I know it went out. I can go back and copy it in on emails of when we sent it, when it got there. okay, well what are we missing? Call the accounts payable department for the other company. And just picking up that phone and making the phone call, talking to a real person, we figured out, hey, you guys haven’t completed these steps in our accounts payable system.

through Oracle or SAP or whatever their program is. You’re missing steps. as soon as you just pick up the phone and solve the problem, it becomes easy. And from that point on, it was, OK, hey, we’re going to get these. We’re going to go through the process. We’re going to get the checkboxes done. I’m going to follow up with the person on the other side through an email to start. And if they don’t respond to me within three days, I’m picking up the phone. And I’m calling them to say, we did all these checkboxes. We did all these steps.

Can you go in and do your end and process this all the way? yeah, the phone call, just a good old fashioned phone call really was what made that possible. And as soon as we discovered the pathway, we built our own notes and our own processes of, okay, now we have an understanding of this process and we’re gonna stick to it and we’re gonna follow up on it and we’re gonna make sure we come back to this. We’re gonna send an email. We’re gonna pick up a phone when it’s necessary.

to make sure that all of those processes and all that back and forth gets taken care of. And once we got going with that, it was just really easy to maintain. was really easy to stick to that process.

Rishi Srivastava (27:06)
do you teach project managers to think in terms of cash flow and job costing, not just budgets and schedules?

Ben Yeh (27:14)
I think it gets back to what we talked about of a cooperative environment between your finance team and your operations team. Build that relationship across those departments and as a finance team you have to learn what’s going on on the operations side. So whenever I think about accounting

And this goes all the way back to my college days because it was the easiest way for me to understand things, easiest way for me to learn accounting topics. So as you move through your really basic accounts payables and accounts payables transactions to your fixed assets, your depreciation, your lease accounting, your revenue recognition, as you continue to expand through that academic career.

What I always went back to was this is an actual transaction. This is something happening in real life. There’s economic value being exchanged here. What I’m doing as an accountant, I’m just recording it. And in the end, I want to be able to record it, categorize it correctly, report it, and then look at those numbers, look at the results to understand what was happening in real life.

and now make decisions in real life again, make actual transaction decisions, actual management decisions from the data. It’s not just about recording numbers. And so if the finance team can try and understand the real world happenings, what is actually happening week to week? What are we doing to manage that payroll or manage our manpower on this job to that job?

Do we need temp guys? Do we need welders? Do we have subcontractors? Try to have an understanding of the operations side. That’s going to be what drives your ability to communicate with operations to help them understand finance. So once you can start talking both languages, you can start merging those languages and get everyone on the same page. And that communication, that relationship building,

is the core of that. It’s the base for everything that comes after.

Rishi Srivastava (29:11)
finance and operations they definitely need to understand each other. What’s your framework for identifying margin erosion early before it shows up in the financials?

Ben Yeh (29:22)
Gotcha. So when we think about margin in the companies that I’ve worked for, most specifically with Strait Mechanical, obviously it’s the most recent, it’s what I’ve been really involved in. We have two main drivers of our costs and that is our materials and that is our labor. Those are the two things that can fluctuate on us.

once we’ve got a subcontract that’s pretty well locked in place and if we have some sort of change to the actual design or the engineering that requires change that subcontract we’re going to take care of it in a change order so it’s going to be self-contained but when we have price differences in materials or if we order something by mistake

If we have some sort of an error in our ordering process, that’s the big one on the materials side. So we had a project a while back that we had not been notified that it was American iron and steel. And so we had made an order of materials that was not qualified for that American iron and steel requirement.

And so we had to figure out, okay, what can we return? can’t we return, but we can maybe repurpose, we can send to another job site, but now we have to reorder materials. And so we knew as soon as we made that recognition, we knew there was gonna be some issues with that job. We knew we were gonna be tighter on that project. labor, you know, there’s a theme.

The theme comes back to there’s real things happening. There’s real operational things that are happening. And if you don’t have that communication, if you don’t know what’s going on, you’re not going to have that warning. Until you see it maybe a month or two down the line where, that got, OK, hey, let’s talk about this. These numbers have really kind of gone up more so than we thought. We’re now showing that we’re underbilled.

Rishi Srivastava (30:57)
Mm-hmm.

Ben Yeh (31:16)
You know, maybe we were a little bit overbilled and all of a sudden we’re $50,000 underbilled on this project. What happened? But yeah, having that communication again, it’s amazing as we go through these questions how much that continues to come up of finance having communications operations, operations making sure you are communicating with finance when something happens. And without that, it is really hard to identify that margin erosion.

you know, in real time. And I’m thinking, when I’m thinking early, I’m within that month, you know, not, rather than sort of within the year. And so really trying to be proactive and see that as it’s coming down the pipeline.

Rishi Srivastava (31:56)
Yeah, yeah, I mean that order issue that you talked about, if you’re not in touch with no easy way to see that impact in your financials So the next section here is on leadership and cross functional

As a controller consulting directly with ownership, how do you communicate complex financial realities in a way that drives operational decisions?

Ben Yeh (32:20)
Yeah, so this is something that has evolved over time as I said earlier that historical data, I didn’t really have great access to historical data and it wasn’t necessarily directly comparable once we switched over our systems. And so as we got more and more information, as I got more more comfortable in that role of what I was seeing and trends I was seeing.

it became a challenge of, I am now seeing a trend.

And just like, then just exactly what the question said, how do I communicate this trend? How do I communicate the importance of it and the impact of it? And one of the tools that I use is to

use different scenarios. And so I will model out and I’ll say, hey, this is our margin that we’re at right now. Historically, this is what our margin has been. And this is what our overhead is. And so if our target revenue is this, given our margin, given our overhead, this is what our outcome is going to be. If our target, if our revenue is this, if our revenue is this, and I can put that in sort of three different examples. And kind of a below.

of a sort of a target kind of break even and a hey we’re doing great this is awesome. Putting things in that context where these are choices we can make if we make choice A, we make choice B, we make choice C these are the different outcomes we’re going to see in terms of the financials. so when we talk about operational decisions it can be how much work are we going after?

How have we structured our office? How many project managers do we have? How many superintendents do we have in the field? How many total field employees do we have? We can look at and break down those different scenarios. And we can look at historically and look backwards, and then we can look forwards with it. One of the things we made changes for in the past was

We had been using a lot of contract labor, lot of temporary leased labor in a particular year. And I had noticed this after a couple months that it was continuing. It was something we were continuing to do. wasn’t a, we just pulled up, we pulled in six guys to help for this month. Had that conversation, said, yeah, we’re gonna need more guys. We’re gonna keep these guys on for the next three, four, five months.

being able to then talk and say, well here’s what this looks like over these six months by hiring out contract labor. Here’s the scenario if we bring that in. We’re gonna factor in, let’s factor in giving health insurance to guys after that 90 days. Let’s factor in the 401k. We’re gonna factor in all the payroll taxes. Factor in the whole labor burden. This is what it would cost us to use our own guys if we went out and hired them.

So being able to demonstrate, compare and contrast different decisions, that has been the best tool that I have to communicating with ownership. And then oftentimes with kind of the operations team in general. Is just show them those different scenarios, show them all the what ifs and be able to explain how that has an effect on the operation or how their decisions affect those what ifs.

Rishi Srivastava (35:23)
Yeah, coordinated across insurance audits, reviews, internal your philosophy on aligning all stakeholders around financial health?

Ben Yeh (35:35)
question.

That is interesting.

Let’s put it this way. The simplest way that I can think of to describe this is to identify where you are as a company and what is the most important factor to your financial position at that time. You might be at a position where you’re just getting off the ground and

I am just trying to make sure I can pay my bills at home. It’s you as a business owner and it’s three or four employees. That’s a very different, like I don’t even care what my financials say at the end of the year. I’m just trying to pay my bills. And then you can have a situation where, hey, this company is doing great. I know I’m in a good position. Performance wise, I know my margins are really good. I know my volume is really good. I’m not worried about cashflow.

I have established my cash flow health, have great lines of credit, have savings accounts, have great banking relationships, good credit score, I know if something were to happen unexpected, I’m okay. I am looking at my tax planning, I am looking at my…

you know my retirement planning, I’m looking at succession planning, how am I going to get bought out of the company in the end? So you can have this whole range of what is my most important priority when it comes to financial health. And I think identifying that is your starting point. And you know for the construction industry, especially for small companies,

Cash flow and managing cash flow, week to week, month to month, year to year, is the number one. That’s just your starting point, understanding how money is moving in, how money is moving out. Being able to manage that internally, being able to communicate that externally.

with a construction company, you may have a company that is more or less break even over two or three or five years. But you have good relationships, you have consistent work, you know, you’re never really in trouble. But it’s a situation where the cash flow management is the primary goal. And you’re still trying to get to a point where

you have cash flow handled, where you have that line of credit paid down, have a CYA fund in savings, you have X amount to cover in case something happens, and within that cash flow model, you’re still looking at a lot of the details. You’re looking at, well, are we managing our labor right? Are we managing our materials purchasing correctly? Are we making sure to ⁓

keep a leash on our overhead spending. not going out and spending on things we shouldn’t be just because we think we can. And the financial health is going to be dictated in different terms. Healthy cash flow, healthy financials, then healthy retirement, healthy succession planning, cash flow and profits such that,

in two years, know, A, B, and C, you guys are gonna buy us out and the company’s gonna finance it and you’re gonna take the, you know, I’ve done a few of these succession situations where there have been buyouts and, you know, you’re gonna take the compensation, you’re gonna pay the taxes, but we’re gonna get the money and whatnot. So, it just depends on where you are in that process as a company and where you need to focus on your financial health.

Rishi Srivastava (38:47)
What qualities do you think make a great construction controller today? Beyond the technical

Ben Yeh (38:54)
Being humble enough to know that you don’t know everything, I think is an important component.

It’s a big piece of a person being willing to be open-minded and willing to learn new things. And if you go into your role saying, I know everything there is to know about accounting and about how to do accounting in construction, there’s going to be that tension between operations and finance. We’ve kind of talked about that and

I think that is a killer for those relationships. It’s a killer for being effective. It’s a killer for stress. So to an extent, I think you have to be humble enough to go into conversations with operations and realize that I don’t get to tell them what to do. They don’t, and sometimes you do.

But sometimes they get to tell you what to do as well. And you have to be flexible enough to adapt.

and just being willing to think outside the box a little bit to problem solve. And I know in my experience, the last five years, I have learned so much about the industry from building the relationships with the project management team and with our guys even in the field.

and how they go about their days. And learning what it takes to be a good plumber, what it takes to be a good project manager, what it takes to be a good superintendent. Learning that from the project management and the operations teams is helping me to visualize things better and contextualize things better as a controller. And I would just really say to young accountants who are

Coming out of public accounting, public accounting is very, it’s a system, it’s a process, it is, there’s a way to do it, there’s a way we do it, and there’s a very good reason for that. there’s a, yeah, immensely good reason for that is because your jobs get passed off to someone new. You might have to teach an intern how to do it. You learned from someone how to do your, how to do that role with that company.

And so if you change how it’s done every year, there’s no consistency. And you want systems in place where when I hand it off to that intern, it’s been done the same way for three years. We’re going to look at things critically every year and make sure it still matters, make sure it’s still the right way. But we’re going to organize it the same way. We’re going to go through the same general process and

we’re going to have consistency from one person to the next to the next so that when I work for one manager it’s the same as when I work for another manager and when I bring on a new staff it’s going to be same as it was for the last staff. When we move out of that public accounting structure into industry and especially into small business there is much more fluidity.

And if you can be adaptive and open to that fluidity, that’s where you can succeed. And you’re gonna learn so much and you’re gonna develop so much as an accountant and as a leader when you’re open to

Rishi Srivastava (41:47)
accounting versus private accounting, they’re just completely different

Ben Yeh (41:50)
And I will say, I’ll follow up with this, I have taken a lot of what I’ve learned in public accounting and I do try to use some of that. I do try to, like my year end files, they’re organized and coded and named in a way that’s very similar to what I used in public accounting. So that when I hand off all those work papers to our external CPA, it’s already organized. So I’ve almost…

done the review of the financials before I hand it off. I’ve already done all the tie-outs. And so you will, you absolutely use all those tools and you can use all those things that you’ve learned about process and organization and structure. You’re taking, you’re just taking that next step in, being able to apply those things to something that is inherently a bit less structured.

Rishi Srivastava (42:36)
The last section here is on the future of construction finance. Where do you see the biggest opportunity for automation or AI in the controller’s workflow, especially around payables and cash management?

Ben Yeh (42:48)
So I would, I think payables is a big one. And the reason being is that it is somewhat predictable in the sense that when you have a document, they are often delivered to you in a predictable manner. Most things are delivered in a PDF form via email. They are

formatted in such a way that the terminology is similar from one company to Using the word terms, well we know what that is, it’s pretty standardized across almost every industry. We look at due date, invoice date, invoice number. Again, all of these terms are very standardized and so if you have a tool that is, that you’re trying to have do things for you.

the more similarity and the more standardization you have, the more effective that tool is going to be in being able to extract data.

I have looked at the bane of my existence in some ways has been payroll. there are so many variations and so many variables in payroll that I have not found a way to really automate that process as of right now with different rules for overtime in different cities.

For example, city and county of Boulder, if you work more than eight hours in a day, those hours past eight hours are overtime. The federal rule is 12 hours. So is my automated system going to know that from the job number that it is? Now, the job number has an address, so in theory it could be there. We could make it do that maybe.

but there’s a lot of variables that that automation system’s trying to pick up on. We have drive time, we have prevailing wage jobs. Well, when we have prevailing wage, the only hours that count are the hours that are actually on site for that job. So if I have a project manager or I guess to be superintendent, so superintendent is doing takeoffs. They’re looking at the plans.

They are putting their orders in, but they’re working from the office that day because they’re working in conjunction with the project manager. That time is not paid at prevailing wage. That’s just paid at their regular hourly time. So is that automated system going to be able to identify that? How would we program it? How would we notify it to make that recognition? When we have mileage, when we have reimbursements, when we have per diem.

per diem is based, well you can do it standardized. We happen to use the IRS per diem rates, which is done by the GSA every year and we have, it’s based on the county. We have guys that drive out to one job, they stay overnight at that job for two nights, they drive to a second job away from home, they stay there for two nights and then they drive home. Is that AI system gonna recognize that

they switched jobs. Well, there’s a different rate for the first day and last day and for the days in the middle. So how’s it going to handle that automation of well the first day they were gone for four days. It wasn’t two days and two days. It was four full days they were gone. So the first day is county number one, first day of travel, full amount. Well now they’re in county number two, full amount, county number two, last day of travel.

So is AI going to be able to recognize that when you have a time card? There are so many variables that go into that.

I don’t know for that, I just don’t know for there yet. That has been, I have thought about it, I have tried to think about it of how to get around the two options that exist. Option number one being manual entry of every time card, which is what we actually ended up settling on. Once you’re good with a 10 key, it doesn’t actually take that long. Or having the guys in the field manually enter the time card into

the electronic system. But even then it requires a lot of review and lot of revisions to make sure that some of those things like mileage, like per diem, are being done correctly. And so by the time you get through all of that review process, you’re right back to it taking as much or even longer time than just manually entering the time cards where you’re able to review it and revise it and make sure it’s entered correctly the first time. So I think the big opportunity

right now is with the more standardized processes. Whether that’s with bank downloads, whether that’s with accounts payables, where you have somewhat standardized terms and formats. The big challenge down the road is going to be for payroll and for other things that are just highly variable that have just so many considerations and are subject to

regulation, lot of regulatory issues with payroll and how is the AI going to handle all of those different regulatory things, regulatory requirements for all sorts of different jurisdictions. Yeah, it’s definitely a tough ask for it right now.

Rishi Srivastava (47:35)
What is your thought on foundation’s payroll for construction? ⁓

Ben Yeh (47:39)
I think it’s actually a, if you’re using foundation for your ERP, I see no reason why you wouldn’t use payroll for construction. is, it is a direct integration with the ERP system. so they, the, the pro, if you’re going to do your job costing, your labor costing and enter your cost codes and enter your hours into the system anyways, you might as well use

their processing. And what I can say about that is again, their customer service is awesome. Their customer service is absolutely fantastic. Anytime we’ve had an issue, it’s taken care of. It is not a problem. Wonderful, wonderful customer service. They do all of our quarterlies. They do all of our annual reporting. They will help you get everything set up in terms of your, your Suda taxes, your, your workers comp rates.

that you can program all of that right into the system. So it’s so streamlined. And for us, we had been using one of the major third-party payroll providers. We were able to go from a biweekly payroll to a weekly payroll. And with that transition, we saved like 40 % in terms of our processing cost. The only thing that really was a difference was

we changed our 401k custodian to a company where our 401k had been integrated with our third party payroll. But even when we did that, our management costs for the 401k went down as well. So we tripled up. It was a triple whammy. We saved money on processing payroll. We saved money on our custodial fees. And we saved time because we didn’t have to duplicate.

entering payroll in both systems. it’s just been really great and again you want to get down to a real deciding factor it’s the customer service. They’ve just been really really fantastic with that.

Rishi Srivastava (49:23)
The last question If you were to advise a young accountant entering construction finance today, what mindset or skill would you tell them to develop first?

Ben Yeh (49:34)
into construction accounting. Okay, so I’m gonna kind of make the assumption that this is someone who’s coming in as

Probably a…

an assistant controller or a staff or senior accountant type of a level, just kind of depending how big the company is, right? And the mindset is…

Go learn something new. Every day. Just be willing to learn. Be willing to listen. And…

The other component of it is when you make that jump to industry from public accounting, I highly recommend that the industry you make a jump into is an industry that you have some sort of inherent interest in or an appreciation for. So for me, I don’t have a passion for like tech stuff necessarily.

a company that designs software isn’t, I think it’s cool, I think it’s interesting, but it’s not necessarily where I have an inherent interest. Whereas I’ve always been, before I went to accounting, I actually wanted to be an engineer. And so I was a Lego kid, always building things, drawing things, I took computer aided design classes in high school, and I actually started in mechanical engineering.

before I switched over to accounting. so construction and manufacturing and that side of technology and production, that has an inherent interest to me. think it’s, I do home renovation type construction. So I’m building things in the real world. And so going into an environment that I’m inherently interested in, I can be more invested in that.

⁓ from just a sort of a mental focus perspective, from an interest perspective, from an enjoyment perspective. And if you can be there, if you can have that level of investment, it’s going to make your day-to-day work so much more meaningful, so much more enjoyable, and you’re going to want to learn. So find an industry that you’re interested in, that you really have a passion for.

because it’s going to help with that openness. It’s gonna help with that desire to learn and understand what’s happening in real life, which then feeds right back into what I had said ⁓ earlier in this interview where accounting isn’t just about, it’s not being counting, it’s not just numbers. It’s something real is happening in the real world, transactions, events.

economic value is changing hands and we need to be able to account for that and report that and put it into a context that matters, that is clear so that at the end of the day we can take that back and say hey this is what actually happened and this is what we need to do moving forward. These are real decisions and actions we need to take moving forward. So that would be my advice.

Rishi Srivastava (52:30)
I love

There’s so many great points in there. Ben, had a fantastic time sharing with you. Thank you for coming out to the show.

Ben Yeh (52:37)
Thanks for inviting me and Rishu we’ve had great conversations in the past and this one as well. So just appreciate you very much and everything you’ve done with us in the past too.

Rishi Srivastava (52:46)
Thanks for listening to Finance at the Job site. If you found today’s conversation valuable, share it with a teammate and subscribe so you don’t miss the next episode. You can listen on Apple podcasts or Spotify or watch on YouTube. Just search Finance at the Job site. Until next time, here is to building smarter, faster, and more profitable projects.