From Global Finance to Fractional CFO – Lessons from Kevin Jacobs

Rishi Srivastava (00:00)
Welcome to the finance at the job site podcast today. Our guest is Kevin Jacobs from born Kevin. Welcome.

Kevin Jacobs (00:09)
Thank Thank you. It’s good to be here.

Rishi Srivastava (00:11)
Great. Kevin and I are to go through a series of interview questions. First section here is on background and career journey. Kevin, you spent over 20 years in finance across construction, steel, and manufacturing. What first drew you to this industry?

Kevin Jacobs (00:29)
Rishi, I grew up in a blue collar household. My father was a veteran of a paper mill. He worked in operations for 41 years. just growing up in that environment, seeing where, you know, someone is out there putting their hands on a process that’s actually making a product, you know, affecting the local economy, providing products to people.

I just liked that. I liked that world. and my journey to accounting is a little non-traditional. So I spent time working in both construction and in operations and manufacturing and just seeing that real world impact, you know, and just seeing how financial decisions, you know, can shape communities from infrastructure improvements to

commercial bills to industrial projects. And you know, that tangible connection between numbers and outcomes is what hooked me early and it keeps me invested in this.

Rishi Srivastava (01:30)
Yeah, people in this industry, they’re doing and making real things, real products, real impact to the economy, changing lives. ⁓ I know about the economy. Without real products, there’s not going to be any services industry. I feel like products start first.

Kevin Jacobs (01:36)
Yes.

changing lives.

Yep.

You know, it’s, know, construction and manufacturing are super interesting. And it’s as, you know, it’s almost sad as you see the country move to more service based avenues that construction and manufacturing may slip a little, but it’s good to see it coming back. tell you, it’s just, it’s nothing like seeing, you know,

Rishi Srivastava (02:05)
Mm-hmm.

Kevin Jacobs (02:13)
going out to a job site and seeing the big yellow equipment moving dirt, pouring concrete. Coming back a couple weeks later, there’s concrete or steel standing up. And then to see the skin put on that project and then to see that project come to fruition and start producing things. It’s just, it’s nice.

Rishi Srivastava (02:15)
⁓ huh.

and

Definitely looking back what lessons from your time at global companies like I send cope or GMC steel have shaped how you now approach construction finance.

Kevin Jacobs (02:45)
You know, probably the biggest lesson from that is, phrase it like, like the discipline of scale, balancing your capital structure, managing volatility, because we all know construction, manufacturing is volatile, but we all know construction can be really volatile.

And just leading through these massive capital projects and allocating resources where they needed to go at the time they needed to go. You know, those lessons learned just, you know, they translate directly to the construction industry today. know, construction finance is all about risk management, margin discipline, communicating across diverse teams, and all of that is vital to success. And those are those are lessons that I learned.

working for companies that operate on a global scale.

Rishi Srivastava (03:30)
Yeah, in a tight margin. Industry, you know not controlling for the volatility can be devastating.

Kevin Jacobs (03:37)
Absolutely, absolutely. I’ve seen it shut doors at companies.

Rishi Srivastava (03:41)
So what motivated your shift into fractional CFO with or and how does that role differ from being a full time controller or finance manager?

Kevin Jacobs (03:52)
You know, as a full-time employee of a single company, you know, that’s where all of your focus lies. So that’s probably the biggest difference is, you know, have one responsibility, you answer to one owner or one board of directors, and it’s all focused down one lane.

Which can be very rewarding. mean, that comes with its own challenges. But the experience that I gained from that, from working for global companies, for helping contractors grow and scale healthy, I wanted to just, I kind of wanted to take that experience and package it up and be able to offer help to more contractors who are in

stages of growth or they’ve reached a point where they now need to bring in someone who may be at a CFO level, but they may not quite be big enough to need a full-time CFO or they may not can quite afford a full-time CFO at this time, but they need that guidance. They need that strategic experience. And so just to be able to come in and help

multiple companies. the way I explain it to people who friends of mine that are outside of finance is basically I take away headaches. Because you know, you’ve you’ve seen it, you’ve got a contractor who’s really good at his craft. And and he’s in that five to $10 million range and things are good. But then all of a sudden, a data center comes to his area and he’s landed

several big contracts within that multi-billion dollar project. And so now he’s looking at increased bonding capacity. He’s looking at, you know, greater strains on his cashflow. He’s needing to buy equipment. He’s needing to hire and hire experienced people, both project managers and office staff. So just to be able to come in and go, hey, take a breath. We’ve got this.

Rishi Srivastava (05:32)
Mm-hmm.

Kevin Jacobs (05:52)
We’re going to come alongside you, we’re going to partner with you, and we’re going to help you get to where you want to be, where you’ve always imagined this company could go. And so just being able to share that experience across several clients is very rewarding.

Rishi Srivastava (06:06)
Yeah, I think a fractional CFO is a very interesting discipline. You have this oversight over multiple companies and you’re kind of strategically getting in when these people may not be ready for full time CFO role.

Kevin Jacobs (06:26)
That’s right. And it comes with its own unique challenges. ⁓ There has to be a certain side of you that’s a project manager because you’ve got, when that focus is singular, it’s easy to keep responsibilities lined up. But when you’ve got eight or 10 or 15 clients that are in the thick of things at that moment, and they’re all at different stages of their path,

Rishi Srivastava (06:32)
Mm-hmm.

Kevin Jacobs (06:52)
It’s, ⁓ you you have to wear a project manager’s hat more than a count should.

Rishi Srivastava (06:58)
Yeah, yeah, definitely. So you also run Prolon, your own business. How has being both an entrepreneur and a finance executive influenced the way you view financial management?

Kevin Jacobs (07:11)
We know owning your own business really expands your perspective on things. So it gives me both an owner’s perspective and an operator’s perspective. ⁓ When it’s your own business, every financial decision you make has a human impact. And that human impact is most of the time your family, your wife, your kids.

Rishi Srivastava (07:21)
Hmm.

Kevin Jacobs (07:33)
anyone, your friends, anyone associated with you that may have any kind of contribution to that company. So, you know, the balance between, you know, cash flow and sustainable growth, where that balance is between running your own company and devoting time to your family. So that all of that really, really, you know, helps me to be very, to have a

great deal of empathy for these contractors, these business owners who are in the same seat, you know, and they’re trying to, they’re trying to realize their dream. They’re trying to grow their business while at the same time, continuing to feed their families. So it’s a, it’s a tight rope balance. And I think, I think owning my own small business has helped me with that perspective to be able to partner with those other owners.

Rishi Srivastava (08:17)
you

Yeah, one thing I always think about is how should an owner of a small business approach work-life balance?

Kevin Jacobs (08:28)
that is kind of the golden question. Because as we know, owning a small business can easily eat up your entire week and not just 40 hours. mean, it’s funny when I hear people say they want to start their own business because they want more free time. But what they don’t realize is, you know, you’re about to be wearing every single hat within that business. And it’s

Rishi Srivastava (08:37)
and

Kevin Jacobs (08:48)
You’ve got the 40 hours plus the other 40 hours of the other hat you’re going to be wearing. So it’s, it’s tough. There has to be a balance because you know, it’s the plant that you water grows. So ⁓ you have to devote the time to that company to grow it. You started it for a reason, but then your family needs guidance and direction and your time too. So it’s going to be.

That’s not an easy answer. It’s going to be specific to each person’s situation. you know, my advice though is don’t neglect the family. They’re there, they’re supporting you. You know, if worse comes to worse, bring them into the business with you and let them help you, let them share in some of those headaches. And the wins.

Rishi Srivastava (09:29)
Yeah.

Bring some of them in here. You earned the CCIFP designation. Why was it important to you and how has it impacted your career and credibility in construction finance?

Kevin Jacobs (09:44)
You know, construction finance is a different animal. There are elements to it that are, while it’s still accounting and finance, there are elements that are different from say, running a manufacturing company or running a service based company. You know, the whip schedule is the first thing that comes to mind. You know, if you’re really devoted to keeping up with that job schedule, that whip schedule,

⁓ That’s a different thing right there. So just earning the CCIFP, which for those that don’t know, it’s a certified construction industry financial professional. And it was just, it was a goal of mine to get that. I believe that if you need to stay in a constant state of improving yourself because there’s no standing still, you’re moving forward or you’re moving back.

And this was a way for me to commit to excellence within my field. It gives me credibility with contractors, with banks, with bonding companies. And more importantly, it gives me access to peers and resources that are in that space so that I can go out there, find best practices, and bring them back to the clients that I serve. So it was a…

Rishi Srivastava (10:31)
Yeah.

Kevin Jacobs (10:52)
Well, know, while there’s a selfish side to it, did want to gain that certification, but I’m hoping that the benefits that I can bring to my clients far outweigh that.

Rishi Srivastava (11:02)
Yeah, and CCFPA is offered by CFMA if I’m thinking about right.

Kevin Jacobs (11:08)
That’s right. That’s right.

It is offered and administered by the CFMA and they have several options for getting it. I actually took it at the sick pack conference in Chicago a month and a half ago. So they’ll do that. They’ll do online proctoring and they’ve got several great study options too.

Rishi Srivastava (11:26)
Okay. What is Cfma?

Kevin Jacobs (11:28)
CFMA is a…

Construction Financial Management Association. It is a collection of contractors, CPAs, bonding agents, insurance agents, bankers who are all centered around and focused on the construction industry. They are there to provide training, to provide education, to bring attention to the construction industry because as we know,

It’s hard to find good people within the industry. And then also the younger people who are graduating high school are not feeding into the construction industry like we need to. We’ve got more retiring than we’ve got feeding that pipeline. So they’re out there for marketing, for advertisement, education, like I say, safety awareness.

Anything around the construction industry you can find within CFMA.

Rishi Srivastava (12:19)
Thank you. The next section is on construction finance challenges. You are known for your expertise in web reporting and US cop in construction. What do you see as the most common mistakes companies make in web management?

Kevin Jacobs (12:34)
You know, too often WIP schedules are treated as just a necessary evil instead of a true management tool. The biggest mistake I see is not using this report to its potential. The WIP schedule is actually the heartbeat of a construction company. The balance sheet, the P &L are very important. The cash flow statement is very, very important.

But the WIP schedule is the foundation for all of that. So the contracts jobs, you know, they’re the foundation of a contractor’s finances and they’re housed within that WIP schedule. And the WIP breaks down each contract’s results showing exactly which ones are winning, which ones are losing and which ones may potentially lose. So it this report will raise red flags early in a job cycle.

and it gives the contractor time to course correct and get that job back on track. The whip is a tool that drives decisions and it shouldn’t be just used as a…

I’ve got to do this to give it to my bonding company or my CPA. It should be something that is actively managed, tracked, tested for accuracy, and then used as a guide, like I said, for these jobs because it will give early red flags if there’s a problem.

Rishi Srivastava (13:53)
A follow up to that is how do you test the wip report for accuracy?

Kevin Jacobs (13:58)
Well, you, the first thing you want to do is you want to tie it back to the P and L because a good wip will have current year billings and current year cost for each job. So you’ve got that total, which should tie to the P and L. And if it doesn’t, you should be able to identify if there were small differences and if there are differences, they should be small. There shouldn’t be any large differences because

that wip should be flowing to your P &L. If it doesn’t tie to your P &L, you’ve got to dig a little bit. You’ve either got some journal entries that are going on, or maybe your ERP system, if you’re relying on that to generate the wip is not tied completely to your P &L. that’s the first thing that you need to do is tie it back to your financials to make sure that your reporting is accurate.

The next thing is to make sure that all active jobs are listed on the WIP schedule. You don’t want to, even once a job is completed, you want to leave it on that WIP schedule so that, because there are elements of a completed job that still are elements of the calculation for current year finances and for historical data.

leading back to, all right, what jobs did we do really well on? What jobs did we not? It can give guidance on what type of jobs you may want to focus in on in the future. Which ones you want to bid, which ones you might want to stay away from. But so tying it to the financials and making sure you have a complete list of jobs are the first two things you would need to do.

Rishi Srivastava (15:40)
That makes a lot of sense. Another question on that one is, so the web schedule is telling you how much of

total complete you have, right? Like it to date complete. How do you actually tie that back to the physical progress that’s happening on the job site?

Kevin Jacobs (15:56)
you know, it depends on.

It depends on the type of work and the type of contract. You know, you’ve got ⁓ lump sum contracts, got T and all the different kinds. But it also depends on the type of work. So if we’re a contractor that’s pouring concrete, we may want to focus in on cubic yards poured. If we’re the type contractor that’s supplying labor, we may focus on man hours and labor utilization. Same thing with equipment, equipment utilization.

Rishi Srivastava (16:01)
Okay.

Kevin Jacobs (16:24)
may be a driving factor in this. it comes back to the, when you estimate, we really, really emphasize that you need a job schedule, especially for larger jobs, know, smaller jobs. There is a point in there where it’s material versus immaterial, depending on job size. But for large jobs, you need a job schedule.

because usually larger jobs will involve labor materials and equipment. And so knowing that your payroll may have exceeded budget halfway through the job, but then if you can look at your job schedule and go, well, we’re 70 % ahead on labor. So we’re about to scale back. And so the next 50 % of that job labor should come in under budget. So it takes

The whip is very important. It can be used in conjunction with other tools like a job schedule to really drive into the detail and be able to keep a very, very close eye on your profitability.

Rishi Srivastava (17:25)
Thank you, that was very informational. How do you approach

conversations with project managers who may not speak finance, but whose decisions directly affect cash flow and job profitability.

Kevin Jacobs (17:39)
That’s a good question because that has been a topic of discussion in several circles lately. You know, we in our position being able to work with multiple clients who are at different phases of their company, know, different experience levels in the field versus versus the office. One of the most common

pain points that we see within that realm is just definition of terms. A project manager may say gross profit and in his head, it’s defined one way, but then within that accounting department, they say gross profit and it may be defined slightly different. So, so getting everyone on the same page with with the same terms and then speaking a common language.

You know, you don’t want to go out to a project manager and start talking about EBITDA and GAAP requirements. And my working capital is not as good as it could be because you ordered an extra bulldozer. They’re not going to care about any of that. They want to know the financial impact on their jobs. They care about labor hours and utilization. They care about equipment utilization.

⁓ They care about if there’s enough cash on this job to fund mobilization for the next job. And so, just getting on a level where everyone is speaking the same terms and those terms mean something to someone. Like I say, you can’t, you can’t talk to a project manager about EBITDA, but you can talk to him about, you know,

His labor hours are well over budget, which is causing his payroll budget to bust out the top. And he needs to know that so that he can dial back on some overtime, rearrange some people. the goal is to just get them to see finance as another tool to manage their jobs and not just someone who’s calling them or texting them on the phone, worried about a piece of paper all the time.

Rishi Srivastava (19:33)
Yeah, so guys are actually making physical things we gotta keep in mind. is supposed to help them move that piece of, you know, work along.

Kevin Jacobs (19:44)
Yep.

Yep, that is that’s correct. We are accounting and finance as a partner to the field. We’re not we’re not working against them. We’re supposed to be coming along long beside them and helping them helping them reach their goal to which is finishing that job and finishing it in a way that is profit.

Rishi Srivastava (20:00)
Fast flow is often cited as the number one challenge in construction. What strategies have you found most effective for keeping companies liquid during periods of growth or downturn?

Kevin Jacobs (20:12)
You know, saying goes, profit covers a lot of sin. And that’s the same way in a period of growth with cash flow, growth from a cash flow perspective. It’s easy to be flush with cash and go, ⁓ I need to go buy this that I’ve been wanting for some time now and wanting not needing.

It’s very easy to get pulled into that. So it takes a lot of self-discipline for these owners. And I encourage them during these times of growth to build reserves. It’s good to have that shiny new three-quarter ton truck that you’ve been wanting, but it’s also really nice to have a million dollars in cash as a reserve that can help you mobilize.

Rishi Srivastava (20:49)
in the

Kevin Jacobs (20:56)
on a bigger opportunity that may be coming down the road. So building reserves and go ahead and go to your bank. You know, evaluate your needs at the moment, evaluate what your needs will be in six months to a year, three years, five years down the road. If you need a larger bank, it’s time to go talk to them.

And I don’t recommend disassociating from your current bank, which may be a small town bank or a credit union that you’ve been doing business with since day one. Maintain that relationship, but go find a larger bank which has more options and maybe increase that line of credit. Because you don’t have to use that line of credit now, but if you need it, if your current line of credit is a quarter million dollars,

Rishi Srivastava (21:26)
Thank Thank

Kevin Jacobs (21:44)
And all of a sudden you’ve got this great opportunity and you’ve won this job and you have to mobilize and you need a million dollar line of credit. It’s too late to get it right then. You need to go ahead and think about that during the good times and go ahead and put that million dollar line of credit in place for when you do need it down the road because it’s coming. If you’re excited about growing this company and you’re good at what you do.

Rishi Srivastava (21:55)
That’s

Kevin Jacobs (22:10)
people are going to find out and you’re going to get opportunities and you need to have those tools in place. Going ahead and forming relationships with bonding agents if you don’t have them because you may not need it now but you probably will need it down the road if you’re wanting to grow your company. So during the good times, that’s some of the things that I encourage our clients to do. Now during a downturn,

You know, if you’ve got that reserve in place, that helps that larger line of credit that helps you can get into it and then just you need to be disciplined about paying it off once you’re back into the good times. But you also need to, you need to be very transparent with your banks and your bonding companies. If you’re having, if you’re struggling with cash flow, if you’re having trouble with a job that’s dragging the finances down, be open and honest with them.

I’ve heard several bonding agents talk over last three or four months. One of the biggest points of emphasis in the bonding world is trust and confidence. That’s confidence in the numbers that you’re presenting to them. It’s also confidence in are you capable of doing the job that’s in front of you. And if you will maintain that relationship and be open and honest with them, it’s reciprocated.

Rishi Srivastava (23:23)
Thanks.

Kevin Jacobs (23:27)
Other things you do is you tighten your receivable collections. You do what you can to get that cash into your doors because we can bill and receivables can grow all day. But if cash isn’t coming in the door from those bills, that’s a negative effect on cash flow. So tightening up those receivables and then controlling spend in an intelligent way. You you don’t want to starve your business.

But then you don’t want to do any spending that is not needed at the moment.

Rishi Srivastava (23:59)
Something led finance in both construction companies owned as a fractional CFO. What recurring red flags do you see in contractors financial processes?

Kevin Jacobs (24:11)
You know, probably the number one is that we see either poor job costing or we see no job costing. For whatever reason, either they’ve never learned it, they’ve never performed it, or it’s never been needed. You know, we’ve always been profitable. I’ve always had cash in the bank. Why do I need to do this extra report?

And so it’s it’s that’s that’s a red flag because like I said earlier that that whip report, you know, is the heartbeat of your finances and it it it tells you where these jobs are going. So if they’re not doing any kind of job costing, that’s a red flag. If they’re under utilizing, say an ERP system. A lot of times we see where they may be sent spending.

hundreds of thousands of dollars on this Cadillac of an ERP system. And they’re using about 10 % of it with no thought to, you know, phase two of the implementation where we begin using other modules within the ERP system. And then either they’re not doing any cashflow forecasting or again, it’s just a poor job of it. You know, they’re not going back and.

reconciling to actual to make sure that their forecasting is buttoned up and accurate and you know they’re not they’re not missing any major cash outflows. So those are those are probably three of the most common red flags that we see. Now and and one more going to us to the staffing side. We usually see and this is this can be this this can actually travel up into some of your larger

Rishi Srivastava (25:31)
Good, okay.

Kevin Jacobs (25:42)
contractors is relying too much on that one person who’s been there 10 or 15 or 20 years and has all of the knowledge of the accounting and financial processes in their head. That person, having that person is really, really good. It can help you sleep at night while they’re there. But there’s a number of things that can happen. Their family situation can change. They can have a wreck.

Rishi Srivastava (25:51)
Thank

Kevin Jacobs (26:06)
You know, they could they could just up and want to retire, move to move to the Bahamas and live life on the beach. And if all of your financial knowledge, all your process knowledge is housed in that one person, it’s hard to transfer it in a short time. So if we that’s another thing where we encourage people and we also help this because at Horn, we’re more than just a CPA firm. So we do staff development, leadership development, and we

We emphasize written processes and we also emphasize cross training so that there is no one person that is, that houses all that knowledge that you at least share it across the team. And you’re just building a stronger team. It’s you’re surrounding yourself with good people who know their job and you’ve taught them how to do their job. And it’s just, it makes it easier on that one person who usually if we see that one person, they’re usually the one that’s working.

60, 70, 80 hours a week and they’re about to burn out. So sharing that knowledge just helps them with their work-life balance and helps build a stronger team.

Rishi Srivastava (27:10)
Yeah, the key person risk. You’ve overseen ⁓ &A and financial restructuring. What unique risks or opportunities do contractors often overlook during these transactions?

Kevin Jacobs (27:24)
You know, contractors usually underestimate their culture and the processes that they may have in place. They may be really, really good at everything they do. I mean, they’re, you know, they’re going home at night. They’re doing the whip schedule. They’re doing cashflow forecasting. They’ve got the line of credit in place. They’re prepared for growth.

their operation is smooth. Their culture is fantastic. People want to work there. They take care of their employees, their employees take care of the owners. Everything is just a well-oiled machine. And contractors don’t realize, so if you don’t see the other side where processes aren’t in place and your accounting staff is working,

overtime to try to get these manual processes completed so that they can give you numbers. If you don’t see that that is out there, you don’t realize how good you have it within your own walls. So contractors usually underestimate the tools that they’ve put in place. And then they may overlook, you know, their backlog. They there’s a lot there’s a lot of value.

in a large backlog and they may overlook, they may know that it’s valuable, they may not know how valuable it is. Under Billings is another place where, because that’s, we all know that’s work that has been performed that hasn’t been billed yet. So Under Billings and even bonding capacity. I mean, if you’ve got a really great relationship with a bonding company that has bonded you up to so many tens of millions of dollars, that is an asset.

And then consolidation creates opportunities. So ⁓ contractors can, that do want to grow beyond state borders or a certain financial target, know, consolidating with another company gives you an opportunity to scale larger than you may have thought.

It can help improve systems. Maybe that other company has better systems than what you have and maybe processes. And then just combine resources. So all of that put together may open the eyes of that contractor to realize that, I have built something really good. Or with this other partner coming in, we can build something outstanding.

Rishi Srivastava (29:39)
Yeah, lots of different factors.

Kevin Jacobs (29:41)
Yes.

Rishi Srivastava (29:43)
The last section is Kevin on leadership strategy and the future. You’ve emphasized aligning financial insights with business objectives. Can you share a story where that alignment significantly improved the company’s performance?

Kevin Jacobs (30:00)
⁓ yeah. One contractor I worked with was chasing growth. He was chasing top line growth. You know, I want to be here. Never, never really getting into the details of how to scale to that. Just throwing it out there. Hey, want to be triple where I am in two years. so, you know, chasing jobs.

chasing jobs, chasing larger jobs.

but then struggling with profitability. So, you know, your top line is growing, but your margins are slipping. And so what we did was we were able to align the WIP analysis. We were able to tighten up that job schedule and align that WIP analysis with reviews with project managers. we set up week, in the beginning, was weekly meetings with project managers to review the job schedule.

Later on, got to be monthly. so we identified consistent under bidding by certain project managers and within certain trades. And then so by helping them with their estimating, giving them the tools for what the market demands for certain trades, for certain jobs, helps them adjust their bids. And so

and still won jobs. And we saw the margins turn around. We saw them come back up and they went from, you know, being just over break even to profitable within a year. So that, that, is a good example of aligning, you know, the finance, the whip analysis, the job calls with, with the business objectives of estimating and margin discipline.

Rishi Srivastava (31:19)
Thanks for watching.

Kevin Jacobs (31:38)
which we mentioned earlier, and then overall it helped the company become profitable and was able to grow like the owner wanted to.

Rishi Srivastava (31:45)
Yeah, like I was saying, the people who are building products a lot of times, they’re very good at their craft, right, these construction companies, but maybe they’re not as good at managing business and finance where someone like you, you know, can help them so much.

Kevin Jacobs (32:00)
That’s a great point. And that’s what we see a lot. You know, these contractors are, they’ve started a business because they are really, really good at their craft, like you said. And, and they get into it and, they’re out there doing it. They’re jobs and it’s picking up steam and it’s rolling and it’s going. And then all of a sudden it’s, wait, I haven’t reconciled the bank account in 12 months. Why is my banker asking me for financials? I just…

I just want to, I want to take my line of credit from 250,000 to 500,000. I pay my bills. Why? What does he need that for? So, and it’s something they’ve never been in. It’s not, I mean, they’re smart. They can understand finance. It’s just something they’ve never been exposed to or never had an interest in, but bringing someone like us in even on a short-term basis where we can, we can get processes in place.

Rishi Srivastava (32:32)
Yeah.

Kevin Jacobs (32:51)
get a set of internal financials in place and do some education for either the owner or their accounting staff on what to do and why we’re doing it. And then maybe back off and do just like a quarterly check-in or a semi-annual check-in, make sure things are still lined up good and maybe continue that training and education of the accounting team.

Rishi Srivastava (33:15)
Now, so how do you build a performing finance teams that can scale with the demands of fast growing contractors?

Kevin Jacobs (33:24)
It’s there again, it comes down to a lot of different factors and it really comes down to.

Rishi Srivastava (33:28)
Yeah.

Kevin Jacobs (33:32)
There is a certain technical skill that you have to have to be on an accounting team. But in my opinion, it’s not the number one decision maker. I can train an accounting graduate how to perform the accounts payable function, the accounts receivable function, reconcile bank accounts. What I’m looking for

Rishi Srivastava (33:37)
Okay.

Okay.

Kevin Jacobs (33:54)
is someone who’s excited about their craft, someone who has a willingness to learn, and someone who

doesn’t mind being part of a team. It’s the attitude to be part of a culture. And then I can teach you the skills that you need. it’s when first trying to build a team, it’s all about personality and attitude. Like I said, the technical skills that have to be there, but they’re not as important as the attitude. And then from there, you just continue to pour into that employee.

that team member. If they need training on on specific technology, if they need training on financial reporting, if they’re if they need to, to go to maybe a gap based financial reporting class, it’s pouring into that employee, that team member, and and giving them opportunities to grow and learn, which just pays dividends within your own internal team.

Rishi Srivastava (34:50)
Yeah, that makes complete sense.

Construction ERP adoption is notoriously bumpy. With your experience in Vista, SAP, NetSuite, and QuickBooks, what advice would you give a CFO about choosing the right systems?

Kevin Jacobs (34:58)
Thank

I would.

From the top down, the first thing I would say is fit over features. Every contractor, there are so many different software packages, ERP systems out there. Some are, there are a lot that are very, very good. There are some that are very good at certain crafts. So my first advice would be to investigate multiple systems.

ask thousands of questions because it’s the fit for your company, your team, your situation, how you do business that’s better than any features that may be out there. This software may have a hundred features, but if only two of them are what you’re looking for, that may not be the software package for you. So you start with your processes, you identify pain points, you look at

your growth plan where you want to be down the road. And then you find that ERP that supports all of those things, your processes, your pain point solves your pain points and supports your growth. You want to make sure your team is a part of the selection. They may not have the final say so, but at least get input from them because they’re the ones that are on the front lines doing that process every day, AP AR cash, and they’re going to have

specific situations that you may not think of, they have questions that they’ll ask that you may not think of. So involve them in the selection process. And then everybody budgets for the spend on the technology, but we see where that budget kind of tightens up when it comes to training. I think you need to spend as much or more on training than you do on the actual software.

You know, a brand new bulldozer is great, but if you don’t know how to crank it up, it’s just going to sit there.

Rishi Srivastava (36:47)
Yeah, training is some of these systems are very complex at the same time very capable.

Kevin Jacobs (36:52)
One software package that I’m thinking of has so many options within it, but you can. And so if you didn’t train a person well on that software, they may look at it and just be overwhelmed and check out. Whereas if you train them a little more than the tight budget you had for training, they may know that all of those options that are in there, I can customize to my workflow and just look at what I need. And so like I say that

Don’t skimp on training dollars.

Rishi Srivastava (37:22)
Yeah, Looking at technology trends, AI, predictive analytics, real time dashboards. What excites you most about the next decade of construction finance?

Kevin Jacobs (37:34)
You know, it’s pushing aside the whole Skynet Terminator side of AI. AI is very exciting. You need to jump on board and learn as much as you can. It is, I personally, now there are some jobs that it may replace, but I personally think that it is going to give current staff

some of their time back. And when I say that, I’m thinking, say like, you’ve got an AP specialist who is posting vendor invoices every day in a very manual process. And so they’re working six to eight hours a day. They’ve got a stack of invoices on their desk and they’re just punching numbers all day long. Well, you bring in an AI helper and you set that on top of their system.

and maybe it’s, maybe you get your invoices emailed and then that AI agent is scanning that email, maybe preparing the post within your software so that now that AP specialist, all she has to do or he has to do is go in and review what that software has now prepared to post and post it. This.

I see this as freeing up that person’s time to be able to analyze those posts instead of just data, pounding away at data entry just to get the job done. So now they can turn, like I said, they’re focused to analyzing these situations and find, we capturing early pay discounts that make sense to us? Are we paying vendors early that are, you know, that’s having a negative effect on our cashflow? We can use that cash.

for a couple more weeks for something more beneficial to the company. So I see AI as being very helpful down the road. I think we need to embrace it. I think it does need, we really have to put a lot of focus on the controls within AI, but while at the same time not restricting the positive benefits that it could give us. just from that perspective,

Also from the perspective of the timing of data, if a project manager and the CFO can be looking at real-time data, that’s labor, that’s equipment, that’s material, that’s everything. If they can look at real-time data, they can make decisions that can positively benefit the company that day.

instead of waiting 30 or 45 days until the financials come out, the WIP schedule is done. And then that that decision may no longer be relevant because it may have grown into a larger problem. But if you can get that information immediately, and I know immediately is a scary word, but I think we’re heading to that point where we can get information real time, accurate, and be able to make decisions that day.

Rishi Srivastava (40:27)
Great we at being human we specialize in AI AP process automation for contractors. So all the flows that you talked about for AP, know.

Invoice comes through the email, AI looks at it, humans use it. There’s no data entry. The accuracy is high. there’s sometimes human intervention, most of the time it’s just going to be streamlined flow. And it goes to the PM and makes it to the ERP.

Kevin Jacobs (40:57)
Well, you, it’s funny

I brought that subject up because you know more about it than I do.

Rishi Srivastava (41:01)
Yeah, so obviously seeing the contractors, you know who are like ⁓ four weeks behind on getting their AP in this ERP, you know they’re like now current, you know. It’s just AI just processes it through right? I mean all the friction of data entry, know bad validation UIs, know the timings and the notifications all that stuff that’s needed for streamline AP. We have built that and.

I think besides that, the time saved. So one of the few companies we’ve worked with quadrupled the AP people’s productivity. So there’s a couple of people in the office. All their job is to get the data in the system. That’s like that job’s so mundane and it’s so much waste of a real human being. Who can be looking for this early pay discount issues? The things that a real AP can eat at so much value.

Kevin Jacobs (41:33)
Yeah, that’s

I agree. And two, just the accuracy, you know, where a human that’s pounding away a data entry, 85 % accurate, that’s really good. That AI accuracy may bump that up to 95, 98, 99%. So maybe even 100%, who knows?

Rishi Srivastava (42:03)
Mm-hmm.

Yeah.

Yeah, yeah. I think this is where one big piece with the AI is user interfaces. So how does human work alongside AI? So we focus a lot on that as well in the AP. It’s not just about AI just doing things, right? We want humans to be able to, you know, supervise AI. You know. Thank you for bringing that topic, ⁓ Kevin.

Kevin Jacobs (42:22)
Let’s it.

Yeah. Yep.

You’re very welcome.

Rishi Srivastava (42:34)
⁓ The last question I have coming for you is. If you could give one piece of advice to a first time CFO. In a construction company, what would it be?

Kevin Jacobs (42:45)
You know,

As a CFO, don’t try to be the smartest person in the room. You need to be the best listener. The CFO role is to align finances with operations, to make suggestions to operations that may improve processes and to listen to operations for the challenges that they face in getting some of this information back to you.

And then working alongside them, maybe it’s a tech solution, maybe it’s a process solution, maybe it’s a people solution. But to be the best listener and…

really listen to people and see what their pain points are, what their needs are. You are, as a CFO, you’re also trying to align relationships. So you’ve got owners, you’ve got boards, you’ve got project managers and field supervisors, you’ve got bonding agents, bankers, sometimes lawyers, and to try to translate the financial story across all of those groups.

⁓ You need to listen. You need to know what each of those groups’ needs are. You need to be able to translate that financial story to what they’re asking, what their needs are. And if you can do that, you’ll earn trust and you’ll put the company on a path to grow and grow in a very profitable manner.

Rishi Srivastava (44:01)
Yes, what cost was so insightful and useful. Thank you so much, Kevin, for your time. I enjoyed this conversation.

Kevin Jacobs (44:06)
Well, thank you.

Thank you. I appreciate you having me. I enjoyed it.

Rishi Srivastava (44:10)
senior.