Managing Growth and Cash Flow in Construction – Insights from CFO Matt Robinson

Rishi Srivastava: Hello everyone, welcome to the construction CFO podcast. Our guest today is Matt Robinson from Swine Electric. Matt, welcome.

Matt Robinson: Hello, Rishi, how are you? Welcome to everybody else.

Rishi Srivastava: So Matt and I are going to go through a quick interview here. So Matt, the first question I have is regarding your background and career journey. So can you walk us through your career path? What led you to become a CFO in construction?

Matt Robinson: Yeah. So I guess I have to go all the way back to when I was in high school, you know, just talking to counselors and such like that and saying, kind of talked about what I would be interested in doing. And I was led to by a wise person to say, you ought to take accounting in high school. I’m sure if they still offer accounting in high school, but they did way back then. You know, and I took that and boy, I like this is, I really resonate with this subject.

Rishi Srivastava: Okay.

Matt Robinson: And, so that’s just where my focus was. You know, I was going to go, you know, get that accounting degree right after I got out of high school, which I did, got a, got, got an accounting degree and went into one entire busy season in public accounting. That was enough for me. I had an opportunity to go into industry. worked for a utility company as like a staff accountant.

Matt Robinson: A great experience there for a few years. After that, I went to an insurance company as like a senior accountant. And then after that, I had the opportunity to join a manufacturing and distributing company. I joined initially as their assistant controller, but I was there for 14 years and I rose through the ranks as controller and finance director, and then as their CFO. And so,

Matt Robinson: Um, that, uh, I spent about, like I said, 14 years there, and then it came along an opportunity to switch industries all together as a CFO of a construction company called Swain Electric. And that’s where I am today. That was eight years ago.

Rishi Srivastava: Hmm, very good, very good. So what are some of the differences between utility company and construction company?

Matt Robinson: The utility company was primarily focused on distributing electricity to the public. And they were actually starting to branch out into other kinds of utilities and try and dabbling into like internet and, you know, becoming an ISP and direct TV, if you remember that, that kind of stuff. But back in those days, this is like in the late 1990s, mid to late 1990s. And so.

Rishi Srivastava: Mm-hmm.

Matt Robinson: And again, it was, you know, that there was some aspect of construction. had linemen and things like that, but, the main focus was really being a service provider in the community as a construction company that happens to provide electrical contracting services. is primarily focused on the construction of electrical facilities and

Matt Robinson: Infrastructure, maintaining those things. Not necessarily to the general public. We focus not on residences. We were mostly focused on at the utility company, but we were mostly focused on industrial type of customers and clients and doing big projects.

Rishi Srivastava: Okay, so what was your first job in the construction industry? Is it your first job in construction industry?

Matt Robinson: Well, guess technically, yes, my current role would be my first job in the construction industry, unless you count when I was in high school, I worked for a landscaping company and we did some landscape installations. I guess that’s kind of construction-ish, you know, but that was more maintenance. But so anyway, so yeah, here I am. you know, there was, you know, it was a good move for me.

Rishi Srivastava: That counts.

Matt Robinson: You know, I’m kind of different thing to jump from maybe into a CFO role in the construction when I did, but coming from outside industry, but it worked out.

Rishi Srivastava: Yeah, so what has surprised you about construction?

Matt Robinson: You know, when I, when it came into the company, I think I was really surprised by the level of manual processes that are kind of inherent in construction. You know, when you think about it, construction contractors, they kind of usually start out like a tradesman says, you know what, I can go out and do this on my own. He may go himself. He might take a couple of friends. They, you know, get together and they start a.

Rishi Srivastava: Mm-hmm.

Matt Robinson: You know, company in their trade and there’s a demand for it and they’re good at it and people like it. But things like administration, accounting, those aren’t the focus of the company. The focus is always on the craft. And so, you know, after a while they said, hey, maybe we got to get quick bucks here. Maybe I’ll get my wife or my daughter or son to come in and help out with some of the paperwork and

Rishi Srivastava: Mm-hmm.

Matt Robinson: And, or maybe they go out and hire an assistant and they get some email accounts and QuickBooks and things like that. But even with all those things, that is the spoke, the focus is still the craft. They, they can grow, you know, really big, just with, with their craft. And so kind of the, administration kind of slips behind. So that, that was like, wow, there’s a lot of paper checks flying around, between.

Matt Robinson: Queen House Center customers and the adages, people are, you’re forming out in the field, they need materials, so what do they do? They write down what they need and they take a picture of it and they email it in, hey, someone wrote this for me, little things like that. But, so that was like, wow, there’s a lot of just opportunities that maybe streamline some things and automate things.

Matt Robinson: You know, another aspect, another thing that I also found surprising, maybe on the beneficial side was I find that the industry is very collaborative. I was desperate to learn about the construction industry and, you know, how to, what are the nuances? What are the things I didn’t know as a CFO?

Rishi Srivastava: Mm-hmm.

Matt Robinson: And I found that there’s a lot of opportunity to reach out. I joined an organization CFMA, Construction Financial Management Association. We have a great chapter here in Arizona. And I found that networking in that organization was really helpful. I made a lot of good connections and got a lot of help, learned a lot about how to operate in the industry. mean, to the point like a competing…

Matt Robinson: You know, electrical contractor invited me to his office. So he showed me a software that he had that he really liked. And like, wow, that doesn’t usually happen in other industries, but I was really pleased that we had that kind of collaboration and friendships and help, especially amongst PFOs and construction.

Rishi Srivastava: Yeah, yeah, I make sense. Maybe the estimating is competing hard. Yeah. How has your view of the CFO role changed since you first stepped into it?

Matt Robinson: Yep.

Matt Robinson: Great question. know, I think a lot of CFOs, or we look at it and think, you know, this is going to be just like when I was a controller, you know, we’re going to be focused on finances and taxes and my banking relationship and the auditors and cashflow and so on. And those are very important. But I think the key, probably the biggest change or my view has changed is that

Matt Robinson: The CFO really needs to be the partner of the key stakeholders in the business, trying to work with them, trying to use insight, provide strategy, remove barriers or friction that are within the business. You know, I think it’s best when everyone in the organization can, you know, work together toward a common goal, but sometimes, you know, apartments or different

Matt Robinson: People have different focuses and sometimes there’s a lot of, know, kind of maybe some headbunting or obstacles to get in the way. So I found that it was really important for me as as a CFO to have, take that opportunity to try to help build some collaboration between departments and help people see that we do have a common goal. You know, case in point, I back in my first role as a CFO with the manufacturing company and

Rishi Srivastava: Okay.

Matt Robinson: And, we had the marketing department and the operations department. they, noticed they’re really at odds with each other. You know, they had a thing called the handoff meeting where the marketing department literally like handed off. Here’s, here’s our prototype. Go mass produce this now for us. And, and it was kind of just the, the, name of the meeting and kind of indicated that there’s no collaboration here. It’s just here we’re handing this to you. got to go.

Matt Robinson: And we found like, operations team was frustrated. We can’t even make this. How are we going to do this? Is this not going to fit on the production line? Things like that. you know, took a look at that. We moved and changed that meeting. Why don’t we move that meeting up in the process where it’s the prototypes being developed. And we’ll maybe call it a feasibility meeting and get some input from both sides and try to get people talking and collaborating.

Matt Robinson: And, know, that’s, know, at least in that situation, it ended up helping a lot, helping, you know, build some bridges and some collaboration and make things flow a lot smoother. I found that, you know, I was, more of a partner with places I didn’t think I would, like the HR director and I would meet on a daily basis. There’s just a lot, you know, I find that people can talk.

Matt Robinson: I’ve got a great HR team and they talked to their HR director or staff about things that were bothering them. And that’s where you can kind of get some intel into what are the obstacles in this business? What’s causing some problems? And so by doing that, by being a partner, trying to address some things with them seemed to be something that I didn’t think I would be doing so much, meeting with the HR director every day and other department heads like that.

Rishi Srivastava: Yeah, mean, CFO is also about collaboration.

Matt Robinson: Mm-hmm.

Rishi Srivastava: Next question for you, Matt. Who had the biggest influence on your approach to leadership and financial strategy?

Matt Robinson: Great question. You know, I had the benefit of working with a lot of great CEOs and CFOs. And I think I can attribute a lot of them to teaching me quite a bit. think one thing that, maybe a couple of things that I think were really helpful. One was I worked under a CFO as a controller and the CFO encouraged me to get the

Matt Robinson: You know, hire the best people to be around you, be around the best possible, most qualified people you can. And when you think about that, why would I want to hire someone smarter than me? You know, that’s intimidating, right? and, and, you know, really that I, I, know, I did that. looked for people that were had a lot more skill in certain areas than I certainly did.

Matt Robinson: Maybe they were younger in their careers and, and, and, I would hire them, hired some great financial analysts hired a great assistant controller who had great skills and, and, and very, you know, focused on, their careers. So there’s always this kind of like sense that maybe they’re going to want to move and they, they, they move on in their careers after a while. But the, benefits that came from working with really qualified people.

Matt Robinson: Um, were, were really, really helpful, uh, to me, helped me. I learned a lot. Uh, I developed a lot. It was more of a partnership, um, than anything. And I think the other, the other, um, skill that I was taught by a great C CEO was to, to see the big picture when you’re, uh, um, managing finances, you gotta remember, you gotta both look at the 30,000 foot level.

Rishi Srivastava: huh.

Matt Robinson: But you also gotta be able to dig into the details, but you can’t get stuck in the details. You always gotta keep that eye on the goal, on the big picture and where we’re headed. And so those are some great advice that I got early on to help me in my leadership.

Rishi Srivastava: Makes sense. I remember Mark Zuckerberg was saying, I have only those people who you can work for in an alternate universe.

Matt Robinson: Yeah, so true, you know, it really is.

Rishi Srivastava: So Matt, we are on section two, cash flow and financial strategy. What is the hardest part about managing cash flow in construction today?

Matt Robinson: Sure. Yeah.

Matt Robinson: You know, I think construction by itself, the hardest thing is you’ve got this long length of time between when you first outlay your cash and when you recover it from your customer. That’s just kind of the expectation of the industry. So typically you go out and you start buying materials and you start on the job and you’re paying your laborers every week in construction for the most part.

Matt Robinson: You really only get to, you know, on big projects, you really only get to influence or invoice once every 30 days. You know, so if we started on the first, it’s the end of the month. So 30 days have gone by and now I’m, I’m invoicing and the, best terms I can get are net 30. If I get, you know, that’s typically the standard. And, but a lot of times customers are, are requesting net 45 and, and that’s 60.

Rishi Srivastava: But.

Matt Robinson: And so we’re either, by the time they pay, we have outlaid cash, we’re either 60 or 75 or 90 days in. And then in construction, we have this other thing called retention, where they typically, usually retention is 10 % of the project or the invoice. So they withhold, you’re only getting paid 90%.

Rishi Srivastava: Mm-hmm.

Matt Robinson: And when you think about that, a large project can go 12 months, 18 months, 24 months before that last 10 % is recovered. can be, you know, so that’s probably the hardest thing is just managing that cashflow. There’s a long tail on that recovery sometimes with that cash.

Rishi Srivastava: Hmm. So has that evolved in the last three or five years?

Matt Robinson: Um, yeah, I think in the last three to five, um, I’ve, I’ve seen, you know, some companies be more asking for more aggressive terms, you general contractors, we want to get, you know, going from 30 to 45 or 45 to 60. We see, we see that happening. We also see some, um, where they’re dangling out, um, incentives. Hey, we’ll pay you early. We’ll pay you at 30 days. Uh, but.

Matt Robinson: You know, with this, you know, pay system that we’re going to adopt and they’re going to take, you know, two and a half percent of the invoice. those are probably the things we’ve seen in the last few years come about. More stretch on those terms or the option of using an automated, you know, payment system to be able to bring those payments closer.

Rishi Srivastava: So what are some of those payment systems that are out there to get to an app or sync from somebody like you, a contractor to a GC? So yeah, what are some of the names of the pay systems that are out there?

Matt Robinson: I’m sorry, what are they?

Matt Robinson: I think we have, yeah, Avid Exchange. I’m trying to remember. I don’t remember all the names of them. They kind of just seem to have their options. But that Avid Exchange is one that I know of. And they’ve approached us as a contractor, too. Say, hey, maybe you can do this with your suppliers and such.

Rishi Srivastava: Okay, okay.

Rishi Srivastava: Yeah, and it’s not many people like to pay at all on the exchange of money. Yeah, so how do you approach the balance between paying subcontractors promptly and protecting your company’s cash flow? Cash position.

Matt Robinson: No, no we don’t.

Matt Robinson: Yeah, yeah. You know, I think, you know, when you look at that just financially, you’re like, boy, it would tempt you to say, hey, we’re just gonna have to stretch everybody. If we’re not gonna get paid for 30 days, we’re gonna have to, you know, push it back as far as we can. But I think when we do that, we’re ignoring the intangibles of the relationships with the subcontractors and the suppliers. And those can weigh really heavily.

Rishi Srivastava: Mm-hmm.

Matt Robinson: Especially in today’s market where, you know, labor is in short supply, sub-contractors, their labor is also in short supply. There’s a lot of demand out there. And so I think we really take the approach that we are just going to take the stance. We’re going to pay our sub-contractors and suppliers within terms. And if they offer discount terms, we’ll likely pay in discount terms, pay early.

Matt Robinson: We just feel like it’s more important to have reliable, good quality subcontractors, suppliers, material suppliers that are going to come through for you when you’re in a pinch and need their help. That has a financial cost to it if you ignore it that I think would outweigh the benefit of stretching someone a couple of weeks for pay. So we like to build strong relationships where they,

Matt Robinson: They’re confident that they’re gonna get paid by us and so they’re coming to work for us.

Rishi Srivastava: Make sense. What’s your take on pay when paid clauses? Do they actually help contractors or they create more friction?

Matt Robinson: I think, as long as everyone’s on the same page, and owners are paying on time and we’re in a good relationship, it’s, it’s, it’s good. It does say that, Hey, with, you know, the contract usually says, you know, we’re, we will pay you within seven days of getting paid by the owner. that can help us a lot, but then.

Matt Robinson: When they don’t, when you’re late on getting paid, it’s a call and they’ll say, well, their excuse is, well, we haven’t been paid by the owner. So I think it’s really important that we build in contingencies into that plan that that’s gonna happen. We’ve really got to understand the contracts. What does pay, pay if paid, pay when paid, what does that mean? But again, like,

Matt Robinson: Like we’re talking about with what we try to do with our suppliers and our subcontractors, we try to build a strong relationship with the owner, really kind of understand what’s going to happen. What’s the relationship with the owner? Are they new to town? Do they have a good reputation? been around a while. Is it someone we trust?

Rishi Srivastava: Okay.

Matt Robinson: Really, we haven’t experienced too much trouble with getting stretched too hard with these pay with paid, pay when paid clauses. They’re almost in every contract today, at least big ones. So, this has to be managed carefully.

Rishi Srivastava: I sense. So if you think about financial risk, whether it’s tied to project delays, retainage, or bonding.

Matt Robinson: Well, I think every risk, I like to try to quantify it as best as you can. So you take retainage, you can quantify that pretty easily. Here’s the cost of the contract, here’s the retainage percentage, it’s 10%. So I’m gonna be out 10%. But what I have to really clarify now is, okay, well,

Rishi Srivastava: Okay.

Matt Robinson: What does the contract say? Do I get paid retainage when I’m finished? Or do I have to wait until the landscapers put the gravel down and the project’s 100 % complete? That’s a big difference between, you know, that could be a big difference in time. And so if I understand that, okay, I’m going to get paid as soon as we’re complete, we have that written in, into the contract.

Matt Robinson: I can quantify how much that’s going to cost me. It’s now a feasible number to understand. But if I go into the contract with not knowing when that retainer is going to be paid, it can be pretty problematic. Bonding is pretty easy. If we come into the contract, there’s a requirement for a bond. Before we sign the contract, we’re already talking about the cost. We understand what that cost is.

Matt Robinson: Um, we make, you know, sometimes we work with the customer who’s, you know, can we put this into the cost of the contracts? And a lot of times it’s agreed to, um, project delays. Boy, that’s a, that is a tough one. Um, project delays, uh, kind of can be a two-edged sword. lot of, a lot of contracts and we’ve got to be real careful reading our contracts and understanding what does it say about, you know, we as the subcontractor of colleges in the project.

Matt Robinson: Delay or what does it say about the owner causing a contract or project delay or someone else? How does that all affect us? We’ve got to understand that. We look heavily or strongly at liquidated damage clauses and try to understand that. We want to make sure, hey, we’re willing to take on a risk.

Matt Robinson: And put out that we’re going to get things done on time for the things we can control. But in the last few years, especially 2021, 2022, our industry, the electrical contracting industry, we had a lot of material supply chain issues. And so those are out of our control. So we had to make sure our contracts were reflecting like, hey, in essence,

Matt Robinson: We’ll be responsible for the things we can control, if that’s a piece of this transformer you guys want, if there’s an 18 week lead time on it and you want it in 10, there’s not a lot we can do. So we try to build that in and understand the risks before we jump into it.

Rishi Srivastava: So in terms of rating these three, which one do you think is the most significant risk for less than electrical contracting in general?

Matt Robinson: Well, I think project delays are probably the biggest risk. They’re the most unknown and they can really have a lot of costs on time. know, again, like it goes both ways. we have to stop on a project because of a delay of the owner or a delay of another contractor and we demobilize and we have to remobilize and, you know, three months has gone by, that’s costly to us.

Rishi Srivastava: Mm-hmm.

Matt Robinson: We’re hitting that learning curve again, and it’s really hard to quantify what that’s gonna be. we just gotta get, we gotta make sure that we understand both from what our responsibility is and what guarantees do we have if someone delays us too. Very hard to quantify, very, very…

Rishi Srivastava: You

Rishi Srivastava: Boom.

Matt Robinson: Hard to know how much they would cost or if they’ll happen, but you got to build it in and make sure, mitigate it as much as you can in your contract.

Rishi Srivastava: Makes sense. The next section is on technology and automation. Can you walk us through the key software tools your finance and accounting team uses daily?

Matt Robinson: Okay. Yeah. You know, I, when I came to Swain Electric, the, the compliment company had already implemented a really good construction focused ERP system, which I’m grateful for. there are lots of good systems out there, for construction companies that are especially focused on that. And I think a good ERP system is, is just a really important tool that, any construction contractor should, should acquire. helps you understand.

Matt Robinson: Your projects, which ones are making money, which ones aren’t, which ones we need to pay attention to. Get your invoicing done on time. They can help you with the administration of aspects of your contracts or of your projects as well. We also utilize a lot of other maybe add-on tools. We have a time tracking tool, which I find essential when I…

Matt Robinson: When I got to the company, time tracking was, I called it Foreman’s Choice. The foreman just choose whatever he wanted to do. If he liked to write things on a piece of paper or if he liked to call it in or whatever, it was a mess. But now we have a streamlined way for everyone to record their time, their team’s time.

Rishi Srivastava: No.

Matt Robinson: Things the other way, it was prone to a lot of error and things like that. It just time delays and lot of back and forth phone calls. Same thing with regard to like order management. We’ve implemented a good order management system for acquiring materials and tools on projects. And it was kind of the same system as before, kind of Foreman’s Choice. If you like to write it on scratch paper and send it in with a driver, you like to…

Matt Robinson: Take it, it down on a two by four, take a picture of it, send it in, you know. That’s what would happen, but we worked on getting a good system to help us take care of those things, streamline them.

Rishi Srivastava: Good good. So which tools are indispensable and which ones do you tolerate?

Matt Robinson: Which ones do you tolerate? Yeah. I think any tool that, maybe it’s not so much that I tolerate it, maybe it’s the field and you’ve got to watch out for those. We went out and acquired an order management tool system that…

Matt Robinson: It took about six months to really figure it out, but our form and our field personnel were tolerating it. They didn’t like it. It wasn’t thoughtful, had a lot of just issues. so it just kind of brings to the point, sometimes we think, we’re going to solve everything with technology, but you really got to find things that are going to be useful and helpful and that people will adopt.

Rishi Srivastava: brrr

Matt Robinson: Not tolerate because after a while you get some feedback and you find, really I didn’t know it was that hard for you. I’m so sorry. But if they like it, if they find it saving them time and helping, sometimes one party, maybe the back office thinks, oh this is going to be so great for us, this is going to make our life so easy, but you’re making life harder for another group.

Rishi Srivastava: Mm-hmm. Mm-hmm.

Matt Robinson: That’s not a good implementation of technology.

Rishi Srivastava: So what’s one technology investment that paid off and one that didn’t?

Matt Robinson: Okay, yeah. Well, you know, I think going back, that example I was just using, order management. Maybe I’ll get a little bit into why it was so frustrating, but the first order management tool that we invested in found out later on that the foreman were saying, this tool is really hard for us to find material.

Matt Robinson: The search engine essentially was terrible. And what we found out was that the, the tool was built by, by a company in the East coast or some, some other region of the country, definitely not from Arizona or the West coast. And so the guys would like get into the system and they’d be looking for something that, you know, this is what we call it out here in Arizona. Well, they call it something else back East. And.

Rishi Srivastava: Hmm.

Matt Robinson: You know, that was really hard and frustrating. So we spent, you you spent a lot of time and effort trying to work through it and calling back, hey, can you guys fix this or that? But probably the biggest issue with that system was the lack of integration it had with our ERP system. And it came with, hey, that’s coming up. We’re going to get there, guys.

Rishi Srivastava: Move.

Matt Robinson: We’re working with your ERP. We’re going to be able to integrate fully with them, but it didn’t happen after a few months. it was just the technology for the back office was like, you know, this is supposed to be streamlined, but we’re having to do a of manual processes to get data from one system over the other. And so that was, you know, so that did not pay off.

Rishi Srivastava: So.

Matt Robinson: We implemented another system, competing system, and we found a lot of benefits. Key was they used a lot of metadata in their search engine so that the parts that they were trying to find were represented by every region in the North America. So it was a much better search engine. The field liked it better. And the integration with our ERP system was what we wanted.

Rishi Srivastava: So.

Matt Robinson: Was up to par and it meant that we didn’t have to do any manual exports and imports and whatnot. So that our field now had timely data when they were using the system.

Rishi Srivastava: OK, thank you. So have you started using any AI-based tools for invoice processing, forecasting, or reconciliation? Why or why not?

Matt Robinson: Yeah, well, we have a couple. The first one we implemented was a contract reading software, if you will, analyzing software, which has been really helpful, helped us really understand our contracts a lot better and help us find them. And then a few…

Matt Robinson: Let’s see, it’s been about a year Rishi. We adopted Being Human, an AP management AI software that has really revolutionized how we enter invoices. We have really enjoyed it. It’s been very helpful. It’s taken away a lot of the manual processes that we did. when we think of invoice processing, you typically think, well, it’s just, you know,

Rishi Srivastava: Good.

Matt Robinson: Key entry into your ERP system. But it goes beyond that. It’s how do those things get routed? How do they get filed? How do you retrieve them later on? And so we’ve been able to use being human to help us really save a lot of time, reduce errors, and been very helpful to us to manage our AP a lot better.

Rishi Srivastava: Thank you. What would it take for you to fully trust AI in your financial workflows?

Matt Robinson: Yeah.

Matt Robinson: So, you know, that’s a great question. AI is a, it’s an interesting thing. It’s a, almost like a buzzword for sure. The last couple of years, it’s a little bit of the wild west, if you will. So, I think the three things we look at with any technology are accuracy and security. They’re at the forefront and then.

Matt Robinson: Next is how will the technology be adopted? Just because it’s AI, just because it’s going to save someone a long time, is it really the right tech for us to be using? we always look at the cost-benefit factor. Again, just because it’s a technology and it’s going to save a lot of labor or effort in some area, is it really worth it? They come with a price tag.

Matt Robinson: And is that, is it, you know, you got to look at all aspects of the costs, you know, what am I, what am I going to be replacing? Is it just some manual labor? it, is there some important human intervention that is going to be needed, but we won’t be able to do. So we have to look at making sure the technology is going to do what we want it to do.

Rishi Srivastava: You

Matt Robinson: And it’s really gonna give us, you know, ultimately have a positive cost benefit relationship to us.

Rishi Srivastava: Yeah, it’s definitely a multifaceted decision for you. If you could wave a magic wand and build the perfect construction finance tool, what would it do?

Matt Robinson: Mm-hmm.

Matt Robinson: Oh, wonderful question. The magic wand. I what we’re always aiming for. think, you know, probably the WIP report. I remember thinking about, what could AI do with our WIP report? And for your listeners, working process is an important report in the construction industry where you’re basically looking at all your projects. And the FASB has said, hey, you guys, you accountants have to…

Matt Robinson: Record your revenue in a certain way and you’re to have to use your going to have to figure out where you’re at in your, your, your, your projects in order to recognize your revenue properly. And that report, what a pain it can be. Any, any, anyone that works with those can, can know. So, and, but I look at it I think, wow, you know, using AI and, and other technologies, we could really get into.

Matt Robinson: A lot of predictive analytics if we get the right data. If you start looking at your project and say, wow, if you could start predicting, how would weather affect the project? How would the makeup of a certain team affect the project? What about this customer? What quality of the plans that we’re getting? There’s a lot of factors that aren’t being measured right now that can go into…

Matt Robinson: That actually affect a project, but how do we quantify that? And so I think really what we’re looking for, what would the magic wand be? would be, hey, we want to capture all relevant data into a tool. And we want to be able to use that to predict. We want to, know, predictive cashflow. We want to be able to know how things are going to come about. What’s the most likely occurrence?

Matt Robinson: We wanted to help us with compliance tracking, lien management, help us get our payments done timely, help us automate requesting payments and keeping our cash flow smooth. But probably what’s most important is any tool we want it to be really intuitive and useful to all users. we’ve got, in construction, you’ve got

Matt Robinson: You know, people in the back office and maybe, you know, are used to using technology. Maybe they’re, you know, Excel gurus and, and they use the ERP every day. And then you got, you know, project managers, uh, that are, you know, kind of somewhat delve into those things. Then you got guys in the field that, uh, maybe some of them, boy, you hand them an iPad and they’re like, ah, what do I do? Um, we, we need tools that are so easy to use and intuitive.

Rishi Srivastava: Thank you.

Matt Robinson: And that provide relevant information to those parties so that they want to just use them. It’s taking all those factors in that affect projects and distributing it out amongst the masses so that they can make better decisions and keep things flowing smoothly and profitably.

Rishi Srivastava: There has to be a very strong magic wand. So the next section we have is reporting, job costing, and ops. So what’s the one report you pull every week without fail, and what are you scanning for?

Matt Robinson: Yeah. Yeah.

Matt Robinson: Okay.

Matt Robinson: Well, we have a couple of reports. I have a dashboard report, and I think a lot of companies have dashboard reports where we’re looking at high level cash, job level data, payroll, other cost data. But I also have another report that’s more distributed a little more widely. We call it, for lack of a better word, the Billing Weekly Report. And it’s really just a list of our active jobs. And it shows where they are.

Matt Robinson: In terms of their cost today, where they are on invoicing, a prediction of how far complete they are, a little bit of whip in there, I guess you could call it. But really what we’re trying to flesh out is what jobs should we be paying attention to? What should the project managers be paying attention to? What should they be invoicing on this week, maybe even looking at the…

Matt Robinson: Doing change orders and things like that. you know, that’s something that, you know, we’re trying to flush out if that report is saying we’re, you know, keep, we got to keep the cash coming in. We got to be invoicing on time. When we got that long window from, we’ve outlay the cost and when we can retrieve it. we got to, no one’s going to pay us if we don’t invoice. So that’s what that report’s used for.

Rishi Srivastava: Make sense. Yeah, long outlay. Actually long delay. So how do you ensure your project managers or field teams absolutely understand and use the financial data you give them?

Matt Robinson: Hmm. You know, simplicity is going to be the key in providing information. I learned long ago that, you know, those of us that maybe grew up in accounting, we went to school and studied it and we got jobs and we love spreadsheets and things like that. Well, guess what? Not everybody likes looking at those things. Actually, some people…

Matt Robinson: Don’t like looking at numbers at all. It’s hard for me to fathom, it’s actually in most of the population. you really, you know, so it’s really important to always remember that when we’re looking at data as maybe a financial professional, we’ve maybe seen things right away. Other people aren’t just going to see it like maybe you can’t. And so really just…

Rishi Srivastava: Mm-hmm.

Matt Robinson: Getting to the point in reporting the data. You could have someone a big long list of here’s all your jobs and here’s where your costs are and things like that, but you really got to point out, we do it via highlights and maybe just putting it, here’s a report I’m going to email to you, but in the body of the email, here’s like three bullet points. Here’s what I want you to look at. You got to recognize that you’re a recipient, maybe it’s a project manager.

Matt Robinson: Well, they have a lot of other things to do besides review your report and build their customers. They’ve got to worry about, you know, hey, the customer has like a lot of demands on me and I’ve got their schedule to worry about. I’ve got to give them this and that job hazard analysis. And I’ve got to get the guys, got to make sure I’ve got guys coming tomorrow morning and things like that. So I’ve got a lot going on besides looking at your report.

Matt Robinson: You really got to keep it simple. if you decide on the two or three things that you really need them to be actionable on and put it out there and make it very, very clear.

Rishi Srivastava: Very good advice. How do you handle cost overruns when a job starts drifting off track? What’s your process of course correction?

Matt Robinson: Yeah. So, I think the, the, the process is trying to identify potential overruns early, early on. you know, the, the way to, to mitigate that, is to, you know, take, take corrective action. Sometimes there’s an opportunity. It’s really just, you know, from, from the CFO seat, you, you might.

Matt Robinson: Be able to see, there’s something going on here. It looks like we’re heading over cost, but you may not know why. And so it’s really important to just start to have those conversations early on with the people that know project managers and encouraging the project managers to get with Foreman and what’s the cause of the overrun here. Sometimes there’s an opportunity to work with a customer and get a change order.

Rishi Srivastava: Thank you.

Matt Robinson: Those just, you got to stay on top of those. You can’t wait till the end. You can’t kind of do it on a handshake. You know, let’s get this in writing and let’s get going on it. Let’s not wait. Sometimes it’s a matter of making some corrections within the team on the project, the crew on the project. But first and foremost, let’s make sure we see it.

Rishi Srivastava: So does your ERP setup support the way your team actually works, or do you feel like you work around the system?

Matt Robinson: And address it.

Matt Robinson: Yeah. You know, ERP has some good tools that kind of come with it for both finance and operational teams, know, field teams. But, you know, the canned reports a lot of times don’t really get you the way you want it exactly. So, we do have quite a bit of work around. Now, our ERP system, they actually promote

Matt Robinson: The usage of their, of your database and doing database queries. And they actually, I think they teach about once a year, they have a three day seminar on how do you query their database? And they teach you some, you know, some useful tools. So, you know, from my perspective, like I, I’ve, I’ve learned to query the database and I don’t like

Matt Robinson: I like to look into the general ledger at times, like my team to look into the general ledger and find, you know, answers to things they’re seeing on maybe the balance sheet or the income statement. But I don’t like how the ERPs can report. So we built a database query of our general ledger account by account. And it’s just a lot easier for us to find the answers that we need there.

Matt Robinson: We can filter it the way we want. can have the information at the forefront the way we want it. And so it’s a workaround, but it’s kind of, once we built it, it’s pretty easy to use.

Rishi Srivastava: So last section we have here on that is on leadership, people and the future.

Matt Robinson: Okay.

Rishi Srivastava: What’s the most underrated skill a construction CFO needs to have and why?

Matt Robinson: You know, it’s probably one that we haven’t mentioned yet. Unfortunately, we again, we think the CFO is the guy that’s going to do the accounting and work with the bank and the CPA and audit and all that. But your CFO, the role is one that you deal with a lot of risk and probably the most underrated skill is helping the organization manage.

Matt Robinson: And mitigate risk. There’s a lot of ways that the CFO can do that. First of all, it’s just to recognize how risky a construction project really is. And it can kind of keep you up at night if you think about it. know, you know, owners probably think about it, but, you know, it’s like translating that down to the other people that maybe don’t have as big of a stake, but helping them see that.

Rishi Srivastava: So.

Matt Robinson: Boy, is, you know, we have a lot of potential risks and let’s get those out there and let’s talk about them and let’s mitigate what we can. So, you know, the CFO can help a lot with the contract, not too many construction companies of at least, know, the small and midsize level have a attorney on staff. So.

Matt Robinson: The CFO kind of by default really got us to understand the contract. That’s one way to mitigate risk. Forecasting, know, helping the business understand project timelines and other factors, understanding the cash aspects, the cash inflows and outflows and forecasting those can help to mitigate risk.

Rishi Srivastava: .

Matt Robinson: Of running out of cash or having a shortfall. And so looking at things like compliance aspects of contracts and projects and things like that and understanding what your risks are in relation to those. So anyway, so I would say being that a really good risk manager is probably an under talked about skill.

Rishi Srivastava: Hmm, so CFO is the Chief Risk Officer and Chief Legal Officer as well

Matt Robinson: Can be sometimes. It feels like that. Yep.

Rishi Srivastava: Next question is what’s the biggest misconception people have about the CFR role in construction?

Matt Robinson: You know, usually when someone hears you’re a CFO, oh, you know, again, it’s just purely, oh, you just do financial things. You do the budget. You do financial reporting, you know, things like that. What they don’t understand is, you know, that the CFO, you know, can really can help to, you know, he’s got to get really deep into the operations. He’s got to understand the business.

Matt Robinson: He’s got to understand the risks of the contracts. you know, the understanding, you know, how maybe people from the outside don’t understand how useful a CFO can be to helping project managers and project teams to be more successful on their projects by helping them to.

Matt Robinson: I spot those times when maybe a project is going over budget or maybe we’re continuing to have a problem with this customer on projects, helping get those invoicing and cash flow running smoothly. I think that’s just something that maybe we don’t often get credit for. Also a CFO can…

Matt Robinson: Can be a huge help on the culture of a company. And when I think of like, can a CFO do? And I think they can bring somewhat of an entrepreneurial spirit to the teams that are leading projects and helping them. How do they do that? They’re giving feedback to the teams. I think everyone would like to know.

Matt Robinson: How they’re doing, how do we do on that project? are we doing on the project so we can make corrections or do better? I think employees inherently want to do that and be recognized for that. I think a CFO can provide enough information down to project team level so that they can feel that pride and understand where they’re doing well and where they can improve.

Rishi Srivastava: That’s a really strategic and deep role.

Matt Robinson: Yes.

Rishi Srivastava: So this is my last question to you Matt. Looking ahead five years, how do you see the role of a construction CFO evolving?

Matt Robinson: Okay. Yeah. You know, I think probably one of the biggest things that we see right now is that a good CFO is going to have to leverage technologies and best practices that are emerging right now. And so how do you do that as a CFO? know, really, a CFO is going to have to learn what’s useful, what’s out there, what’s secure.

Matt Robinson: What’s really going to help us because your competitors, they’re going to find the best practices and the technologies that are going to help them be better and serve their customers better. And we’ve got to do that too. Now at the same time, I find that particularly in the construction industry, we’ve kind of been in a boom for quite a while. Things have been, there’s been a lot of demand.

Matt Robinson: But as we know, all economic cycles are cyclical. so there’s potentially going to be a downturn at some point. So I think at the same time, you can’t just too focused on the latest and greatest technology, you know, AI machine learning. Those things will help. But you got to, got to remember that you still got to be that risk manager. You still got to be that CFO that’s going to.

Matt Robinson: Be able to help the company get through tight times, implement policies and procedures and reporting to help identify ways to improve cashflow and ways to sustain the business through difficult times. One of the, I guess, the challenges of prosperous times is we kind of can mask problems.

Matt Robinson: Sometimes deal with them. We might have, you know, we don’t keep our teams as lean as they might be. And we, you know, that’s okay. We’ve got enough coming in. can handle all of that. So the CFO can kind of be that objective sounding board to say, hey, let’s make sure we’re prepared if things maybe slow down a bit.

Rishi Srivastava: So thank

Matt Robinson: You know, the, the, the CFO, one of the tools the CFO can use is there’s the forecast and, not just using that, you know, blue sky forecast, but, but make that, rainy day forecast, you know, the three to five year rainy day. we, are we in a position that we can survive and, and, and help out and, know, then kind of mini, you know, coming back full circle, adopting tools.

Matt Robinson: Emerging technology, AI, machine learning, they’re going to help you do that part of your job. And I think that’s what the CFO role is going to be like as we continue for the next few years.

Rishi Srivastava: That’s a great answer. Just a follow up, Matt. What will separate top performers from the rest?

Matt Robinson: You know, I think the CFOs that are willing to get out there and really dive in and learn new skills. This is an interesting environment. Today, there are so much really great opportunities with regard to technology. And I think the CFOs that will really

Matt Robinson: Or merge at the top, or the ones that are not just going to be kind of reactive and, I will adopt a proven technology, but the ones that are really for thinking and helping to develop technologies. I think it really just comes down to think about the problems that you’re having, the headaches that you have. really, I liked your question earlier, Rishi, about the magic wand. Think about that magic wand and…

Rishi Srivastava: Mm-hmm.

Matt Robinson: What would you like? you know, if you’re a, you know, an older CFO, maybe you’ve been out of school a while and it’s been a long time since you’ve had to study. Boy, what a great opportunity to get back into that and learn about AI and its capabilities and the things that will come about because of it. And you could be at the forefront of helping to develop.

Matt Robinson: Software and tools that will help your company and others around to do better.

Rishi Srivastava: Yeah, actually the early adopters, if they figure out that this and choose the right technology, they can shape it too. know, the late adopters, they’ll just have to kind of, you know, just follow the herds. So this was great talking to you, Matt. Very insightful. I really sincerely thank you for taking this time and to everyone else listening.

Matt Robinson: Yes, absolutely.

Rishi Srivastava: This is construction CFO podcast and today we had our guest Matt from Xfine Electric. Thank you, Matt.

Matt Robinson: Thank you, Rishi, and great talking to you.

Rishi Srivastava: Thank you.