From CPA to Construction CFO: Melissa Dick on Accurate Financials and Real-World Systems

Rishi Srivastava (00:00)
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 (00:37)
Today, our guest is Melissa Dick. Melissa, welcome.

Melissa (00:40)
Thanks, Ritchie, it’s great to be here.

Rishi Srivastava (00:42)
The theme of the podcast is accurate financials and systems to enable decision making. First section here, Melissa, is on your career and background. Can you share your journey from mechanical contractor COO slash CFO to co-founding Atlas CFO?

Melissa (01:00)
You bet. I’ll actually start a little bit before the mechanical contractor time. Shane and I, my husband and I are both CPAs and we had separate careers. I was in public accounting, he was in private accounting and we had our first son and we said, we want to do something different. So we went to work and became part owners of a construction company that was one of my clients. It was a mechanical contractor.

We loved it. It was so much fun. It was so much work. I think that we did not expect the amount of work and how hard it would be to be running a contractor. And while we were at the contractor, we would get a lot of phone calls and say, Hey, can you come and help me over the weekend and help me fix up my books or help me answer this questions or

help me with this buy sell that we’re going through. And so we found ourselves working all day and then working on the weekends and just thought, maybe this is a business. So once the mechanical contractor was stable and ready and good, we decided to expand and try this. So we’ve been doing it for almost 15 years and our mechanical contractor is still a client.

Rishi Srivastava (02:12)
That’s fantastic. Small business owners, are the backbone of America.

Melissa (02:17)
Absolutely.

Rishi Srivastava (02:18)
What unique perspective did running a contracting business give you that most CPAs don’t have?

Melissa (02:24)
I have a very unique perspective because I was a CPA in public practice focusing on construction companies. So my niche was construction. We were the third largest niche. And so I spent all of my time talking to contractors, working on contractors books, helping with audits. the humility comes in here whenever we were going to go work for the mechanical contractor.

they were a client so I felt like I know them really well and I did. I had no understanding of how hard it was going to be or how little I actually knew. I found that it was way more complex. There are so many transactions and the transactions are all very time consuming because you have so many inputs and construction accounting. All the pieces of software, how complex the jobs are and getting a job put in place and up and running. I was just

shocked at what actually moved profitability needle. And that experience being a CPA and then coming into a construction company just gave me a whole new appreciation for the clients that I had had. And also recognizing that there was so much more going on than what I could ever see as an outside accountant coming in only looking at historical records, only looking at kind of the

finished product of the financial statements and not seeing all of the parts that went into it. So that experience of being kind of an outsider and then being an insider just gave me so much more empathy and compassion for all of our contractors and what they live through in a daily life.

Rishi Srivastava (04:05)
Yeah, I think when you’re looking at just the statements, that is just finished product. There’s a lot has happened before you got to that point. And a lot of times the statements.

Melissa (04:11)
Yes. Yes.

Rishi Srivastava (04:18)
I mean, maybe they’re right, maybe they’re not right. Who knows? You know, what is your experience on that?

Melissa (04:21)
Okay.

Very good point. Sometimes the financial statements don’t represent the true profitability and accomplishment of the company. And so it’s actually more of a marriage of how are you really doing? How are your jobs doing? How are your crews doing? And then wanting to see that as a reflection in the financial statements. So the financial statements shouldn’t be surprise. They should be something that feels very

very part of the organization, this is how we perform. I tell a lot of our controllers that the financial statements are more like a report card of how you’re doing and you want it to be reflective of the work that you’ve put in.

Rishi Srivastava (05:03)
Definitely. What’s the single biggest mistake you see contractors make with their accounting process?

Melissa (05:09)
yeah, this was a, this was an interesting question because I found myself kind of going in a couple of different directions, but I would say, and this might be surprising. I would say the single biggest mistake that a lot of contractors make is focusing too much on end of year income taxes. That is kind of a snapshot in time and everything that we do day to day is going to get to that result, but it’s not the

end-all, be-all result that we’re really looking for as a contractor. I had an old boss, I actually just talked to him yesterday, he’s been such a great mentor to me, and he said that you wanna make good business decisions and then taxes take care of themselves. What a great message because whenever we overstress about the single income tax event, we can miss some things in our business.

We can miss some cash flow effect. We can miss some profitability. so allowing ourselves to acknowledge, yes, that is part of running a business is income tax. But actually it’s kind of a small part of the business. If I had to kind of take a step away from taxes and just talk about the accounting process, I would say that the biggest challenge is that sometimes we want to skip steps and

I know that I’ve shared with you Rishi that we operate within a framework. So our framework is that we have transactions, that we have reconciliations, we have financial statements and then strategy and projections. One of the things that happens is that we think we can skip. Like, well, we got the transactions in, surely we can now do a strategy discussion about how we’re doing. Well, we really need those middle steps. And so I think that just

recognizing that we have to have all four building blocks in order to get some really good financial data that then you can use for taxes. But you really don’t want to skip ahead or skip a step because you could be using information that is inaccurate, not timely, sometimes just wrong. So recognize where you are in that process. because each of those four

pieces of the framework are different. They are many times done by different people. So you don’t want to kind of mix and match. You want to get the right skill set for the right type of work.

Rishi Srivastava (07:27)
Yeah, when I looked at your framework, you know, it just made immediate sense to me. was like, why was I never told this, you know, like those four steps, you know.

Melissa (07:38)
It took me a while too. I’m going to be honest. took me a while. It was actually kind of a, was, think it was January 1st. I woke up in the morning and I said, this is why it’s hard. It’s hard because we try to skip steps. And this is true for me too. And recognizing how important it is to get all of those four layers in place allows for the company to have visibility, allows for some

Rishi Srivastava (07:48)
No,

Melissa (08:06)
confidence to be built and also allows for what I just call like an overall bringing down the stress level because you can recognize where you are in the process you know what to do next and it gives you that framework to move forward without overwhelm

Rishi Srivastava (08:22)
The next section here is on transactions and reconciliations. You emphasize transactions first. Why is that such a critical step?

Melissa (08:31)
Yes.

Transactions is anything that relates to getting information into the accounting software. So think about accounts payable, accounts receivable, job costing, payroll, all of those items go into the software and they really become the foundation for everything else. So let’s just say that you’ve put in some accounts payable and so you’ve got your cost going into your jobs, but it’s wrong. It’s in the wrong job.

It’s in the wrong cost code. It’s not the right vendor. Anything can be wrong. So whenever that goes in wrong, it affects your job cost. And when job cost is wrong, it affects your WIP. And when your WIP is wrong, it affects your percent complete. And when your percent complete is wrong, it can affect your financial statements, making them show that you’re making more or less money than you actually are. What we learned is when we can have the

process for getting transactions in the software in a timely and accurate basis that it allows us to get financial reporting, strategy projections, analytics, all the things that our owners crave. We can get it done because we’ve got this focus on getting transactions entered timely and accurate so that we can do the rest of our work. One of the things that we’ve learned about transactions and this is so hard in

in the construction industry, we have to be done posting for a month. So it’s October right now. And so everyone is doing September financials quarter and financials. In order for them to do that, they have to be done posting all of the transactions into September. If we start back posting, we did our WIP, everything’s done. We’ve issued financial statements and then hot off the press. Here comes an invoice for September.

If we post it back to September, we’ve undone all of our work. So what we need to do is say, oops, gosh, that’s too bad that that invoice came in and it’s September. It’s gonna have to go in October. Otherwise, we’re gonna have to rework all of our financial statements. And that’s just not worth it.

Rishi Srivastava (10:38)
Yeah, and that makes so much sense, you know. The quality of data is so important. The timeliness and accuracy both.

How do you recommend contractors handle the bottleneck of getting AP, AR, payroll and job costing transactions into their system on time?

Melissa (10:57)
It is a challenge because getting transactions into the software is actually time consuming. In regular, what I call like regular old accounting, we may have four inputs to get a transaction into the software. In construction accounting, we can have up to 11 inputs just to get a single transaction into the construction accounting software. That means that it’s going to take longer to get that single transaction into the software.

it’s going to have a lot of opportunity to have something that’s inaccurate because we have so many different inputs. Whenever we think about getting those transactions in we want to get somebody that is I like to call them a specialist. They like they thrive in this they are this is their space and nothing makes them happier and I know this sounds crazy, but there are people like this and I love them. You know back in the day they would get a stack of paper that they needed to get into the software and that was that was

They loved it. They loved it. And so you had the right person doing the right job. Fast forward to today. Today we have a lot of different tools that we can use that we don’t have to be reliant upon somebody spending their time doing the data entry. Instead, can spend have somebody spending the time using their brain, making sure that what’s going into the software is accurate. And because we have tools available to help us get

transactions in the software, we also can then decrease the time that it takes. So this just elevates the entire staff. I am a big fan of finding the tools and the tricks and the outsourcing to make sure that we can get those transactions in an accurate and timely basis. It doesn’t do us a whole lot of good if we are still entering September’s transactions in December. That information was really needed.

several months before. so anything that we can do to make it streamlined and easy and effective is going to make that so much better. The second part of this, again, I’m giving you kind of some weird ones here, but what we’ve learned is that accounting follows a calendar. Accounting follows the same calendar kind of almost like on a daily weekly basis. And I’m to give you an example.

Let’s say that you are going to enter a bunch of accounts payable invoices and then you need someone to approve them so that they go into the right job. And then let’s say your check date is always on Friday. So on Friday you cut checks. In that case, you would need all your invoices in on Wednesday so that they could be approved. Somebody could select for payment and we pay on Friday. What we’ve learned is that the only people that know that we pay on Friday is accounting. Everyone else in the organization thinks that we like write checks every day.

And so if you communicate the calendar, if you build a calendar and then communicate the calendar and then honor the calendar, you can get the transactions and all of your work done much better because everyone starts helping. If everyone knows that you’re cutting checks on Friday, they want to help. They will try to get you information so that you will be ready on Friday and they don’t bring the emergency item in, you know.

Rishi Srivastava (13:35)
made.

Melissa (14:01)
Friday at four after you’re already done with the process. So creating a calendar, sharing the calendar of how we work in accounting, and then really doing our best to honor that calendar really makes a difference.

Rishi Srivastava (14:13)
Yeah, high level expectation and calendar sharing is so amazing that you’re saying this stuff. know, it seems obvious after the fact, you know, when you say it, seems obvious.

Melissa (14:23)
Well, and we’ve learned that our operations team, they’re actually trying to help accounting. So whenever they bring you the invoice at Friday at four, they’re trying to help. They weren’t doing this to do anything other than they thought that this is what you wanted. And so they just needed to know, actually I needed that Thursday. And guess what? They bring it on Thursday. It’s just wonderful to work together.

Rishi Srivastava (14:44)
Yeah. What are some of the most common reconciliation errors you see in construction accounting and how do you fix them?

Melissa (14:52)
There are a couple of common ones that we see and it really depends on kind of which area that you’re looking at. So one of the first ones, and I mentioned this before, so I’ll cover it quickly, is not establishing a cutoff for the month so that you are done posting for the month. That can create a lot of reconciliation problems because you don’t have all the transactions in or you keep moving your finish line. The biggest, the biggest,

problem that we have is of course the work in progress report. I’m sure we’re going to talk a little bit more about the work in progress report, but the work in progress report is so incredibly important to getting accurate financial statements and not having a WIP report or not having a WIP report where you have input from operations and making sure that it reconciles is a huge reconciliation challenge.

and it just bleeds into the financial statements and then it bleeds into doing any kind of analytical work or any type of projection work. So it’s just a critical item.

Rishi Srivastava (15:52)
The next question is on actually a WIP So can you walk us through your process for building a reliable WIP report?

Melissa (15:54)
Is it?

The first time I did a WIP report, was in my early 20s. ⁓ I know where I was, I know what I was wearing, and I was crying. ⁓ I am not a crier, but that ought to tell you how people feel about the WIP. I won’t say that I’m the sharpest spoon, but I thought, I I could pass that CPA exam, and here I am with this WIP report crying. ⁓ I phoned a friend, and she came out and helped me.

Rishi Srivastava (16:03)
Mm-hmm.

Thank you.

Yeah, yeah.

Melissa (16:25)
Since that date, I have trained anybody that’ll listen to me about the WIP I’ve trained bankers, sureties, obviously other accountants, business owners, because it’s just such a critical part of the construction accounting financials. So I will make it super simple. There are four input columns. Those four input columns are the contract, estimated cost, billings to date, job cost to date. Everything else on the schedule is math.

So if you get these four inputs correct, then you are well on your way to building a reliable and accurate WIP. So the job cost and the billings come straight from our accounting software. They should always tie to our accounting software as of the date that we’re doing the WIP. The hard ones are the contract and estimated cost. And most of the time accountants don’t know what that job is going to finish like because

we don’t really know what’s happening on the job. That’s where we get the input from our project managers, estimators, owners, sometimes the people in the field, where they can tell us how the job is going to finish to the best of their ability as of the date that we ask. We know that the estimate is going to change tomorrow, but if we can get their best estimate as of the day that we ask, then we can get an accurate WIP

Rishi Srivastava (17:41)
That was such a great answer. I’m learning actually so much from you.

Melissa (17:45)
Well, I’ve been doing this a long time, Rishi. I’ve got the gray hair to go with it.

Rishi Srivastava (17:51)
The next section is on timely financial statements. What systems or processes make the biggest difference in achieving timely financials?

Melissa (18:01)
Number one is a great attitude. I guess sometimes as accountants, you’re so worked up in getting the transactions done and even the reconciliation send that just building the financial statements and making sure they’re accurate just feels like kind of like one more step in the long line of things that you need to do in a day. But it’s just such an important and critical step. So I would say number one, have a great attitude.

Rishi Srivastava (18:03)
Hehehehe

Melissa (18:26)
We’re so lucky to be in accounting. We’re not saving lives, we’re saving PDFs. And so we can have this great attitude about the joy that we have in being able to do what we do and not have to worry about whether somebody’s life is in danger. Nobody dies in accounting. My sister and my dad are both physicians and we talk about, I talk about how lucky I am to be in accounting.

and that’s just where I belong. I would say that you need to treat month end like a job. Not just getting the transactions in, but treat month end and financial statements like the most important part of your job because that’s the report card. That is how you’re going to show off all your hard work. It’s going to be how you are going to represent the company and it gives you the opportunity to create these reports that show exactly how the company is operating, performing.

and is reflective of that true performance. So it’s this wonderful opportunity to just take everything that is happening when the organization and boil it down to just a couple of reports that are meaningful for not only internal but also external partners.

Rishi Srivastava (19:33)
So in terms of systems or processes, any particular ones that come into your mind?

Melissa (19:39)
Always have a month in checklist. ⁓ I I’ve closed the books for one company for like 20 years. So you think I should know it. I’m amazed at how much faster I use I go through a month end whenever I have a checklist that I can follow because I put the checklist in the most efficient order and I just go down the list and and that includes maybe some some unique items where I put producing the WIP

Rishi Srivastava (19:41)
You

Melissa (20:06)
as one of the top things I do at the beginning of the month because I want to see if there’s any problems with it. So I’ll actually run the WIP report early before I run the final version of the WIP. It makes month end financial statements go a lot faster. As far as tech or adding anything like that, what has worked best for us is

Rishi Srivastava (20:23)
Yeah.

Melissa (20:29)
using technology in that transaction piece where we’re we can really get some automations like your tool AI automations is huge right now and getting those transactions done again timely accurate that makes month end so much faster because you aren’t chasing things and so if you can kind of focus on that that time intensive piece of transactions it also makes month end go faster.

Rishi Srivastava (20:54)
I own a software company and you know not having checklists have cost us you know time, energy you you think you remember everything you know you know but but when you are actually doing the process you’re gonna you likely you can miss something you know

Melissa (21:02)
You do.

I don’t know if you’ve read the Checklist Manifesto, excellent book. I don’t know how many times I’ve read it because I’ve enjoyed it so much. But the premise of the book is that you need a checklist for everything. And if you have a checklist, you also can hand the checklist or part of the checklist to someone else and get some help. But if you don’t have a process and a system and a checklist to do it, then it’s really hard to get somebody else to engage with you. If you haven’t read the book, read the book.

There’s so many good pieces in there. It was written by a surgeon.

Rishi Srivastava (21:39)
Hmm. Yeah.

Yeah. Yeah. You definitely need a checklist when you’re cutting people open.

What are the downstream consequences for contractors who skip reconciliation or delay their financial statements?

Melissa (21:51)
One of the biggest issues we see whenever we are either not doing our reconciliations or just skipping financial statements altogether is the loss of visibility. And with the loss of visibility also comes what I like to call the nasty surprises.

So we want to have monthly financial statements on a percent complete basis for construction accounting and I like monthly. I’ll tolerate quarterly, but monthly allows us a little bit more visibility for sure. And then also if we see anything that we want to adjust, it gives us a little bit of time to get that ready before we have quarterly financial statements. So when we don’t have financial statements, we don’t have the visibility to know how the company is doing from a top level.

And if you’re an owner, like I said, we kind of have a unique perspective because we were

both accountants and also business owners. And from a business owner’s perspective, you really want to know how that company is performing on a regular basis. And that way you can make decisions from an owner’s perspective to know which way you want to pivot or is it the right time to buy a piece of equipment or is it the right time to bring on that next person. It was one of the reasons why we also built our projection model software is because we needed to take the

financial information that we had and then push it into the future so that we could see what would happen if we buy the piece of equipment, if we add that staff. And there’s so much necessary and invaluable information that comes from producing monthly financial statements on a regular basis so that you have that visibility to make the next group of decisions. Not only that, in accounting,

We want to make sure that people trust us. We have a very high trust position. We deal with a lot of cash. We’re running the company’s financials. Whenever we produce monthly financial statements on a consistent basis and everybody can know that we’re going to do it, it builds that trust level. So it shows that we are here to help. We are here to provide visibility. We are here to provide information and that encourages trust.

Rishi Srivastava (23:58)
Yeah, trust is so valuable, know. If people are not believing your numbers, you’re not in a good position as an accountant.

Melissa (24:04)
Yes, yes and our owners rely so heavily on accounting and they trust us so much and we want to deliver that back and part of that’s just being able to provide information back that is meaningful and useful to them.

Rishi Srivastava (24:19)
How do you coach owners and accounting managers to use financial statements for decision making rather than just compliance?

Melissa (24:27)
There are so many wonderful things that we can learn from financial statements.

I like to talk to people about taking financial statements and thinking of them as a tool for decision making. They aren’t just something that you print out of your software on a random basis. They are a critical part of running a business. And those financial statements tell us things that they tell us they have indicators so we can see it into the future. They tell us the strength of the organization. They tell us whether we’re going to be able to take on that next big job with confidence and with a little bit

us worry. So we need to think about them like tools, not just a piece of paper that we print and shove in a drawer.

Rishi Srivastava (25:07)
Yeah. The next section is on tools, teams, and improvement. What role does technology play in helping companies get clean, timely data into their software?

Melissa (25:19)
Software is huge. Whenever I first started out of college, believe it or not, software was relatively new. Accounting software was relatively new. In fact, many of our contractors had to use manufacturing software because we didn’t have a lot of options for construction software. This is not true today. So first foremost, get accounting software that is specifically built for construction.

We have some kind of generic softwares that they will put at the end of it. It’s for construction, but it’s actually not built for construction. And there’s a couple of things you can look at to know whether it’s truly construction based accounting software. One is if they have AIA type billings, they will have that baked into their software. And that’s one indicator that you can say, okay, this is actually truly built for construction. And the second one is they have a predefined work in progress report.

buy a couple different names but that will tell you that you’re using the right piece of accounting software that is truly for construction businesses.

The second thing that we need to talk about about software and technology is that we have to know how to use it and training on the piece of software that you are using or the multiple pieces of software that you are using is critical. If we have somebody that has not used a piece of software before and they’re coming into a new role, we encourage people to buy four to six hours of training time on that accounting software so that they can truly own that piece of technology.

to

feel really confident in what you’re doing and you also want to use everything that piece of technology has to offer. You kind of want to wring it out because that technology is expensive and it’s a tool for you. So you want to make sure that you’re using everything that you can. All that being said,

If you have bad processes, adding technology does not fix the process. So if you already don’t have a good way that we’re going to be doing things within an organization and you put technology on top of it, it usually ends up just kind of muddy in the waters. We always want to think back, take a step back and think about how do we get something in in the most efficient way and then use technology to help us streamline that. It’s not a fit.

It’s not a band-aid. We want to use it as a very critical tool to make our life easier and better, always keeping in mind that, I hate to say this, but we used to do it with paper. So we should be able to do it faster with technology. And I think if we can’t do it faster than we have, we have to go back to the process and make sure that we’ve got all the steps in the right order.

Rishi Srivastava (27:56)
Yeah, another speaker I was talking to, and he had a point. People before processes, before technology. you. Next question is, when you go into a company, what are the first three metrics or reports you look at to assess financial?

Melissa (28:04)
Yes, well said.

This one’s easy. It’s easy for me. So whenever I think about construction financial statements, we think of them consisting of at least three reports. The balance sheet, the income statement, and the WIP report. Although the WIP report is not technically a financial statement, I think of the WIP as the one report to rule them all.

that you know, Lord of the Rings. But you can learn so much from the WIP Report. So if we just break those down, the balance sheet is going to tell us the health and strength of the company. I love the balance sheet. It’s my second favorite financial statement. Well, if I mean, the WIP is my first favorite, but yeah, that’s kind of a report. So if we had to say, what’s your favorite financial statement, which should be a question that we ask all the time, well, it would be the balance sheet. The balance sheet is

Rishi Srivastava (28:36)
the

in

Melissa (29:02)
telling you about the strength, the longevity, what the company is capable of doing, and it really rolls up all of the performance that company has had really from the beginning of time. The income statement gives us a snapshot of how they’re doing right now, which is really important, but it doesn’t tell the whole story.

The way I like to look at the income statement is actually in conjunction with the WIP. So the WIP report is going to tell you how all of your jobs are performing and that should be mirrored in your gross profit. So you should see however you’re performing on your jobs is the same way that you’re performing on your gross profit on your income statement. So they kind of match and a lot of accounting is matching.

We just make sure that things match. Yeah, that’s the kind of the simple way to say reconcile. But whenever we’ve got those three financial statements working together, we have a great picture of how the organization is running and we can run all kinds of different ratios off of those financials. If we don’t have them, all the ratios that we run may be inaccurate or cause us to make decisions that wouldn’t be right.

Rishi Srivastava (30:10)
really love the Lord of the Rings analogy. One report to rule them all

Melissa (30:15)
One report to rule them all is the wall.

Rishi Srivastava (30:19)
How do you balance the need for process discipline with the realities of running a busy contracting business?

Melissa (30:26)
This is absolutely hard and it’s especially hard in accounting because accountants naturally have a real affinity for for accuracy and completeness That’s actually part of our principles of accounting and so they want everything to be right and perfect and and beautiful and lovely and Sometimes we’re going to have to say 80 % is 100 % in fact, that’s a statement I make a lot 80 % is 100 % and that

is hard to swallow sometimes. But if we can get consistent accurate financial statements to 80 % we can make decisions. If we get so hung up on that last 20 % that we’re just like I’m not gonna do it, now we have zero data. So a reasonable set of financials at 80 % is better than zero.

Rishi Srivastava (31:19)
Yeah, you know the pragmatic accounting view that you’re bringing in, it’s kind of gives me such a sigh of relief. You accountants a lot of times, you know, they’re very sticklers.

Melissa (31:33)
Yes, yes, yes, we are very much cut from that cloth and it’s hard. It is so hard and so I had an experience with an owner. I couldn’t get the financial statements the way I wanted them and I’m just I’m being honest about myself. Like I they just didn’t they weren’t right.

They weren’t right. And I knew they weren’t right. And I was working and working, working, trying to figure out what was wrong with them. And finally, we are at the end of the month, the end of the next month. And he says, are you going to give me those financial statements? And I said, well, I just said, I can’t. They’re just not right. And he said, well, how close do you think they are? And I told him. And he says, well, that’s good enough for me. Just give me the financial statements and move on. And I just looked.

You know, I had been operating completely in a silo of just, my own vacuum and it was, you know, I was just swirling. And instead I should have just gone to the person that was going to be using these financial statements and asked for some help or asked for an opinion because once he told me what he wanted, I was done. I issued the financial statements. Turns out the next month I found the issue, corrected the issue and everything was fine.

Rishi Srivastava (32:40)
Yeah, The timeliness of the financial information needs to be balanced against the accuracy of the information.

Melissa (32:49)
It’s a delicate balance.

Rishi Srivastava (32:51)
Mm-hmm.

What are some practical tips for bookkeepers and accounting managers to get from always behind to caught up?

Melissa (32:59)
The number one thing I tell people is face forward. A lot of times in accounting we want to go back. I didn’t do January’s financial statements. And so they want to start all the way back at January, to January, February, March, April, May, June, July, August, and then finally get to September. Don’t do that. Do September’s financials.

Because we’re in October, that’s the month we would be doing. And so you’re just going to do the next set of financials and don’t try to go back. Don’t look backwards. Just just look forwards. That is going to immediately catch you up. Now.

When we have transactions that have been missing for a long time, you may have to treat this a little bit different. But if you’ve got transactions and you’ve been working real good on getting those in the software, establish your cutoff date and start working on your reconciliations and financial statements, because once you get that done, you’re caught up. So then you get this little bit of a win and getting a little bit of a win is huge. I would say

Don’t overwhelm yourself. just just set a goal. Just just set one goal. Okay, I am going to issue this month’s financial statements by.

The 25th, mean give yourself even a little bit of extra room. Everybody may want them on the 15th, maybe even the 10th, but you can go to everybody and say, look, I’m a little behind, can I get them to you by the 25th? It gives you a little bit of extra room, it sets expectations, it increases trust, but if you don’t talk about it, then they just assume that you’ll never do it. Well, no, that’s not true. You’re working towards something and if you set a date and a goal, you’ll get it done because it’ll wear on you.

We already talked about checklists. Checklists really do make it easier and they make it so that you can get help. And finally, I would say celebrate the little wins. Accounting is like air conditioning. As long as it’s working, nobody notices it. As soon as it breaks, everybody’s upset about it. And so in accounting, we have to celebrate the fact that we

Rishi Srivastava (34:52)
Hehehe.

Melissa (34:56)
We hit the cutoff and we got everything posted. High five. Like that should be a win. And we can celebrate the little things because when you’re air conditioning, you need to just to be celebrating that it’s cool inside whenever it’s hot outside and that’s enough.

Rishi Srivastava (35:14)
Yeah, definitely. You you got to enjoy the journey. I’m actually moving to a new place this coming week. And I just set up my bed and my mattress and I came back and I was so happy. I was like, I need to enjoy this now. I had a glass of wine, you know, and, you know, just enjoyed the evening. It was maybe like an hour or two of work, but I felt proud of myself. But previously, like maybe 10 years ago, I would be like,

Melissa (35:28)
Yes.

Rishi Srivastava (35:40)
There’s so much left to do, you know? What about that, you know?

Melissa (35:41)
You

I just saw something that whenever you complete even small tasks like at home, like just putting up the dishes from the dishwasher that you get a dopamine hit.

And so although accounting would not seem like a high adventure sport, we’re doing things along the day, along the week. We got through the entering all the transactions for the day. Those are little baby wins. And if we can just acknowledge it, like you said, then it just gives us a moment of pause and we can be glad and we can kind of take some of the pressure off of ourselves, just like you did.

Rishi Srivastava (35:58)
Mm-hmm.

Yeah, yeah. The last section here, is on advice for contractors. And also, this is the last question. If you had to give one piece of advice to a $10 million contractor struggling with reconciliations, what would it be?

Melissa (36:36)
This is such a great question and one that I gave time and thought to and

I would say the number one thing I would do is try to identify what the real problem is. And I kind of look at it as usually one of two problems. It’s either a time problem, meaning the person that you are looking for to produce reconciliations and financial statements doesn’t have enough time. And I’m going to stop right there and just expand on that.

What we’ll see in accounting is that we hired somebody to do bookkeeping, accounting manager, all the things, and we were a five million dollar contractor. That company then becomes a ten million dollar contractor and we still have the one person. And for some reason we’re like, why can’t you get your job done? But they are doing double the volume that they used to do and they need help. So if they have a time problem, then we need to look at what could we do to

to increase the time that that person has either through adding technology so that they can maybe not be so bogged down in transactions, maybe the right payroll outsourcing, maybe the right type of add-on for project management so they can take some of the workload as well. So that’s recognizing if we have a time problem and it could be adding more staff. The second part is recognizing whether it’s a skill gap.

So a skill gap means that they are wonderful and they’re doing a great job and they’re doing all the things right for transactions, but they actually don’t know how to do reconciliations and financial statements and they need some training and some help in order to close the skill gap.

big fan, like huge fan of training people that are in the organization on how to do reconciliations and financial statements. And for us, used to do, we used to just self-perform and do the reconciliations and do the financial statements and produce them and give them to the owners and then do projections. And we were getting busier and busier and busier. And finally, I was like, I can’t get this all done. And so we had

moment of do we add more people in our company or do we start training our clients on how to do this close the skill gap.

It was huge. So once we recognized that closing the skill gap was where we were going to go, we started seeing our contractors outperforming industry averages. They were happier. They worked together better because the people that were inside the organization knew what they were looking for. They listened and said, oh, I just heard that somebody had a change order. And so they engaged with that.

closing the skill gap is fun and there’s lots of ways to do it.

Rishi Srivastava (39:22)
Yeah, yeah, and yourself, I mean, this kind of problem, you’re probably trained to identify it. A lot of times, to an owner, it’s not even obvious, like, what’s going on here in the accounting department? ⁓

Melissa (39:35)
Mm-hmm.

You bet. We have a giant task list. And it’s…

divided by all the different things that are done within an accounting department in a construction company and it helps us identify like who’s doing what and you’ll fill it out and you can see my gosh this person is so overloaded like they’re drowning or they will just tell you I got to the big tab on controller and I didn’t know what it meant and then you can start to fill in those holes either get them some help

technology or people or start filling in that skill gap.

Rishi Srivastava (40:13)
I had a lot of fun chatting with you today and thank you for giving such valuable insights today.

Melissa (40:20)
It’s really fun to see you again and I hope to see you again soon.

Rishi Srivastava (40:23)
Same here.

Rishi Srivastava (40:23)
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.