Rishi (00:42)
Today our guest is Rory Carlson. Rory, welcome.

Rory Carlson (00:42)
Thank you. Looking forward to it. I’m glad to be here today.

Rishi (00:50)
First section is on your background and perspective. You’ve spent over fifteen years in construction finance, from staff accountant to VP. What are the biggest changes you’ve seen in how finance operates on the job site?

Rory Carlson (01:06)
Yeah, it’s a good question. So d not to sell myself short, I did start as an intern in construction accounting back in the day. So that’s how I first got my my foot in the door. But I I think the first thing I I still remember going to job sites and even in the office and hearing the Nextel chirp phones. That’s probably my first recollection of, you know, being around construction and how popular those that were back in the day. So I think communications definitely changed a lot.

going from the Nextel chirp phones to, all the video communication we’re able to do today. Instead of, chirping someone on your Nextel, you’re able to have a live video feed and show in real time what’s potential issues are going on the job site. And obviously that goes to microsoft Teams and, other video platforms as well. And meetings have definitely changed quite a bit over the years. I also remember earlier on in my career from a data perspective.

know, one my first roles was printing out the weekly cost reports. So I would have stack of, two or three inches of paper I’d print out for some of the execs and project managers for their weekly cost reports. And that was part of one of my earlier on jobs, before things got automated to where they are now and be able to get that real time data or you know not relying on someone in accounting like myself to provide the reports. They’re able to

access the reports on their fingertips on their own computers. That’s that’s definitely changed quite a bit. And that’s led into more automation too. when I first started getting an industry, well I had an opportunity it was to put it enter payroll times. So we had twelve hundred employees, union employees that we need to enter time in on a weekly basis. daily basis too, you know, layoff is payoffs you need to make sure that time’s in on a daily basis. So

There’s a lot of manual entering of that time. So, I mean, going from those earlier days where there wasn’t an automated payroll solution to kind of where we are now. I mean, this that technology’s been around for quite a few years. But, just going on to automation where, AP is automated now, expense reporting, financials, the reconciliation process, contract review, you know, we can keep going on the list, but that’s really changed from becoming

A manual process like it was back in the day to really automating and making our lives a little easier, and we can focus on bigger items.

Rishi (03:28)
Yeah, so much has changed.

Rory Carlson (03:30)
Yes, that’s for sure.

Rishi (03:32)
You’ve worked at both a seven hundred million dollar GC and now a more focused subcontractor. How does the finance function differ between those two environments?

Rory Carlson (03:45)
Yeah, that’s it is a tale of two worlds for sure. mean the the subcontractor I work for, I like to call us we’re sophisticated subcontractors, so we act somewhat of like a G C but we’re still not a general contractor. And you know, when I was in the role I was at the general contractor, I had a larger staff underneath me and I had to wear multiple hats, throughout my role and there’s

Rishi (03:49)
Mm-hmm.

Rory Carlson (04:12)
pros and cons of that, you know, or I should say I wasn’t wearing as multiple hats, you know, I was letting the team kind of take care of the task. So I would kind of get out of touch, I guess is the best way to describe it, with really what was going on and the processes. And there were probably a lot of inefficiencies, items that I didn’t realize we were still doing it just ’cause that’s the way we’ve always done it, right? That’s a popular term that seems to be used a lot.

Versus my my current role now where we’re a hundred million dollar subcontractor, but I don’t have a team of fifteen underneath me. I have a a handful of individuals and it’s a great team, but when someone’s out on vacation or something goes on, you know, I’m wearing different hats and more in in the weeds on things and I can see processes and like, we might have a little inefficiency here, which is a good thing.

Everyone’s jobs easier. Let’s look for how to we can automate these things. And I think that’s definitely a different perspective from a a G C world to the sub world, just the how large a team is and not being as a siloed where you’re kind of wearing multiple hats, like I was saying. and another item too is with being in the weeds a little bit more, or I should say wearing more more multiple hats, you know, this change that I know needs to happen.

it’s easier to roll out that change in my current role compared to the corporate role. Now the corporate level you might have more red tape you need to go through or more questions like how does this fit into our budget? Or my current role now, obviously there’s some price tags on things, but if it makes sense for the organization, if it’s gonna improve be an improvement for our organization, my boss isn’t gonna second question. He’s like, Let’s do it, let’s make

Let’s at least try it and if it doesn’t work out, we can always revert back. But there’s not, three, four, five different levels of approval I need. It just if you think it makes sense, pull the trigger worry. So that’s I say that’s one of the the bigger, more refreshing perspective for my current role.

Rishi (06:09)
Yeah, and one thing I think G C versus sub, the big difference is the number of field employees that directly work for your company right now, right? You’re a sub and there are so many field people. Am I thinking about it right?

Rory Carlson (06:22)
Yes.

Yeah. Yeah. It’s well the G C I worked for, we did self perform quite a bit of work. So I mean, we did we did have fifteen hundred employees that worked for us during that you know, at the peak times. So it that really isn’t shame. I mean, we’re a unique perspective, I guess, from a G C side. So I’ve always had the taste of both union and non union payroll. so I I don’t you know.

Rishi (06:28)
Okay.

Rory Carlson (06:46)
I guess I haven’t lived in a G C world where we didn’t have a lot of field employees. I’ve always had that exposure.

Rishi (06:50)
Hmm.

Okay, okay. some G Cs that we work with they’re mainly have subs. They don’t have much self perform.

Rory Carlson (07:00)
Okay.

Rishi (07:00)
As a someone deeply involved in CFMA and industry discussions, where do you think most construction finance teams are still struggling today?

Rory Carlson (07:10)
This can go a lot of different routes, but I I think the main thing is, everyone I believe in the industry knows they need to adopt A AI in some capacity. Now, however that fits within your organization on, major adoption or just taking on some task, it’s in almost every, webinar or conference and

If it’s not every session, it’s mentioned every other session and even if it’s just a little bit. And it at least for me, I know it become s overwhelming on, what solution is the right solution for us to go to. Just even from like an AP side. All right. Do you wanna incorporate AP and have an AI tool in place to help streamline that process? All right, well, here’s five hundred solutions for you, right? If you’re really so

It’s you kinda gotta vet it down and resource and get your references and what makes sense for your organization because what may make sense for adjustable may not make sense for, another contractor. So it’s a big scary world out there in the AI world, but I’m hoping in the next couple of years, the five hundred solutions can, start trimming down a little bit to

Or some of the cream is rising to the top.

Rishi (08:23)
Yeah. Yeah. And competition is good, right?

Rory Carlson (08:26)
It it is from a price standpoint, but it’s like I said, it’s it’s overwhelming at times. What which way to go.

Rishi (08:32)
Yeah,

yeah, that completely makes sense. the next section here is on expense management and credit cards. Finvari versus Corpay You mentioned expense management is one of the first low hanging fruit investments. Why does this area deliver such immediate ROI?

Rory Carlson (08:53)
Well, I’ve done two implementations now of two different organizations and they’ve both gone very well. obviously picking a good partner, a partner with Corpay, I’ve partnered with Finvari and at least for both of those situations and organizations, they’re great companies to partner with and it was immediate results. I mean one thing is all right, what ERP solution

Do you utilize and does that solution integrate? that’s the first solution. If it they claim to integrate, or if there’s not anything on their site or references that tie it to that solution, I wouldn’t even consider going that route. So I think that’s one thing to ensure that. And then the good part about that is, there’s so many different integration tools you can build off of that potential solution. And I think back to

my prior life employer, before we had one solution in place for managing, expense management and credit cards, we had eight different credit card solutions. And this is over multiple entities, but from different credit card program with this bank, different credit card program with this bank, you know, you have your fuel cards, you have your Home Depot cards, you have your Menards cards. I mean is

Right and you have to reconcile and pay those on a monthly basis and get all the receipts. Well, consolidating from those eight different solutions down to one. I mean, to be honest, not trying to reduce headcount, but we probably reduce two people on our staff because of that. Or we’re able to in reality allocate their time elsewhere because of how much time of encoding we had to do with you know, those thousands of transactions each and every month. And

the to build on that more, we were lagging, a month or two of posting that cost. One you know, because you get the statement on a monthly basis. Well, by the time you get all the receipts and do all the coding, you get the statement monthly. Well then it takes two or three weeks to, go through all the steps. So you’re at seven, eight weeks when you’re posting, that’s a long time not having that cost in your system and getting a true account where you’re

job cost is which at the end of the day drives your revenue and your financials. So getting back to your ri original, question on your ROI, those results are able to see pretty quickly after, one or two cycles.

Rishi (11:08)
Yeah. Actually on ROIs, a lot of times the mathematical equations they’re not a good indicator of ROIs. It’s if it feels right to you, it seems like it’s gonna do the r right improvement, that’s the ROI I feel like we we need to go by.

Rory Carlson (11:23)
Yep, I would agree on that.

Rishi (11:25)
Walk us through your decision between tools like Finvari versus Corpay. What were the key variables you evaluated?

Rory Carlson (11:32)
Well, one of the items I hit on already is does it integrate with your ERP? So if the tool does not integrate with your ERP or if it’s not a partner, I would recommend not even looking at it because that’s gotta be step one. I mean everyone can promise they have all this integration, but I’ve heard horror stories of not partnering with someone that is a true partner with your ERP and it doesn’t go well. So I’ve

used Vista by Viewpoint, both my employers, Finvari and Corpay are two solutions. I know there’s others out there that are partners as well that probably work just as well potentially, but I’ve had good results with them. And I think at the end of the day, it’s what’s your ERP and you know making sure the tool integrates well. another thing I’d look at too are what are the rebates. So you’ll get different rebates depending on potentially on what company you’re going with. So so

with Corpay, you might receive rebates, but there might be a cost then for their expense management tool, where Finvari, they might not offer rebates, but then there’s no cost for their expense management tool for their app. So you gotta kind of run the analysis on how many users are gonna be using the program, what’s your typical spend, what’s your rebates, and really you gotta, see what’s the best value for your company because it could

vary depending on your company size, your company spend, how many employees you’re gonna be using, the app. references. We mentioned references earlier for some other solutions. So I would here’s a shameless plug for CFMA Connection Cafe. I would, put out there and ask, the eleven thousand members that are part of the C FMA community on what tools are you using, what ERP solution are you using? You’ll get a lot of great feedback and kind of hear people of, hopefully

good stories, but there might be some poor stories too and like yeah, I don’t know if want to use that product. I’ve heard, you know, X, Y, and Z. another item too is, what’s the roadmap for these tools? Okay, what are they doing now? But are they gonna expand on their tools? They’re gonna get involved in potential different solutions that, can scale up with your company as they grow and as you grow. Those are I think the some of the key variables that we vetted out when, choosing

A tool.

Rishi (13:49)
So did you use an Excel file where you kind of put some numbers and dollars in there?

Rory Carlson (13:54)
Yeah, I would say definitely Excel files. a lot of discussions and but at the end of the day, yeah, Excel is used in any of these analysis on what tool to go with.

Rishi (14:06)
Do you actually calculate ROI when comparing credit card rebates per user software costs and total company spend?

Rory Carlson (14:16)
I hit on that a little bit on the last question, but I think a good place to look at is look at your average spend for the last three years and then kind of project out where you’re going for the next, three years as well, based on, potential backlog and where you see the company hopefully growing to. And that’ll give you a good indicator on based on the rebates that you’re provided and whatever proposal on what potential.

rebate you could potentially receive. another item per user software costs, that should be factored in on the cost for the app. So like I said, Finvari vs Corpay. Like I know Finvari doesn’t charge for you to use their app, but they don’t offer rebates. So it’s that, you gotta weigh your options out on, how much spend you’re gonna have and how much is there per user? I mean if you’re gonna have a low user count but a high spend

It might make sense to go someone at Core Pay because you don’t mind the monthly costs for using the management tool and you’re gonna have, large rebates coming back where if you’re gonna have a high volume users that are gonna be using the platform, but then the spend’s not gonna be as high, that maybe Finvari makes more sense. So it’s it’s honestly gonna vary so much. And running those analysis using the Excel files you mentioned earlier is kind of the how to make what’s the best ROI potentially.

Short term then long term and what solution to go with.

Rishi (15:42)
Yeah, yeah. For a typical construction company, what percentage of spend is write cards versus AP and how does that impact tool selection?

Rory Carlson (15:53)
I ran this like my current employer and I kinda remember prior life to where we’re at. So I mean this could probably vary from company to company, but I would say credit card is probably five to ten percent. Might be too high to ten percent, so let’s just say five percent. So then it puts AP around ninety, ninety five percent. But I could potentially see the future of this declining.

as well. I mean, I’m seeing more and more vendors applying credit card fees. So with that being said, are we gonna be more inclined to push a vendor or payment towards ACH and not for credit card? That’s gonna be a factor. And and going back to how you calculate an ROI and what route to go, this is something you gotta take into consideration as well, too. What’s just because you’re receiving a rebate today, like

Who says that vendor tomorrow isn’t gonna add some type of credit card fee? So, I mean, that’s potentially something that could hurt your rebate and now you’re paying this fee for each user that’s logged in and app. I mean, that’s something we took into consideration.

Rishi (17:02)
So we don’t like to do take payments by credit card.

Rory Carlson (17:06)
There you go. Prime example. Someone on the call here. I I don’t blame ya.

Rishi (17:10)
Yeah. Well I think if you’re kinda out having let’s say entertainment with clients or something, yeah, that makes sense. Credit card

Rory Carlson (17:19)
For sure.

Rishi (17:21)
one thing you said stood out coding expense at the moment of purchase. How big a shift is that compared to traditional quote unquote chasing receipts workflows?

Rory Carlson (17:33)
Yeah, that’s I I still have nightmares on this process and me being involved or my team being involved, but chasing the receipts is was definitely a a thing, thankfully a thing of the past. So I mean before an expense management tool is used, like I said earlier, we were one to two months behind on posting costs. So we would not be able to post costs until that monthly statement came and then you’re chasing down those receipts. So with this the app

and there’s I there’s different tools out there, but with the app, you get the real-time notification within seconds after a transaction is made with your company card. Then, like I said, we want we were talking about the integration with your ERP. You then could code on the spot to the job ,phase, cost code, cost type, or what GL it might might need to go to. Right on the spot, integrating for ERP,

So the receipts taken, you code it, it’s done in a minute, and then that user doesn’t need to worry about it. So you’re posting that transaction more real time, let’s say on a weekly basis compared to, two months later. So that’s like I said, the chasing receipt workflow. I thankfully don’t have nightmares about that anymore, but that was a big time commitment, let’s say, by the team back in the day.

Rishi (18:52)
Next section Rory here is on payments ACH versus CorPay versus credit cards. You are currently using direct bank ACH with Nacha files from Vista. Why stick with that instead of moving to a platform like CorPay?

Rory Carlson (19:09)
being transparent, legacy thinking, kind of going back to before, this is the way that we’ve always done it, type of deal. there could be an argument made for both sides, we’re potentially looking at making a change of that at some point for us internally. that’s just something that’s like I said, legacy thinking and there’s just the way to think about things potentially different, and

There’s definitely pros and cons of, doing it in house or having, someone else take care of the the payments for you.

Rishi (19:39)
Yeah. Actually

the s some of the liability shift that comes from using another platform could be a factor here too, right?

Rory Carlson (19:47)
That’s yeah, a hundred percent. I mean, that’s that’s one thing where I’m promoting it as much as I can is that liability perspective and you’re opening up more risk for data security as well. So I mean there’s definitely some pros, from that perspective on reducing your risk. I know well one thing for a pro to keep it in house, you do have more control of those payments. So

I I do understand that side and there can be an argument made for that. However, I think the risk of handling it or – outsourcing it outweighs the control. ’cause I have heard some stories of different providers. You know, those payments that are handled by whatever third party might be is

You don’t have that control or knowing where the payments at. So like right now if I need to make a payment today, I could do a same day ACH and I know they’re gonna get it ’cause someone on my team made the payment and then I approved it for the, dual authorization. So there there’s that part of it. And then, another pro for outsourcing, it’s it’s very manual to do the process internally. So if you were to outsource it, you automate that process and

we talked about o automating earlier on in this call years. Whatever we can do to automate any process, like I am all for that. So if we can automate and reduce our risk, that outweighs some of the control in in my opinion.

Rishi (21:18)
Well said. If you had to break it down, what are the three biggest trade offs between internal bank ACH versus outsourced platforms? What would that be?

Rory Carlson (21:28)
three biggest trade-offs would be, like I said, internally there’d be more control. If you outsource it, it’s less control. I I’d say that’s the at least in my mind, the one pro for keeping internal. Now if we go for the pros for outsourcing, there’s that more risk. So you have that data security, all the banking information that’s, stored internally if you do it in house compared to outsourcing it, it’s less risk that you’re taking on. And then

The automating the process, it’s outsourced and then it’s gonna be very manual if it’s internal. So those are the I think the three biggest trade offs.

Rishi (22:02)
You mentioned culture plays a big role. How much of payment decisions in construction are driven driven by ROI versus control versus habit?

Rory Carlson (22:12)
this I what I think this and this is, different articles and things that you read over time. But, every decision we make, the first question should be what is ROI? However, I think human nature defaults to creatures of habit. So I think that’s kind of what comes to my mind when we’re we’re talking about this particular question. So

Rishi (22:35)
Mm-hmm.

Rory Carlson (22:35)
I would like for us or at least for me, like, all right, what’s our ROI? But but I know sometimes I I can be a creature of habit myself. So I think everyone struggles with that. If you don’t admit that then you’re probably lying to yourself.

Rishi (22:48)
Yeah change It’s hard too.

Rory Carlson (22:52)
Change is very hard. Yeah. what always bugs me and I’ll be honest, I was bad bad about this earlier on in my career ’cause, until I started being exposed to more things outside of the little, employer bubble that I only knew. And it was just like, okay, this is the way we’ve always done it. Like, why would I do it any differently? Well that that’s a wrong answer. That’s not how we should be acting is

I always challenge myself and challenge the team and organization. Just because we’ve done it this way all the time doesn’t mean it’s the best way. So one of my favorite things whenever we hire any new employee, I I say, hey, like, let’s just soak in, everything that our organization does right now and workflows. However, I’m gonna come to you in a couple months and I want you to tell me like everything that you think sucks, like better way of describing it. What can we do to improve? And not saying

Rishi (23:39)
Yeah.

Rory Carlson (23:42)
you know, we’re gonna go that route, but I think having different perspectives from individuals from different organizations can be very impactful in a positive way. and otherwise you can kinda get stuck in your own little silo and kinda get in that creature habit like I referenced earlier.

Rishi (24:00)
Yeah. Yeah. In your previous role you turned payments into a profit center via rebates. How did that work and why doesn’t that model always translate?

Rory Carlson (24:14)
Yeah, so I think or at least I know when whenever accounting finance is brought up, especially if you bring it up to like the operations folks, not trying to make a a fight between operations and accounting finance, but in accounting finance, we’re we’re looked at as overhead. I mean, there’s that’s just the way it is. Like we are overhead at the end of the day. And at my last employer, we were a difference making profit center. we were bringing in significant six figure

rebates on an annual basis. And that that’s a huge reduction in overhead. I mean, that’s the way I looked at it. It’s offsetting our salaries, our travel, and all the expenses that, kind of accounting and finance team were incurring. And that was that was a big deal. And you asked the questions, how did that work? Well it didn’t happen overnight. it took us years to get to that point. And it was building relationships with vendors and

having real conversations with them on hey if we pay you by credit card we’re gonna promise you a payment X amount of days before any other type of payment. So like it was those type of conversations that made an impact. I mean one if your company doesn’t doesn’t have enough spend, it’s not going to make sense for you. And you know if or if your vendors are like for us, we’re 99% ACH. Well

It’s gonna be hard to move anyone from ACH to credit card. No one’s gonna wanna take a fee. So like for us, that model doesn’t make sense or won’t translate. However, there’s opportunity for a lot of organizations out there and you just have to assess on where you’re at as organization, how your payments set up and maybe you could turn into a profit center. I I mean I’ve witnessed it, I’ve seen it work firsthand, but it doesn’t translate to every or organization, that’s for sure.

Rishi (25:59)
vendors don’t like to take a fee on them.

Rory Carlson (26:03)
No. And that’s and I I’ve heard I mean, there’s ways you can get creative. Like I said, we’ll offer you credit card payment tomorrow. However, if it’s gonna be an ACH, it’ll be a week from now and a check will be two weeks from now. I mean, I’ve heard of incentivizing these companies on early pay. Or, you know, there might be some fees split between savings, like, okay, like

Rishi (26:16)
⁓ yeah.

Rory Carlson (26:25)
Our rebate might be X basis points. Well then this vendor might charge a certain, fee for that, but it’s not the whole fee. So like at least it’s the covering some of their costs, but then you’re able to negotiate something in there as well. So

Rishi (26:39)
sense. The next section is AP automation and workflow execution. When evaluating an AP automation tool, what are the top three things that actually matter in real-world construction workflows?

Rory Carlson (26:53)
Well, we hit on this earlier. I think the first and foremost, what’s the ERP integration? does it integrate with your ERP solution? If it doesn’t integrate or they say, yeah, we integrate of everything, that should be a red flag. If you go to their website or if you ask around, like I don’t know about them, like I haven’t heard about them. And not only integration, but construction focus. I mean, I’ve been on demos and talking to different AP solutions and I try to

Talk simple terms like all right, how do you select the phase code or cost type? And it looked like I was speaking another language then. They didn’t know what I was talking about. So that’s a problem. I’m like, okay, well, let’s just end this call right now because you’re wasting my time and I’m wasting your time here. So I think ERP integration and construction focus, that’s number one. number two, does any of your tools have this capability? So we mentioned expense management tool earlier. Do they have an AP tool as well? And if they do.

Rishi (27:26)
Yeah.

Rory Carlson (27:45)
Maybe there’s an opportunity there to team up or and just add on to that tool. So you’re not having to add another, tool to the toolbox and consolidation, I think. So it’s a big thing. So you’re not coming tool overload, lack of a better way of describing it. And then lastly, and becoming more and more apparent in the tools are becoming better at this tool is the AI coding. So not just the header information with the vendor.

Invoice number, invoice amount, but the footer information on recognizing different line items, looking back at historical coding and then either suggesting coding for you to to put in there or coding it for you, having that capability or at least a roadmap on that tool getting there, that’s gonna be the game changer because at the end of the day, I’m looking for a tool for our team to have the least amount of keystrokes possible. So

least amount of keystrokes is gonna be having a lot of this coding done, like I said, not at the header level, but the footer level too. So having that technology built in and continuing to improve on that, is gonna be very impactful on what tool you’re gonna choose at the end of the day.

Rishi (28:54)
Yeah, that makes sense. Just a plug on us. we are a construction focused AP automation tool.

Rory Carlson (29:00)
Yes, I my vetting out of beiing human, they have a good good tool from what I’ve seen.

Rishi (29:05)
Thank you. You described AP as the next step after expense management. Why does that sequencing matter for companies adopting technology?

Rory Carlson (29:15)
Well, we mentioned earlier in this conversation that expense management, it’s pretty easy to implement, at least with the partners that I’ve partnered with. So that was an easy win. not much time to implement. So then this helps out the adoption of the AP tool. So you have that buy in already from the executive leadership and the different leaders of an organization like, okay, well, we’re using this tool already for expense management. Like now we’re feeling comfortable like

You know what you’re doing, you can implement this bigger tool because like we said earlier, let’s just say credit card transactions are five percent of your spend, ninety-five percent is everything else. Well, that’s a bigger piece of the pie. And that’s gonna be make a bigger impact within the organization. So you want to make sure that you get that easy win first before moving on to bigger Apple to the bite off there, at least from my perspective and kind of

the success routes I’ve had in my career, it’s it’s worked out well.

Rishi (30:10)
sense. actually some other companies we work with they go up after first to AP and then to Expense. Yeah.

Rory Carlson (30:17)
Yeah.

And and that could make sense and work for them as well. But like I said, I’ve had success going the other way and it’s it’s worked for me and like I said, it’s been an easier implementation from compared to the A P side, which was a longer journey, let’s say. And it impacts a a wider group of the organization potentially too. Not everyone has credit cards, so

Rishi (30:34)
Yeah, yeah.

That’s right, yeah. So AP is a bigger change, right? Yeah. So the last section here is FP&A, the next frontier. You’ve seen the difference between Excel-based reporting and FP&A tools. What fundamentally changes when a construction company makes that leap?

Rory Carlson (30:43)
Yes.

Yeah. manual processes. I think that’s what changes. You know, using Excel files to put together all your financials and all your different scenarios and planning, becomes a lot of ticking and tying, reconciling, making sure that your every number’s tying out, your V and X lookups look into how many different tabs on spreadsheets, you know, tying out and

You know, having an Excel file of fifty tabs, it all roll up into one. I mean, that’s a real thing. I’ve been a part of that. still potentially maybe a part of that in my current role. And I’ve seen the jump from that to an FP&A software where that tool can help, pull data of real time. You have all your reports built out, you hit refresh, boom, all your your data gets populated.

obviously I’m simplifying it and there’s a lot of steps to get to that point where you have to build out these tools. But once you build them out once, or this reporting out once, it’s there. You don’t have to re keep recreating the wheel, you don’t have to keep manually putting information. it’s feeding through GLs or whatever type of mapping that you have. and then you can build on that reporting, you can build on the dashboards. It just helps build your portfolio of reporting a lot quicker.

It gives the tools to your exec team or whomever else where they’re able to access it in real time and not have to wait for the account finance or accounting team to provide the reporting. So I I think it’s just a game changer where it’s more real time reporting, less reconciliation. it just hopefully after we implement the AP tool, it’s the next frontiers you mentioned on potentially looking at a solution.

Rishi (32:39)
Yeah, and what are the various reports that you create with an F P&A tool?

Rory Carlson (32:45)
with Excel or with an actual F P N A tool?

Rishi (32:49)
just Excel is okay. You’re probably trying to move the same reports to an FPN A tool, right?

Rory Carlson (32:53)
Yeah.

I would say your budget versus actual, you know, that’s like a big one. Your cash forecasting, that’s a very important one. So like a thirteen week cash forecast and then extending it out to a three month, six months, twelve month, eighteen month look ahead. looking into different forecast scenarios of your most likely scenarios, best case, worst case, you know, running

All right, if we pick up this job, how does that affect this? Where right now it’s a very manual process, more or less, compared to like an FPNA tool where you know you can click the mouse and check boxes and run things more automated compared to copying and pasting and making sure when you’re copying that everything still reconciles. So those those are like the big three I would say an FP&A tool would would help out with.

Rishi (33:47)
Last question, Rory, is if you were stepping into a construction company today, no systems in place, what would be your exact order of operations for building a modern finance stack?

Rory Carlson (34:00)
Well, first we mentioned this a few times on ERP solution. So I would first determine if there isn’t an ERP solution in place, what’s the – best route to go and make sure you have a very sound ERP solution that is construction focused. if you don’t have that in place, everything else you try to build on that, it’s probably gonna become that much harder because you’re trying to, fit a square and a round hole.

Potentially, you know. So that would start with a solid, ERP solution that’s construction focus. the next, like I talked about my horror stories of expense management. I’ve horse horror stories of manually entering payroll time for twelve hundred employees. So automating payroll as easy as you can. And there’s a lot of different solutions in there. We’re clocking in, clocking out. we didn’t even go down that rabbit hole, but

You know, that technology’s been out for many years and like I said, there’s a lot of different solutions. But I would automate the payroll. Not like you said earlier in the call, this could differentiate between general contractor and subcontractor. How many employees do you have on staff? if you have more office employees versus field employees, maybe that doesn’t make sense, but from the two different companies I’ve worked with, automating payroll definitely wouldn’t be number two in the list.

Number three would be implementing expense management. Like I said, easy win. if you have a credit card program in place, does it make sense to continue with that? Once again, I would look for something that’s maybe more construction focused, consolidating accounts. But once again, that goes back to the question: is payroll potentially is do you have a lot of credit card spend? If you don’t, maybe it doesn’t make sense for you to to look that route. the next

The next one I would look at is implementing AP. you mentioned earlier my order of operations, I’ve been going to automate, things. I would go expense management first, accounts payable second. Like I said, that might not be everyone’s best route or favorite route to go, but for me it’s it’s worked out well. So I I would focus on automating AP next. And that’s kind of the world that we live in right now with an organization and and vetting out the different AP tools and picking

the solution that makes sense for adjustable. And then the the next frontiers we mentioned would be the FPNA tool. ideally we’d like we want a tool in place. And I have the reporting built out all in Excel. So my goal would be to have, an FPNA tool put in place where we could take all this reporting, make it more automated, but and there’s FPNA tools that you can buy and you can buy more of the out of the box, but

I would want something that fits adjustable needs. So having the reporting already built in-house and then being able to provide it to an FP N A tool out there so they can kind of mimic and help build it out. You know, that’s the next frontier solution. But like I said, we gotta focus on internally AP first.

Rishi (36:47)
Yeah. Are there some good FPNA solutions for construction available?

Rory Carlson (36:53)
So I have personally used Profix. they worked well for the what we used it for at the organization. from what I’ve seen from the last time I used it to where they were there to where they are now, they’ve made major enhancements. I mean, if you look in the market, they are rated high in a lot of different areas. So I think that’s definitely a a potential good solution to go to. I’ve also had

some exposure to adaptive planning, minimal at best with that. I was kinda on my way out of my last employer, but I know that’s a workday adaptive planning. That’s the the solution. I I’ve heard good things about that. So I know there’s other tools out there. I can’t speak on them personally. those are the two that I’ve had exposure to and definitely two that once I get to this next frontier we’ll be betting out for sure.

Rishi (37:45)
Yeah, makes sense. So some of the companies we work with, they do revenue in five to twenty million range. And that’s where it gets hard for a controller to convince to the owner because they’re still in the startup mode. The owner is like, So what is your take? How does a controller go to a an owner, who’s just like getting out of startup mode yeah.

Rory Carlson (37:59)
Yes.

I yeah, if you’re in the five to twenty million dollar range, you might not be F P N A level, just being fully transparent. You might be the Excel. and you can automate some things. You can build some fancy looking dashboards off the data and you can have some Power BI built in. So I mean there’s definitely avenues to go and without having an FP N A tool per se. I would say once you start getting to like the fifty, sixty, seventy, like for us we’re

know a hundred million dollar contractor, I know we can make that leap, but it’s first like for for me personally, it was building out the reports internally. I mean, we didn’t have any of that reporting or budget versus actuals and different forecast models, cash forecasting in place at all. So building those out internally saying, hey look at this reporting that’s you know how impactful is this? we’re making

Sound business decisions based on this reporting. All right, now I gotta go to the table and go to the execs. This is how much time it’s taken me to put all this together. So if I have a tool in place, I could save that time and focus my, time elsewhere potentially. But so that that would be kind of where I would for the five to twenty, if you have any fighting chance not to be down about getting an FPNA tool, is build out the reports internally first.

And then kind of expand on that because it’s there’s a price tag on that type of tool for sure. I, you know, there’s no way around that.

Rishi (39:34)
Yeah, yeah. on the expense and AP side though, what we’ve seen is some of these companies they’re behind like six months on their financial reporting. some companies we work with because the transactions don’t get in time in the system.

Rory Carlson (39:47)
Yeah.

I mean that’s you need to make sure you’re closing the books on a timely basis before you can produce the financials. And if you’re constantly running in arrears on getting the c the transactions posted, like what are you s you just you’re getting to the financials being delayed, right? So yeah, the having the tools in place to produce those financials on a timely basis. Yeah. And that that gets to a further point. You want to focus on automating the payroll expense management AP first before thinking about anything with FP N A, because if you’re

costs aren’t getting posted in a timely manner, well your FP and A is gonna be garbage if you’re six months behind on financials because you’re gonna be, playing catch up and doing more accounting than actually financial and planning and looking ahead.

Rishi (40:29)
Yeah, very well said. so the controller has a fighting chance of convincing the owner that expense and AP can still make sense in those that five to twenty million rent?

Rory Carlson (40:38)
yeah, expense expense and AP

making that can totally make sense for five to twenty five million. Yeah. I I would say there’s real opportunity there and you’re running a lean accounting and finance team and the one way to continue to state lean is to have tools like that in place. you could potentially bring rebates to the organization.

you’re streamlining the the invoices or whatever type of transaction process you have right now and automating that so then, you can keep your headcount the same or potentially if you need to scale down, there’s that opportunity out there as well because those tools act as another employee at the end of the day, Try to humanize a little bit and I try to like our A P tool that we’re implementing right now, we call them A P jack. You know, we gotta

So he’s a j A B Jack’s part of the team. You know, that’s that’s our AI tool that’s helping out. And our the goal isn’t to reduce the stat by any means. It’s all right, how can I allocate that employees time to something that will better further the organization? I think that’s for the anyone that’s in the five to twenty five million dollar range, that’d be the argument I would say to to make if you’re looking to get a solution in place. And like I said, for some of those expense management tools, here’s a plug for Fin Vari.

There’s no expense to the organization. So that’s there, you don’t get a rebate, but there’s no expense. So you know, there’s solutions out there that now that make that solution might not make sense for every company out there. But if cost for implementing any of these tools is part of the, holding back, well, there’s at least one solution. I know, and there’s probably others out there that, there is no cost tied to it.

Rishi (42:22)
Yeah, yeah, makes sense. By the way, people who use us for AP, eventually they also use us for expense. But we don’t issue cards. Beiing human, we do not issue cards. So we connect to the cards directly using plaid. anyways, thank you so much for your time, Rory. This was a great conversation. software is always a tough world for people to properly fathom.

Rory Carlson (42:30)
⁓

Yes, like I would agree. Like I said earlier, there’s it could become overwhelming with the different solutions out there, but plug for C F MA, we’re strong community. We probably lived through the the pros and the cons of a lot of solutions out there. So don’t be afraid to ask around and, vet out the the different solutions through your peers within organization.

Rishi (43:07)
Very well said. Thank you, Rori.

Rory Carlson (43:10)
All right, thank you.