Forecasting the Future: How Contractors Can Build Value and Cash Flow with Shane Dick of Atlas CFO

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 Being 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 Shane Dick. Shane, welcome.

Shane (00:40)
Well, thank you. Thank you for having me on.

Rishi Srivastava (00:42)
The section here is on your career and motivation. You built the Atlas Growth Model. What problem were you trying to solve for contractors?

Shane (00:52)
So in a nutshell, the simple problem or what we were looking for was clear visibility financially and what we ended up with. So the Atlas Growth Model is software. That’s the name of the software we use for financial projections, but it really ended up being more of a process. When you break down what it takes to do strategy and projections and you go all the way back to the beginning, we think of it as four parts. So the first part is transactions.

The problem we were trying to solve was getting transactions in right and on time. And that’s anywhere from accounts payable to accounts receivable to job costs to estimates to change orders. So getting all of the transactions in is the first step. The second step was how do we make sure it’s right? So that’s reconciling. So you put it in, well, the next step is, it in right? So once you reconcile,

You got transactions, transactions are reconciled, now you’ve got financial statements. And that’s a pretty straightforward process if those other two are working and everyone knows their responsibilities and what they need to do and when they need to have it done by. So that got us to, okay, now we’ve got this great data. The issue is what do we do with it? It’s not enough to look back, but let’s look forward. And that is how we ended up with

Rishi Srivastava (02:01)
Mm-hmm.

Shane (02:06)
the strategy piece. So we’ve got a job schedule, we’ve got financials, we’ve got a budget, we’ve got a sales funnel. We believe this information, it’s useful. Now let’s take it and let’s look forward and see where we’re headed. So that was the problem we were trying to solve.

Rishi Srivastava (02:23)
starting from transactions all the way to the strategy. How did your experience as a contractor shape your approach to strategy and forecasting?

Shane (02:32)
So as a contractor and a CPA, so we wore both hats. It was not just a need to see where we were going, but you’ve got a lot coming at you as an owner. You’ve got the business, you’ve got clients, you’ve got business development, you’ve got all of these responsibilities. So our approach was how do we make it simple? Again, once you’re on the path and the process works, we didn’t want to have to spend a whole bunch of time recreating anything.

The AGM, for short, Atlas Growth Model, is pretty simple. Once you’ve got everything ready and you believe the data, plug it in and you can quickly see where you’re headed. Our goal is to look at three reports in five minutes and that’s confirmation you’re on track. You shouldn’t have to go back and guess. You should be able to look at your projections. Okay, here’s what I expected. Here’s where I’m at. Check the box. Go back to solving problems.

Rishi Srivastava (03:22)
Yeah, contractor experience is so valuable, Construction finance is a different beast.

Shane (03:27)
it is. I did not have all this gray before I got into construction.

Rishi Srivastava (03:31)
Why is job mix such a critical factor for profitability in construction?

Shane (03:37)
So it’s kind of an old sob you’ve heard timing is everything. Well, where that comes into play with job mix is maybe you’ve got this job schedule. It’s full of work. It’s full of unearned revenue, unearned margin. But when you can see when that falls in your calendar year, when you’re going to make money, when you may be short, that’s where job mix comes in. OK, well, maybe this big job, we can’t move the needle. It’s not going to go any faster than what it will go.

but maybe over here in this month we could plug in some small work, a special project, something that is a quick hitter, and maybe that’s what we need to turn a break even month into positive or a loss into break even. Sometimes just not having a loss in a month is a win, and so job mix can help you with that. The P &L side, that’s the P &L side. The other side is the balance sheet. How much does it contribute to working capital? How much is

Rishi Srivastava (04:04)
Maybe you’re over here and that’s not.

The other side is the bad one.

Shane (04:29)
Does it contribute to equity? Or is it going to drain it? And these are all things that’s important to know when you’re trying to look ahead and make informed decisions.

Rishi Srivastava (04:31)
And like you

said, on the weak months, you know, maybe when there’s not a lot of work, not losing money is also winning, not losing too much money, Yeah, exactly.

Shane (04:49)
Yeah, sometimes that’s a win.

Just not slipping backwards. Sometimes you can celebrate that.

Rishi Srivastava (04:56)
Right, right. The next section is on cash flow and job selection. When you sit down with a contractor for the first time, how do you help them think about job selection?

Shane (05:08)
So that’s kind of a continuation of the other ⁓ point I just covered. So not just job selection from the standpoint of profit, of revenue, gross margin, and then leading to net income, but cash flow. Contracting’s a hard business. You don’t want to do it for practice. You want to be building value. by value, I mean a balance sheet. means you need to have equity. You need to have working capital. That builds a sustainable business. So when we start looking at work,

when I put all their jobs in and the other data that’s relevant, we can start seeing, well, here’s, it’s not just billings every month. Here’s what that does to get you to a better place from a business standpoint. Here’s how you’re building value or here’s what we need you to get you there. This isn’t just, you should not be doing this to break even or have a little cash. You need to feel good about what you’re doing. And so when we start putting all the jobs in and then looking at

Rishi Srivastava (05:59)
in and then putting

it on certain ones and seeing what happens with the job changes.

Shane (06:01)
picking on certain ones and seeing what happens if this job changes, if we add this

new work in, it becomes a, you start looking at the top level, not just individual projects.

Rishi Srivastava (06:11)
What’s the biggest myth you see owners believe about cash flow?

Shane (06:15)
I have two. there’s the usual that net income does not equal cash flow and we all know that intuitively. There’s doing the work and then there’s getting paid for the work and I wouldn’t say people don’t realize that but I would say they forget. Nobody likes to go make collection calls. They want to just go do the next job but believing that you can’t manage that process is probably a myth. You need to have someone on point.

Rishi Srivastava (06:17)
That’s it.

Mm-hmm.

Shane (06:42)
responsible for cash flow. You don’t want to wait till it’s a fire drill to deal with it. So the biggest myth or the ⁓ biggest pain point is not addressing cash flow and just thinking I did the work, I build, I’ve gotten it income. It must be going to show up someday. The other one is since we do construction, commercial construction, we do percent complete. That means we do under and over billings and the

Rishi Srivastava (06:49)
and to get changed.

other one is…

Shane (07:07)
The one I see, personally, that I like to get people to overcome is thinking that overbillings are bad. I love overbillings. That means you’re in a positive cash position. That means you’ve been paid, you can manage the cash. The opposite of that is having to ask to get paid. to me, the number one thing is manage overbillings and get overbillings if you can. Now, that also assumes you’re

Rishi Srivastava (07:08)
I see personally that I like this.

building.

Shane (07:33)
working with us or you have a process like I described and so you know you’re not just going to put in the checkbook and spend it. I’m short-cutting a lot but if you work with us you understand the importance and you know this is why you need Overbill.

Rishi Srivastava (07:42)
So that would be great. Yeah.

Yeah, my collection is painful. You know, don’t want to go ask money for money, but you need the money.

Shane (07:53)
Yeah,

it’s a right to get paid. It’s not a privilege. You did the work. People just have to ask.

Rishi Srivastava (07:58)
Yeah. How do you model whether a company can cashflow a new project?

Shane (08:03)
So when we do that, we start by putting it in the model from the standpoint of the job and looking at earned revenue and gross margin. And so from that point, that’s relatively straightforward. We know, okay, well, here’s when the job’s gonna start, here’s when it’s gonna end, here’s what it adds to the bottom line being net income. Now going back again to cash flow and the balance sheet.

Rishi Srivastava (08:25)
to catch.

Shane (08:26)
I like to take people back to the balance sheet because that’s really how you see how healthy a business is. So if we’re going to do all this work, what is the impact of that job? And for example’s sake, job. It’s 30, job is underbilled for a large period of time? What happens if our collection terms are not

favorable compared to our payment terms for our subs with, for example, matching payables to when we get paid, matching or managing

focus

Rishi Srivastava (08:53)
for seven. But the conditions need to be Yeah, the interest rates are so high nowadays. You underbilling and if you’re putting too much pressure on your line of credit, that’s not good, you know?

Shane (08:53)
the conditions we’ve been given.

Oh absolutely and banks want to know that you have a plan. They want to know you’re not just chasing billings and so if you’ve got to run up a line of credit because you had to have that job where it made sense they want to understand how you’re gonna how the at the end of it what’s the reward okay it’s not just net income that we then had eaten away because we paid eight or nine percent on a line of credit so absolutely.

Rishi Srivastava (09:07)
Mm-hmm.

Yeah.

What are the top three levers contractors can pull to improve their cash position in the next 90 days?

Shane (09:41)
you only want three I’ve got like five or six so there’s the usual bill and collect AR but what I would say that that leads to is not just not don’t just look at your AR aging and say okay here’s what we owe here’s here’s what is owed us here’s who I’m gonna call go back and look for projects that maybe you haven’t billed

Rishi Srivastava (09:44)
Give me all then.

Okay, here’s what we owe.

Shane (10:03)
Service is a good example. A lot of times a service department can get really busy and they’ll put costs in a work order, but somebody forgot to bill it. So if you have a, some software calls it a job profitability report. If you have a simple report that lists costs and then billings, you can quickly see, this job is cost, we haven’t billed it.

Okay, so that’s bill and collect. That’s a little bit more behind it, but look at things that maybe aren’t showing up that you can bill. The next is always look at retention. Put someone in charge of figuring out when you can bill retention and then collect it. And a little bit more to that is how soon can you go retention? Maybe you need red line drawings, whether you have to do training or send in O &M’s. Well, the faster you can get that done, the faster you can bill. So,

Sometimes it’s not just enough. There’s more to it behind the story of just looking at an aging report or balance sheet. Now financials are a great tool to communicate because you can go and say well, let’s look at retention. Let’s talk about why it’s creeping up and now let’s go through and find the process that manages that. So that’s two. The other one is managing underbilling or getting more overbilled. Again, I like overbilling. If you’re underbilled, that just means you’re incurring

Rishi Srivastava (11:10)
the only one and it being under.

Shane (11:19)
probably paying for costs before you get paid. So again, look at that. It’s not just the balance sheet, but on the job schedule with the some they go by the same name. It’s a form report, different names, but look at that. that going to flip? If it’s high, is it a timing issue? So questions like that. The usual aligning payables with receivables, meaning pay when you get paid.

Rishi Srivastava (11:25)
it’s balanced. ⁓

Shane (11:45)
as much as you can. That’s not always possible, but if you’re paying in 30 days, you don’t get paid for 100 days, that’s a problem.

Rishi Srivastava (11:53)
Yeah, especially subcontractors there are know 60 days delay and the retainage is just such a hard line of work

Shane (11:57)
yeah.

Oh, absolutely. 100 % agree. You really have to have someone that is dedicated to looking at that stuff. Maybe it’s not every day that you need to consistently review these items. And then the last one, I would say review your job schedule and know your estimate to your actual cost and your under over billings. At least material size, meaning they make it in a palette. If you understand that, if you look at

gross margin fade, if you’re at under and over billing, percent build, you’ll And that’s the important thing is have a discussion with your team, with the owner, with your GC. The biggest thing is talk about these and then that’s how you can get ideas and get to continuous.

Rishi Srivastava (12:48)
Yeah. Forecasting and growth planning. When forecasting, how far into the future do you think contractors should realistically plan? One year? Three year? Longer?

Shane (12:59)
I like one to three years. Some people can’t plan yesterday, I would say three years is most projects last two years is a pretty long project so we can spend a lot of time in Strategy talking about this year and how to make this year great But then have an eye on if we repeat this again in year two, where do we get and then year three? What can we what can this business look like so?

Rishi Srivastava (13:04)
Mm-hmm.

Shane (13:25)
I would say have a goal of what you want to be for a company in three years, then it’s now time to get to work and that’s focus all your efforts on making the current year a great year.

Rishi Srivastava (13:36)
Yeah, for planning for too far out, it’s just too hard to, I mean, nobody knows what’s going to happen in five years. know, right.

Shane (13:43)
⁓ no, it’s just a guess. There’s so many…

Whatever’s out for bid or you’re estimating today, that job, it’s done. We don’t even know what the market’s going to be looking at building for the most part in five years. Who knows? Could be a total change between government work and private work, school bonds, federal money, Davis-Bacon jobs. But there’s so much out there. yeah, I would say have an idea where you want to be. But if you’re going to get there, it’s the day to day.

blocking and tackling to make year one a great year.

Rishi Srivastava (14:12)
How do you incorporate debt structure, banking, and bonding relationships into your predictions?

Shane (14:18)
Those are the fun ones because and that’s why I spend a lot of time on the balance sheet because everybody that an outside partner wants to know what does the balance sheet look like so if you’re gonna add debt whether it’s long-term debt fixed assets a line of credit short-term help to get through a job they want to know what does that balance sheet go what does it look like now what’s it gonna look like if I say yes if whether it’s to that job or that loan what is your

Rishi Srivastava (14:24)
So.

Shane (14:46)
stress test it, show me what it looks like and show me how you’re going to improve as a result. So we can factor those in and then we have, I’d call them swim lanes. This is, the model’s made for, I would say decision, not precision. And what I mean by that is we can plug a number in of debt and then directionally, what does your company look like as a result? And then the effort you have to put in or you’re going to put in with growth.

new work, whatever it may be, what does that look like? So you have an idea. I don’t expect you to get to that number to the penny, but you need to know, okay, if I keep doing this, then I should be in a comfortable range that allows me to pay off the debt, to get the next bond, to have my surety say, I will support you as you continue to grow this business. So that’s a critical piece, and being able to show not just did we…

add a chunk to a liability in one month, but here’s what the result is. Whether it’s paying it down, getting more equipment, the balance sheet has to benefit from that. So we have multiple but simple ways to show that in stress test.

Rishi Srivastava (15:54)
Yeah. As a business owner myself, I like to see P &L more than the balance sheet. for people who are listening to this podcast, could you help us understand the connection between balance sheet and income statement?

Shane (16:08)
Yes, think of the balance sheet as a bookend. let’s say your year is a calendar year of January 1 to December 31. Well, your balance sheet on 1-1 of the new year is one end of the bookend. Where you end up with a balance sheet at 12-31 at the end of the year is the other. Well, on that balance sheet, have assets, have liabilities, you have equity. Well, transactions flow through there, whether it’s

billings going through into AR and as a result going up to cash, whether it’s job costs going to accounts payable from cost of sales. So everything on those bookends flows through and ends up on the P &L. So that’s the P &L, everybody likes that because that’s the activity, that’s like your scorecard of how you’re winning, how fast you’re winning, but the end result, what you built with it is the balance sheet.

Rishi Srivastava (16:52)
Mm-hmm.

Hmm, that makes sense. What are the most common aha moments contractors have when they see a three-year forecast for the first time?

Shane (17:07)
I would say the biggest aha is I know how to get there now. I’ve talked about the job schedule, looking at historical data. If all that’s right, if it’s believable and you as the owner trust that data or the CFO or whomever on the team is looking at this data, when you see it laid out on a timeline, meaning month to month for one to three years, it clicks. It’s like, aha, I see what this effort gets me and now I see where I need to focus next or.

what I’m going to have someone else focus on for improvement, for more work, for more fixed assets. It all makes sense. It’s not just a piece of paper, but it’s a timeline and you can see the results. that’s the biggest thing. It keeps them motivated. I think, okay, I can do this another day because it can be a thankless job running a contractor. And so being able to know that if you keep putting one foot in front of the other and managing the work and finding work.

Rishi Srivastava (17:54)
you

Shane (18:00)
This is the timeline and this is what it’s going to look like.

Rishi Srivastava (18:03)
How do you build a financial projection that owners and project managers will actually use?

Shane (18:11)
Keep it simple. So more than that, would say involve the team because we’re using trustworthy data, meaning they’ve again done the process. Everybody knows their role. They’ve done their part. Now we’ve got data we believe. Well, you don’t want to spend a bunch of time now. You’re not going to spend time reconciling, looking at individual. We don’t care what postage expense was. We don’t care if utilities changed by five bucks.

Rishi Srivastava (18:12)
Yeah, that’s

Shane (18:36)
We’re looking at the big picture. And so if the team being the project management staff, for the most part, can see, well, here’s my job, here’s what my job contributes. And so if I stay on track, if I beat the estimated cost, if I make more margin, if I go get more work and I can get a little more in this year, now I can see not just what I’m doing on a day-to-day job at a project level.

but what the business gets in return. And so that benefits me as probably an executive management team member, as a project management team member. Everybody wants to incentivize performance. Well, that’s an easy way to then get everybody to see, well, here’s where the performance is gonna get us. And so as a result, they can see how they win.

Rishi Srivastava (19:22)
Yeah, and you know, the project teams, they usually don’t have that much understanding of very detailed financial data. Keeping it high level in the big meetings is so important. You can’t be missing forest for the trees.

Shane (19:40)
Yeah, yeah, you can show them, here’s how, if you focus on what you can control, which is your project, your timeline, your costs, change orders. Here’s how you can think like a business owner, because you’re managing risk at that point. You don’t have to need, I don’t need you, Joe or Jane or whomever to worry about interest expense or depreciation expense. We’ve got that covered. That’s covered as part of our.

Rishi Srivastava (19:55)
Mm-hmm.

Shane (20:03)
monthly process. need you to focus on this to the best of your abilities and now here’s how we win.

Rishi Srivastava (20:10)
Yeah, focus definitely. The last section here is on strategy and decision making. Can you share an example of a contractor who avoided a bad job or made a better job selection because of your model?

Shane (20:24)
Absolutely. So my favorite one is a company we work with. Size is irrelevant. The example is what matters. The job was going to be 50 % of their annual revenue. They were a sizable contractor and it was a 16-month job. It was a quick timeline. It was good margin. It checked all the boxes. Everybody wants a big job and they want one with fat margin. They had that. We put it in the model and before they signed the contract we said, let’s look at

collection terms because we wanted to because it was a short timeline and a ⁓ really big job look at what cash flow looked like well their payment terms were paid every hundred and twenty days so you get three checks in a year and you gotta have it done in sixteen months which means you’re throwing a massive amount of your labor and subcontractors at it and you’re going to cover that cost

Rishi Srivastava (21:03)
Mmm.

Shane (21:13)
We went up and down with that thing trying to figure out, can we manage it with overbillings? Can we manage it with matching payables to receivables? That wasn’t going to work. None of it was going to work. Could we go to the bank and say, we need a temporary line of credit? And we could show you it’s going to go up here, but it’s going to come down here. Well, the answer was no, because it was such a big job. It was a concentration risk. And so what we ended up doing is we took some data from the model, put it in a report.

They went to the owner and said, we can’t do this job at these payment terms. You’re going to bankrupt us. And the owner actually said, well, that’s never been our intent. That’s just our standard contract. And no one’s ever come back and shown us this timeline. What can we do to help you? The best part was they got to bill twice a month, and they got paid 10 days after they billed. So that thing went from a.

gonna bankrupt them, massive rock around their neck, that cash flow that year and made it the best year they’ve ever had. So that’s my favorite story. Now not everybody gets those big a win. I wish we could, it’d make me very happy. But a lot of times it’s also looking at a job, a sizable job, and saying, this fits in this time frame, but maybe if we take it for a little less margin, I’ve had this several times, we shave a point or two off,

and we get that and we know we can perform because it’s in our wheelhouse. I’ve had people do that and they beat the estimate, they got the job and they ended up with a great year. It plugged a big hole and sometimes it’s just here’s another good job. It fits here, it fits here and it just keeps us on track. So all kinds of things you can do if you have the visibility.

Rishi Srivastava (22:29)
Mm-hmm.

Right. You know, a times these contracts, the lawyers are writing it and they really are not taking into consideration, you know, the subcontractor’s best interest and they’re to give their boss the best deal. So 120 days, that’s probably the longest you can hold money from anyone. You know, so they all write that in the contract.

Shane (23:08)
I know, I know. It’s a tough business. We’re trying to build you the best product, the best building we can. so, we’re all in this together. want to, contractors want to build things. They want to be proud of their work. So, let’s don’t stress them out as part of the process.

Rishi Srivastava (23:23)
Definitely, yeah. And people like you who can do and analyze these kind of details, you’re so valuable to the industry.

Shane (23:32)
Thank you, but it also goes back to transactions, reconciliations, financials, and transactions are, a lot of times people forget about the accounting department. We’ve doubled our size and we’ve still got the same number of people we had way back when. And so we try to encourage people, look for efficiencies, and especially software like you have, is such a great tool to go in and automate because you think about the number of transactions that have increased.

Even if you didn’t grow more, the amount of information that owners or GCs, whoever you’re billing, is starting to ask for is tremendous. And so it’s important to look for any tool you can get to make that job easier.

Rishi Srivastava (24:13)
Thank you, What’s your advice to contractors growing fast but not seeing the profits they expected?

Shane (24:22)
A lot of times in our experience it goes back to looking at your estimate versus your actual. And what I mean by that is having a job schedule slash working process with your contract, your estimated cost, and then tracking your actual cost to date and having it percent complete and under a rebelling calculation. And understanding is that going in the right direction because a lot of people will bid a job at…

15 % and then they never go back and look and say, is it still making that? They just assume, I bid it at that, it must come in at that. And then they’re not, by the time they see it, they’re not doing a WIP, or they’re spending, not dedicating the time they should be to understanding the WIP. And then you’re behind the curve. I would say not just start when you think profit’s not meeting your expectations, but start from day one. If you’re growing, you really need.

that data. It is not a hard report. That’s tricky to understand, but it becomes second nature after you look at it enough. And so that’s key. Look at your job schedule and compare your estimate to how your job’s actually performing and be honest with yourself. Nobody likes to lose, but you may have to admit that job didn’t turn out right. And so let’s fix it. Let’s make it what it is. And then let’s do the strategy. Okay. How do we overcome this?

Rishi Srivastava (25:39)
I used to work for a commodities trading company and we used to estimate profit and loss you know when let’s say beginning of month and the end of month comes and the accounting values are always different compared to our estimates. Exactly, who are you estimating? Maybe accounting made the mistake you know it’s not the estimators we were estimating everything right.

Shane (25:55)
yeah, and then the fighting starts.

I know. Yes, I have a friend who used to say, well, we just report the news. We don’t make it.

Rishi Srivastava (26:04)
You didn’t go and collect. You know?

Yeah, yeah, it’s tough to estimate and also accounting is tough too, you know both Yeah so How do you balance? Optimism versus realism when building projections in a volatile construction market

Shane (26:30)
Balance is a good word. You’re actually continuing on with the previous one about if you’re growing fast and not seeing profits. You really have to have an honest discussion about your job performance. Don’t throw a fat number in the estimate and then think that and be unrealistic. If that job’s changing, because they all change, the minute you start the job the estimate is wrong. It’s different, I should say. So you’ve got to spend a lot of time

Rishi Srivastava (26:52)
Mm-hmm.

Shane (26:55)
asking questions and again back to our framework if you feel the transactions are in if you trust the data then it’s a great tool that you talk communicate talk about that information here’s what we’re seeing is this realistic I know we bidded at X and we were excited well let’s let’s talk about whether we’re whether we’re still on track or maybe we need maybe we need a dose of realism

Because you can’t make good decisions if you’re not honest about how you’re doing. It’s just life.

Rishi Srivastava (27:25)
Yeah, right.

You gotta be really hard on yourself and be just truthful. Whatever is the reality, if you try to hide it, it just gets worse.

Shane (27:36)
Absolutely. I think I look for the good in people. I don’t think anybody gets up every day trying to fail. I think they just want to do their best and sometimes situations change. A job is always different than the way you bid it. So let’s just talk about it and let’s figure out how to help each other out and get through it.

Rishi Srivastava (27:53)
The last question here for you Shane is what are the key metrics you watch monthly to ensure a contractor is on track with their growth plan?

Shane (28:02)
So what I like to do just to make sure you’re on track, to make sure everybody’s up to speed and everybody knows where they’re headed, the first thing is always the job schedule. We always do a detailed review of estimate to actual, compare it to prior months, prior period, is there a change? And what I mean by change specifically is gross profit changing. If it’s going up, that’s great. Hopefully that means you’re beating the estimate.

and they’re updating estimated costs and they’ve got change orders in, but pay attention to that. Are your change orders in? Are you putting in costs and then hoping you’re gonna get a change order later? There’s so much you can talk about with a job schedule. So that’s the first thing we look at. We spend a lot of time on that because it’s a great tool. And then we have put everything in the projections. I mentioned earlier, you should know what to expect for the month. And so we will look at.

Projected results for the period compared to actual and I’ll look at the next three months out because if I see something slipping after we update projections I’m gonna bring that up in the strategy meeting. Okay guys Is this correct or is did something change or is this a timing difference and then working capital? Cash is king But you have to look at working capital not just from a standpoint of do you have enough? what’s what’s the mix or the quality? And what I mean by that is

You can have a lot of working capital, but if it’s tied up in old AR, if it’s tied up in retention, if it’s tied up in under billings, you can, again, have net income and no cash. So I always drill into the job schedule, projected versus actual results, and what’s the balance sheet and its working capital look like.

Rishi Srivastava (29:39)
One thing I heard from a speaker recently was contractors run out of cash before they run out of work.

Shane (29:46)
Yeah, absolutely. I have seen people actually go broke but they had positive net income. They got too far behind. The bank said we can’t help you anymore. But if you do, it’s not hard. It just takes diligence. If you’ve got someone on your team looking at this and you’re using all this information as a tool to communicate and back to the beginning, if your transactions are right,

Rishi Srivastava (29:55)
Yeah.

Shane (30:10)
you can start to get to where you believe the data. anyone listening, you have talked to Rishi, get some automation, get the data in, get it in right so that you can actually start making strategic decisions. Don’t spend a day chasing invoices. Get onto better, more fun things and make money.

Rishi Srivastava (30:28)
Yeah, Shane I had a great time chatting with you. Thank you so much for coming on the show.

Shane (30:33)
My pleasure, thanks for having me.

Rishi Srivastava (30:35)
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.