Andrew Polito is VP, Controller at Go HQ which provides a suite of back office services, including recruiting to delivery companies. The Fort Worth-based company provides back office support for transportation and logistics, seeing 500% growth in five years, earning a spot on the Inc 5,000 list of fastest- growing private companies in America.
In this episode:
- From audit to shifting to a private company finance team
- Building FP&A from the ground up
- Power of the 13 week cash forecast
- How I introduced automation in an initial two-person finance team
- How our finance tech stack delivers the data and insights to succeed
Transcript
Glenn Hopper:
This is fp NA today. Welcome to fp NA today, I’m your host, Glenn Hopper. Our guest today is Andrew Polito. Andrew is Vice President and controller of GO HQ and Bright Flag Recruiting, which are both part of Waypoint Group. Andrew has grown with and led the accounting and finance functions of Go HQ for five years and led finance through Waypoint Group’s acquisition of Bright Flag Recruiting in early 2024. Go HQ and Bright Flag recruiting together provide a suite of back office services, including bookkeeping, hr, and operational support to small business owners in the home delivery space.
Since 2020, Go, HQ has grown over 500% and has earned a spot on the Inc 5,000 list of fastest growing private companies in America. Two out of the last three years, Andrew’s previous background was in public accounting, working in KPMG’s audit practice. He comes with a unique perspective as a young professional who left the world of big four public accounting for a small business with no previous finance team. He’s had to rely on tools and resources to enable the finance function to scale with a fast-growing business, while maintaining a lean team and ensuring all stakeholders receive information timely to inform quick and quality decision making. Andrew, welcome to the show.
Andrew Polito:
Thanks, Glenn. Happy to be here.
Glenn Hopper:
Yeah, so we met at a data rails event, what, back in May earlier this year? Yeah,
Andrew Polito:
Yeah, earlier this year. Yep. Yeah,
Glenn Hopper:
And I think our conversation then will be probably pretty similar to the one we’re gonna have on air today, so that consider that our dry run. Everybody I talked to is a potential <laugh> podcast guest, so it was just, that was our prep months ago for the conversation today,
Andrew Polito:
<laugh>. Yeah, that’s right. I was really intrigued by, you know, what you do here and what you do in general. And so I was really excited to continue the conversation further and, um, you know, just talk a little bit more about what we’re doing and career potential and whatnot.
Glenn Hopper:
Yeah. Having been in those early startup phases, being the first fi building out the finance function from ground up, and, uh, it’s, it’s an interesting challenge. I, I know, uh, audit in itself, you learned a, a whole lot, but very laser focused, uh, what you were doing in audit and then jumping into this startup world, especially one growing as fast as you guys are. I’m, I’m really excited to dig in and talk about sort of how you’ve built the team and, and made that transition and everything. So I guess with that, you, you want to dive in?
Andrew Polito:
Yeah, yeah, definitely The shift from audit to to private company finance is, is, is pretty, pretty vast. So definitely I look forward to talking about a little bit more about what the challenges were as well as, you know, what’s going well.
Glenn Hopper:
Yeah, and I think, so my first finance leadership role, I had only been an fp and a, so there was a lot that I, and I’m not a CPA, so I was missing a lot, but at least I was familiar with sort of the more on the strategy side and the modeling and all that. But there’s some basics that <laugh> probably a little bit of a background in audit would’ve been really helpful in that phrase. Thankfully, I had a, a really good controller in that first, uh, in that first role. But I wonder, you know, a little different from your side, making that leap from external audit to running finance internally, what was the hardest part of the biggest shift or the biggest realization to you when you, when you made the move?
Andrew Polito:
Yeah, coming from audit, right? You’re working with large publicly traded companies very often, right? And they’re, they’re very mature finance functions, accounting functions, and a lot of resources and a lot of teams. And your primary role in audit is really on the financial reporting side and making sure that investors are protected, that the company has the right controls in place, and that everything is up to snuffing according to a gap or IFRS or whatever, you know, regulations that the company falls under. Whereas on the private side, what’s, what’s really important is a lot different. While those things are very important, you really have to have an understanding of what makes a business successful and sustainable. So that was the, that was the hardest part of making the shift was when I came in, I came in guns blazing, I was creating flowcharts, I was creating, you know, making sure my accrual entries were, were perfect, my amortization roll forwards were, were great.
But then was that really what was needed for the business at that time? And understanding the non financial reporting functions, if you will, that that come with making a business successful. So things like cash forecasting, budgeting, KPI, tracking, you know, going through accounting school, getting my CPA, you know, what a KPI is, you know, what the right ratios are that you’re supposed to be measuring when you’re talking to a client and audit and they have certain debt covenants they have to meet, you know what those are. But when you come into the small business finance, they’re looking to you to tell them what KPIs are important, what should we be measuring? And you really need to get an understanding of the business that you’re working in in order to develop that. Not every business is built the same. And so the, the, the KPIs that we’re tracking are gonna be very different than some of the companies that I was auditing and, and what, and what was important.
And oftentimes those aren’t making it to the ending financial statements. So it’s not something that you’re really thinking about as thoroughly in audit versus now. And then the other part about audit that was interesting is you’re very often checking the work of others in, in, in a lot of ways. You’re, you’re very much making sure that everything is being done correctly when you come into, and when I came into the role here at Go hq, I was creating that, those processes, creating that work, making sure that it worked right, uh, and what was important, what wasn’t. And that was really the, the, the, the hardest part about it was creating from scratch and then deciding what was important, what wasn’t, and then what, what needed to be done now versus can be done later and and whatnot. And then lastly to the resource constraints. Uh, you just have in a small business as, you know, you’re, you’re smiling there, there might be this great software that’s gonna solve this, um, this, this need that you have to improve your cash forecasting, for example, well, the business name may, may not be able to support the cost of that at that time.
So you have to be scrappy and you have to work with what you have and create what you can and then grow with it and then, and then continue to build on the tools that you have as the business grows and can support those other costs that you have.
Glenn Hopper:
Yeah. And it’s not like if you moved from audit to a public company with all the tight controls in place and all the processes defined and, or even even a mature private company, um, that’s one thing. But coming in where accounting is is such a mess. And, you know, chart of accounts probably is, it’s maybe the default accounts or maybe some made up weird accounts that are in there that some part-time bookkeeper did at, at some point or, or whatever the case is. You’re in inheriting just this sort of gray mess and I, I’m not particularly where you are, but just at that phase of the company, finance and accounting are not the primary focus. It is founder led and they’re running the business, and that’s where the focus is. So you get into this, it’s inevitably gonna be a mess. And I’m, I just think about <laugh>, all the auditors I’ve worked with and, and how much I used to drive my controllers insane.
Um, but the whole accountants, I’m, I’m really good with directionally correct, and I, I get like, I’m almost more excited when my forecast is really, really close than I am if we, you know, perfectly close the books. It’s like, well, that’s, that’s easy. The, for nailing the forecast, that’s the hard part, <laugh>. But I just, I think about accountants and, and the great controllers I’ve worked with and all the auditors I’ve worked with through the years. Um, and I could tell that the way that I talk, I mean, I think a lot of them would really sort of struggle with the uncertainty, especially in that startup phase where you don’t have historical data to base your forecast on and you don’t have really defined processes. And you know, you are, especially in your case, I’m sure, you know, using gap to the, the best of your ability. But a lot of times you, you inherit sort of this blended accrual <laugh> accounting with, uh, where they’re using the p and l to like, as a cashflow statement. But I wonder, having that background in that mindset, how did you personally adapt to that shift? And were there certain things that you relied on within you or just, okay, I’ve gotta accept this to make that shift. I just, I love thinking about that shift.
Andrew Polito:
Yeah. Yeah. It’s funny you say that with inheriting different, right? So like, our company definitely similar in that, in that regard, working with, with part-time accountants or, you know, outsource CFO groups that would provide a bookkeeper. And then at the end when I got it, probably had a touch three or four hands at that point. And so while everything was directionally accurate, it was definitely, you know, required some cleanup. And so to answer the question directly, it was really just leaning on both, I would say. So I really, really relied on the people that were already there to really understand the business. I, I, I came in wanting to know what everybody was doing. Uh, anybody who knows me is, I tend to know a little about a lot of things, uh, kind of a wide net of, of things and just ’cause I’m naturally inquisitive.
If someone’s good at something, I’m like, oh, tell me more about that. And then I dig in and dig in. And a lot of the conversation that you and I had was just like, kind of like asking questions on questions and whatnot. And so I really like leaned on a lot of the operations leaders and business leaders and the founders to, to really understand what was going on, what do we do as a business, and also what, what do we wanna be doing as a business? So what should we be doing? And then just getting as much data, facts and information as I can, uh, about what was going on. And then, you know, leaning on the people that were there, but also leaning on, you know, my natural inquisitiveness of really trying to break things and trying to understand how things work. And so the one thing that became apparent for me, and this actually goes back to like the accountant in me, is I wanted, I wanted to get perfect and accurate.
That’s like the, that’s like my default setting and I’ve worked against that. So you saying how I’m happy with directionally accurate. I’ve, I’ve become closer to that as I, as I’ve grown over the last, you know, since leaving public accounting. And so I’m pretty proud when a forecast is, is very accurate. I was just telling, you know, somebody else, our, you know, our expenditures forecast is, is right on the money still. You’re going into, you know, six months now and, and whatnot and, uh, you know, hang your hat on that. But what drove me nuts was that I, I, I knew what was happening. So like after I got that understanding of the business, I could say, this is what happened. This is how we need to account for it. I did the cleanup of the books and whatnot, and I, you know, we deal with that with our services too, with, with customers we support.
But it was driving us, I couldn’t predict the future. Like I, I wanted to be able to predict the future and I wanted to create that right forecast. So that was really where I started shifting my focus to be able to say, okay, this is what’s gonna be happening next week or next month, or in three months coming into a new finance role. It would, I, I felt like I was coming up against surprises all the time. ’cause maybe something wasn’t accounted for properly in the past that I needed to know about, or, Hey, here’s this annual bill with this ma with this major vendor that came up that you have 15 days to pay it. And I, you know, I’m two months in and not realizing that was something that was going to be coming up. And so that’s how I kind of shifted was I really got as much information as I can, took about a month or two to really understand the business and then decided what was important, what wasn’t. And then more importantly, we need to be able to know what’s coming up. And so shifting my focus that way, knowing that the cleanup of the books can happen over time as we make sure that we’re set up for success going forward.
Glenn Hopper:
I love the way you answered that, starting with getting to understand the business. Because if you think about it, and if accounting is the language of business, then understanding, even if they don’t have clearly defined departments, which you won’t necessarily have a, in, in an early stage startup or, uh, clearly defined products even necessarily. But understanding what gets done, what expenses are tied to it, sort of what’s fixed and, and variable, and where any capital expenditure, uh, just understanding how the business operates will then inform whatever chart of accounts changes you have to make and, and, and recoding and remapping and is this a prepaid or is this a one time thing? What’s going on here? And really understanding the fundamentals of the business, then you can map it to the accounts and everything. So that’s, that’s something to th think about. We, I think we take it for granted when we inherit nice, orderly, you know, a clean chart of accounts and, and everything, uh, mapped to the right place, but having to get in early and define all that. But that’s, that’s great to start with the actual business itself, rather than trying to lay, see these are the standard COGS accounts or, or whatever. Trying to lay that on top of it. Let’s understand what goes where and why.
Andrew Polito:
Yeah, yeah, definitely. And we, you know, that ended up leading us to, you know, creating more of a horizontal view of our, our business. So we have one entity at the time, but we have six distinct service lines that really operate under different margins. It’s almost like products where you have different costs associated with them. And I learned that through speaking with every service leader. This service may be able to support X number of customers with two staff. Those same number of customers needs five staff to support that same number of customers in their service. And they’re all paying different, and the customers have different rates based on the tiers of service. So we have a fairly complex business. So being able to, and before it was just one revenue line for everything. So I, I looked at everything almost as separate sub entities of this one entity when looking at revenues and costs. And it was able to really more easily decipher where we needed to focus our efforts on and, uh, allocate costs and whatnot. So, and that’s how we still really think about our business today.
Glenn Hopper:
Yeah, and it’s, you have to, uh, understand the baseline. You have to have descriptive statistics before you can have predictive statistics. So that’s kind of what you’re doing. And that’s leads to fp and a is gonna be impossible if you don’t define the playing field of, of where you are now. So thinking about that, you had to develop fp and a in-house lean team and no previous fp and a. So what was the approach that you used building that from the ground up, especially the accounting stuff you had nailed down, you hadn’t done fp and a directly before, so that’s, that had to be a challenge. Can you kind of walk us through that?
Andrew Polito:
Yeah, yeah, definitely. So the main thing, kind of referencing back to what I said earlier, right? I, I, I didn’t want any more surprises to come across my desk for like, things that were big, like we had a plan and then suddenly there’s this, you know, massive vendor that we need to pay or renegotiate their contract with. And so I really focused first on what’s going to keep the lights on. So one thing that I wish I knew about right away that I should have been doing, and it was something that now is so obvious, is that 13 week cash forecast, I mean, we all talk about it in finance and fp and a, but coming out of, uh, public county, I never really thought about the need for that and how important it was. And now, uh, I was, I was a member of the IMA, uh, in, in San Antonio, and the rational CFO came in and was talking about like, that’s the, the number one most important thing.
And it was cool ’cause I had just started working with that. I was like, okay, I need to focus my efforts here. And that really forces you to understand everything that’s gonna be coming in and out. And not only doing it, but also then measuring the accuracy of it as you go. So like, alright, I thought we were gonna be here, this is where we ended up. What did I miss? What did I get wrong? That was the first level of business was what’s going to keep the lights on in terms of making sure that we’re able to meet our debt debt service and meet our, meet our vendor payments and make payroll and, and everything that comes with running a small business, uh, and, and make collections as well of customer, of customer receipts. And then the next step I did was, okay, now we’re gonna be growing.
We, we, we saw an influx of customers and then I’m getting requests from people that I want to, I wanna hire somebody. I want to hire someone here. We need someone over here. And so then I focused on when can we pro, how can we predict when we’re gonna need to hire somebody next? And that was really the the first version of what, of what our forecasts are today, uh, where, all right, when we get to this customer number, it’s about we’re gonna be running at about 90% capacity. We’ll start hiring someone then if more business comes in, that person’s hired, and we have the capacity to be able to fulfill it and keep going. And so, uh, creating those, those metrics and those KPIs of the ratios between customers and employees or, or whatever ratio that, that any business would be. And in our, in our case, it’s, uh, customers per employee because we’re a, we’re a service-based business for every person.
They can only handle so much. They have only so many hours in the day. And then as we got those defined, it was how can we measure that quicker and quicker? So over the last five years, it used to be after about a month and month after month end, we would run every, run all of our ratios, run all of our KPIs, and this is what we did last month. And eventually that’s not quick enough. And so we start to go, okay, how can we do this mid month? And then how can we do this in real time? And suddenly now we’re able to track, you know, how many customers we’ve added in the week that it happened, like implemented and started service and started getting billed at right as it’s happening in real time. And that’s a report that goes out to all of our management team. Or if a customer drops off, it’s coming off in real time. So we’re able to track retention rates, uh, churn rates, customer ads, upsells, whatever it may be all in real time. And then we could track margin differences as well compared to what we, where we should be tracking at in real time. Like we we’re processing payroll, we know all of our costs associated with the services, and right away we know if there’s something that went wrong or, or different. And we can better predict that for the future and get ahead of it.
Glenn Hopper:
Yeah, I <laugh> that 13 week cash flow. It’s funny because I went from big corporate finance where here’s your statement of cash flows and um, we look at it so we understand what that means, but that’s not the same thing as your 13 week cash flow forecast. And then, so my first CFO gig was a, a was a retail business. So the cash flow, I mean, there’s a, a, an inclination or a tendency to always try to use the income statement as representative of cash flows. But when you get into service businesses that are invoicing and you’ve got delay and all that. So it wasn’t until my second or third CFO gig in a a service company where, um, <laugh> I inherited a finance function that was previously handled by a group’s, um, tax accountant, which you see that a lot in small businesses. They, they’re, they’re asking whoever’s doing their taxes just be their pseudo fp and a and that’s not really the wheelhouse for, for tax accountants, but they were, had no idea what their cash flow was.
All they knew was at the end of the year, they were supposed to spend all their cash <laugh>, which headed into their slow season in Q1, which was always a, a nightmare. But building out that 13 week cash flow forecast went a long way to don’t do that and to making better business decisions. So it interesting to hear that that was a, a first, the first one for you. ’cause it was, I guess I was spoiled by being in that cash business where, I mean, obviously there’s un unwinding the accruals and all that, but the income statement was pretty close to the, uh, to, to what the cash flow was. And so didn’t have to train, um, uh, management on how to read cash flow statement or, uh, or spend a lot of time on that cash forecast. So
fp and a today is brought to you by Data Rails. The world’s number one fp and a solution data rails is the artificial intelligence powered financial planning and analysis platform built for Excel users. That’s right, you can stay in Excel, but instead of facing hell for every budget month end close or forecast, you can enjoy a paradise of data consolidation, advanced visualization reporting and AI capabilities, plus game changing insights, giving you instant answers and your story created in seconds. Find out why more than a thousand finance teams use data rails to uncover their company’s real story. Don’t replace Excel, embrace Excel, learn more@datarails.com.
It’s so key in small business and you just don’t think about it if you’re in a going concerned large company that regardless of what your DSO is, obviously you wanna shorten as much as possible, but the business just churns along. But when you’re in that startup mode, especially scaling like you guys had, and I do want to dive, dive into the scaling and actually let, let’s, let’s get into that now because it’s one thing to be at a startup, but one where you are, I mean, you guys have more than doubled in size multiple years in a row with only is it just two people in in finance? And I’m wondering in that where, where you’re dealing with this, things are changing and growing that rapidly, how do you prioritize what gets automated? What stays manual where you’re spending your time and your focus because it’s gotta be shifting sands under you with that kind of rapid growth.
Andrew Polito:
Yeah, it was a, you know, one thing at a time, you know, what, what can we automate? But the lens that I tried to think it through is where is the value add of finance? What, like what, where can the value add be be and how do I get myself and my team the information needed to create that value without spending all the time just getting those numbers? You also have to consider risk. I don’t wanna go automate a process too much that we don’t have a full understanding of. I think that’s like one of those, you know, I’m a automation expert by any means, but one of those golden rules of automation where like you really should understand your process before you start trying to automate. And a lot of companies get themselves into trouble automating something they don’t understand. And so you can’t really vet it at that point.
And so I, I started with the, you know, the lower risk items, the, the day-to-day transactional record keeping that, you know, you can have controls on place on the backend to to, to clean up and make sure that they do get right. So, uh, within our ERP, just setting those rules and making it a lot easier. And then we use, you know, AP expense management platforms like RAMP to predict where those costs should be. And you, you tell it rules. So like, this vendor will always go here and this vendor will always go there. And so there’s recurring monthly subscriptions that make it a lot easier to, to manage. And so those are, those are some of the first things that we were really doing. And then on the flip side, you also look, you have to look at volume. Uh, we send about 650, 700 invoices a week right now, and they’re changing all the time.
We, you know, our customers can change their service tiers. We have a unique service business where it is a subscription based business, and so it’s a weekly subscription and we don’t require long-term contracts either. So a customer can come in and say, I’m gonna cancel this service and the following week that customer’s that service should be, should be coming off that customer’s invoice. And so when you’re talking about that volume, we have a dozen, two dozen requests between ads drops here, and then within services there’s different tiers. And so that’s a really, manu to do that manually would be really difficult. So we had some systems in place and we definitely had some, you know, manual work that was going into and I really, you know, give a lot of kudos to my team there. That was, that, that really kept that under wraps. And we used some task management tools in order to make sure that things made it to where they should be and uh, had checks and controls in place.
But that’s where it was such high volume that we were forced to make, to automate that as much as we can to the best of our ability because there wouldn’t be enough time in the day to be able to be sending and clicking, alright, this invoice should go out here, this and invoice. You can’t do that. Um, and so that a lot of our spend management, I wanted to make sure our vendors get paid on time. So, you know, setting up on auto pay and making, you know, having controls in place to, if the charge is gonna be over a certain amount, it won’t get, it won’t get made using, again, the spend management platform. Uh, and then lastly, uh, one thing I hate at the end of the month is if we’re wanting to predict what the month came in at, I want to be able to start giving flash numbers to our executive team even before the end of the month is over.
Just to give a general overview, the way I was doing it before and kind of how my mind was trained was all these accrual entries and amortization entries have to happen at the end of the month and this is when we’re gonna do them. So it’s the second of the month, I’m gonna go back and do all those, well, probably 30% of our expenses were coming in during that month end close period or, you know, may maybe not quite that much, but twice. So suddenly the numbers looked really, you know, the numbers what looked one way and now suddenly they’re not looking as good. And so I shifted the mindset to create some automated entries that do post and, and get created, but throughout the month, and also like looking at weekly journal entries to try to get things on pace. And a lot of that stuff is, you know, on a pretty automatic schedule, it’s gonna be generally fixed from month to month. And so we actually do a lot of our amortization entries at the beginning of the month because we know what it’s gonna be. And then accruals we’re trying to get done before the end, but whatever would allow us to get information fastest to our, to the relevant stakeholders is like where I focus my efforts, but originally focused on the less risky stuff that just is monotonous, trying to get that out of the way.
Glenn Hopper:
It’s funny, I thinking about doing accruals for the accruals so that you know, <laugh>, you know what I mean? So that you know what’s gonna hit at the end of the month because, uh, as far as when you’re, when you’re dating those, I definitely remember that I, so I’m gonna date myself here by making a 20th century reference to something that was in newspapers. I don’t know if it, our younger listeners may not know what those are printed big pieces of paper that had the day’s news on ’em. And they also <laugh> they also had, um, a a, a comics section and one, one comic and there was a, was family circus and there was a, Billy was was the kid and there were, it was a a, a running panel that they would do where it’s Billy wandering around and you would see kind of this arrow of all the places that Billy went.
And when you were talking about automating chaos, basically I was thinking if you’re trying to throw automation at something, God, this is a weird off the <laugh> off the path <laugh> description of, of what I’m trying to say here. But so for the older listeners out there, if you remember the family circus cartoon tracing Billy’s path and trying to automate that would be very difficult because it was chaos. So when I would come in to startup, or not, not even startups, but uh, I did a lot of turnaround work as well. And you come in and you, you know, you have fewer people and you’re trying to hit a EBITDA number to make the private equity overlords happy or whatever, we would have to do automation and I would come in as the CFO and just step all over everybody’s stuff. But I was trying to go trace every process, whether it was customer onboarding or whatever it was back to the beginning.
And rather than anything financial, it was about we’re gonna do, uh, an audit of all your people and processes and data flow and all that. And it’s, but you can’t automate anything until you know that. And even, even if you don’t use any kind of digital automation, there are process improvements that people, especially in that early stage where you’re growing fast and people are just getting the job done where everything, every time they do a task, it’s completely different. It’s, this is not scalable, we’ve gotta figure this out and define it and all that. So being there and, and trying to wrangle that chaos and, and map it out. And then the fact that you’ve been able to put in the automation, and this is, this was very, uh, surprising to me when we talked before the show. You’ve got your, your close cycle now down under a week, and I know, uh, I’m sure there’s a lot of automation and maybe just some standard process improvements in there, but, and I know, uh, not quite there yet, but you’re targeting a two day close cycle, which really, that’s a super high standard for a company of, of the size that you guys are.
And, um, and especially considering how lean your team is. So I I’m wondering, God, that was a long <laugh> just a winding road to get to one question, but how much of that is from automation or just improved processes or changing the timing? Can you walk us through how you’ve managed to shorten your close cycle so much and how you plan to get it even shorter here in the coming months?
Andrew Polito:
Yeah, yeah. So, uh, it’s definitely a mix of automation process, just process improvement in general, you know, to, to the point earlier, there’s a lot of stuff that we do that we really could try, we could get in weekly. So just from a process standpoint, we’re really in there every day just cleaning things out, making sure, you know, accounts are being reconciled and whatnot. And then, you know, knowing that we, you know, put up a prepaid that is gonna be hitting in this month, like getting that taken care of in the middle of the month, I’m not waiting till the end of the month to to, to expense that expense that item. So just like general mindset shift of quicker, quicker is better for the things that are, that are obvious. And then, so making weekly entries is, was a big thing too. So there’s a lot of expenses that we know what they’re, we’re incurring and it’s building up over the course of the week, uh, week over week.
And so taking care of those, even allocations. So we have a lot of different service lines and we have to allocate and the costs come in as one, you know, item, but then those allocations need to happen across all the different service lines to, you know, segment the cost correctly. There’s no reason why we couldn’t do that on a weekly basis. And so it, it was the same process at the end of the month or each week. And so something, you using a smaller data set too, but taking care of it weekly, it gives us a better gauge on where we are for the end of the month. And then at the end of the month is really just through review and making sure we’re shoring it up and, uh, to the, you know, reducing it up or down based on what actually ends up coming in.
I made it a lot easier process rather than going through those steps. And then, uh, on the accruals, there’s, there’s specific reports that we pull out of our GL that we know that this is the report that we’re relying on the GL for. So using things like Excel macros to click a button produces the exact GL report that we want. We do a quick, quick review, we import it to the GL or back to the GL with the, with the accrual adjustment and, and it’s done rather than going through and doing manual data entry for that, we are, you know, we’re exploring using AI and LLMs to be able to parse certain, you know, documents that we wanted to, we wanted to do this, it looks like this every single month. And so let’s, let’s, we, we teach ’em an LLM, Hey, this is what it’s gonna look like.
This is what all of this means, this is where it needs to go, and if anything looks outta whack, please tell me. And it, and it kind of says this, this was something different that I didn’t know and now it knows going forward. So now we just run it through that. And so we’re leveraging that in a, you know, we’re starting to explore that as well with some of the stuff that’s more, you know, PDF based or, or not, or even spreadsheet based as well, but just making our lives easier to be able to post the information that’s needed so we’re not spending time posting that information. So that was kind of a long, long-winded answer, but overall it’s really just the timeliness of when we’re getting stuff done. So we’re not waiting till the end of the month to do those things. And also automation to help us move faster and do those things faster.
Glenn Hopper:
You say it was a long answer. I bet it wasn’t. As long as my question <laugh> <laugh>, and I love hearing all this because it’s really, it’s near and dear to my heart because I’ve been there. But also it’s fundamentals. It’s not, oh we’re gonna, you know, we’re using BlackLine or Oracle EPM or just big massive software. This is just brass tacks, common sense. What can we do better? And and solving for it. And really, if you solve the processes and have this methodology as you’re going, as the company grows, sure you can layer in more complex software as you go. And, um, but it’s all having the right systems to start that would make implementation of, of these more complex software systems, um, m much easier when, when that time comes. I wanna talk about datarails because I, I love the way you’re using it, but before that, we talked about your billing workflow before the show and it integrates data from multiple systems, has ’em talking to each other. So just at a high level, tell me a little bit about what your tech stack is that you’re working with and maybe what lessons you’ve learned along the way about connecting tools in a way. ’cause everything you’re doing now is for scaling, so what are you kind of learning as you go, as you fix a problem now, but make sure that it’s fixed also for the future?
Andrew Polito:
Yeah, yeah, thanks. And, uh, again, I’d have to give a big kudos to our systems administration team that, you know, that that’s here at, at, at our company. They, they really saw this to fruition and really made sure that, you know, everything was functioning correctly and really help build all those connectors. And so, uh, wouldn’t have been able to do it, not necessarily without them, but our, our tech stack generally is we, our, our customers sign a, sign a contract or a master service agreement, and that has certain products on it. We use Salesforce for our CRM, so, uh, sales rep is talking to a customer, they add their products to their opportunity that goes out in a proposal. Once that opportunity is signed, it creates what’s called an order in our system. So because a customer signs a contract with us, we’re not a software where the, where it just gets turned on and we, and you go, we’re services.
So it requires the customer to actually take action. We need information. We’re gonna be recruiting for you, we need to know about your job posts, we need to know about, you know, what your pay rate, pay rates are going to be. We need a lot of information to provide the service effectively, and all of our services function that way. So those orders get created in Salesforce, and then the service leaders or the operations teams are working those orders, they’re meeting with the customer before they’re actually starting. This is all before billing starts, before the contract’s actually active. Then once everything’s set up, we’re good to go. We’re gonna start, get started on service releases that order, it creates what’s called a service contract still holding within Salesforce. And then once a week during our invoicing every Friday, those contracts inform from Salesforce, go through a Zapier workflow and then inform zero, which is what we’re using for our gl.
So, you know, to your point, not a very complex ERP system, it’s, so we’ve had to really work with a, you know, a, you know, just a smaller, a smaller ERP, but we’ve been able to make it work using these connectors. Uh, we use Zapier to tell zero what to invoice, which customers, what the product is, what the rate is, and then what department lines or service lines that revenues related to, which is like how we differentiate all of our revenues. Kinda what I was telling about at the very beginning with the different, uh, service lines, what tier that services or whatever it may be. And then Xero talks to a platform called Benji Pays. And Benji Pays is actually like our billing portal where a customer can go in, update their credit card, update their, you know, bank account information. And that’s also where auto Pigment is, is processed through.
And so every, you know, invoice on Friday, customers get invo, get, get charged the following Tuesday, if there’s an error in the charging, uh, NG pays is notifying us, notifying them, Hey, this payment got declined for whatever reason enables us to reach out to them. And then that information is being written back from NG pays to zero to market as paid or, or not, or refunded or whatever it might be. And then if there’s any outstanding credits that are issued that gets, so that’s like generally our tech stack. And then, uh, to connect zero back to Salesforce, we also use a platform, uh, middleware called Breadwinner that gives the Salesforce and anybody that’s similar in our Salesforce environment, a list of all the invoices that the customers ever received when they were paid, what services they were for. So it kind of writes it back over there so that a sales rep doesn’t need to have access to our billing portal to be able to see that they have access to their, you know, is this customer, is their account manager, will they know that the customer is has due on their balance or, or or not, and the service team that’s working it.
So we use that to, to talk back to Salesforce.
Glenn Hopper:
That’s the, uh, we were calling it a couple years ago, the unbundled ERP where you’re getting all this functionality just by different pieces and making the data work like it is a much bigger ERP system. But that’s, that’s great. And I’ve, here’s a, here’s a pro tip. As someone who’s does a lot of, who does a lot of work in automations, document, document everything you’re doing right now because either as you build more complex workflows or maybe if you’re using whatever tool you’re using, if they change, you want to be able to pivot and know where to kind of plug and play there. But we’re not there yet. But in coming years, that documentation is gonna be what you feed to an AI agent that will then go take over all that stuff. We’re not, we’re not there today. Uh, but you are building just the nature of the, the way tools like Zapier work. They look like a, uh, a workflow diagram. And so that can be, these are the steps we follow, but all the documentation is really gonna help as you, or even if you’re doing a full blown ERP implementation, having all that documented from the beginning will be key. Um, I guess the second <laugh> comment I have after hearing all that, did you ever think back when you were in audit that as a head of finance, you would have to be so tech savvy in thinking about software and implementations and integrations? Was that even on your radar?
Andrew Polito:
I, I can’t say that it was, I I took for granted. I, I always assume that if I, I would either stay in public accounting and, and work my way up through public accounting, um, or, or move to a corporate accounting role and just be able to just use, use the tools that we had in place already. ’cause generally a lot of large companies have their ERP that’s been very, that’s been very mature. So needing to learn about API calls and, uh, what whatever it may be, and being able to merge databases and, uh, join, join, you know, different pieces of information and finding unique keys and stuff. Uh, I, I was, I’m grateful that in college I did have a minor in computer information system. So all the, all the verbiage and vernacular wasn’t totally foreign to me, uh, when I needed to start actually using it. And so it was, it was something that I actually at least had a fundamental understanding of. But no, I didn’t think I would have the tech hat as hat on as much as I do.
Glenn Hopper:
That’s the really cool thing about figuring this stuff out now while you’re small and scaling because you’re really, it sounds like you’re really setting a, a foundation. And as part of that foundation, I’ve been really excited to, uh, talk about this, um, since we, we met, um, at the data rails customer adv advocacy event, um, a few months ago. You guys are big users of data rails and so I don’t always get to talk to guests about how they’re using data rails. And I guess, you know, just in, in general, what specific problems it solved or how you’re using it to track what we talked about, uh, before the show retention upsell, uh, customer lifetime value, all that. I guess rather than just in, in the specifics, if you could walk me through what you were looking for when you decided to implement data rails, what the initial kind of goals were, how you’re using it now, if you see their kind of a roadmap for the future of, of new ways you may be able to use it going forward and, and all that. I’m just, I’m, I’m super, uh, super excited to hear about your data rails journey.
Andrew Polito:
I mean, yeah, so to your point, we could start at the beginning. Really, we were using at the time just just xero to do all of our financial reporting. So we would spit out a p and l balance sheet cashflow statement and be able to do my analytics and maybe run some, you know, rough Excel charts to show trend analyses. And, uh, we, we had explored a couple of other, you know, software that was less robust than, than data rails and it wasn’t necessarily fitting what we want. Like everything was just very much a, like, it’s, it’s good, but it’s not exactly what we need. We really wanted to get into how can we see our data visibly on a week to week basis. ’cause we really do operate our, given that our customers are weekly subscriptions, it’s, you know, it’s very important that we’re tracking that data down to that level.
And so we did end up, you know, we, we ended up finding data rails to be able to fit that need of being able, very customizable to the business that you want to use, and also be able to attach, attach on other, other software. So when we initially started using it, it was really just a function of being able to do our financial reporting through it. So we had nice reports that would automatically produce, and when we were done with the close, I’d click export. I produce a nice p and l with the trend analysis already and the variances and, and calling out certain, certain metrics that were off and what whether and how they were off and enabling me to then, you know, provide verbiage without actually having to spend the time of creating those charts from scratch or exporting several charts to merge ’em together.
So that’s what it really enabled us to do at, at the very beginning. And now how we’ve been using it is kind of going back to that tech stack that we have where all of our xero invoices come get brought into Salesforce. So now we have customer data and all the invoices that they’ve ever received. And so, uh, we can track on how much, you know, revenue this customer has spent with us over their lifetime or, and then even further, because this data’s getting brought in on a weekly basis, I just, you know, the data refreshes on the backend. We send our invoices in real time on Friday afternoon, the day we send the invoices. I could tell the team how much revenue we earned from in general by, by service line, how much revenue we earned that week from upsells. So people that bought more services, how many net new customers we added, how many customers churned, how many customers were, were downgraded or like reduced their tier level or whatnot.
We’re able to see that information in real time in our system. And then we’re able to track that historically going backwards. And so we can track the success of a, we, we did a big retention initiative, we wanna improve customer retention, um, as a, as an initiative back going back two years, we were able to see what the retention was in every month and every week even. We could see if those retention figures are improving and if they’re not, where are they? And then we can do a general trend and we’ve seen that number come up in, uh, getting a lot closer to where we want. And so just the timeliness of information because the systems are all connecting together and data rails has enabled that to be able to just produce that in real time. I don’t, I hardly have to do anything now.
It’s just, it’s there and I just have to speak to it or, or talk about it. And then when we’re talking to our, our owners, I can quickly bring up information and then what we implemented towards the end of last year was putting our budget into there. So now we have our budget versus actuals in real time as well, uh, which has been instrumental to know where we’re tracking at. Our marketing team has a budget that they have for the year and there’s just a little timer that just every time marketing has an expense, it’s just going against it and they’re getting closer to that, to that budget number and you can just see that in real time. And I don’t have to, you know, do anything to tell them, Hey, this is where we’re tracking at. They already see it. Uh, so it’s been pretty instrumental from that standpoint.
And now what we’re doing for the future is trying to improve our forecasting using data rail. So we have our budget. That’s great. Everybody, you know, having done an fp a role for a while, six months into the year, your budget pretty much doesn’t matter at that point. <laugh>, you have <laugh>, so much has changed depending on what it is, but you know, we introduced three new service lines this year that we weren’t November tiers of services to, to, uh, support customers where they’re at. And so I’m now updating those forecasts and getting them updated in real time. We were doing a monthly update up until now, but it’s again, very manual now using realtime data. Hey, this is what our average customer is spending, this is what our sales team is now projecting, we’ll be, we’ll be able to sell over the next, you know, this, the next five months, uh, at the, at these rates, because this is the, this is the general run rate that we’ve been running at.
Uh, one example is more of our service lines. We did do a lower tier, a lot more customers spending half the price that they were before ’cause they went down to that lower tier. If we were relying on the old data and just manual, we would’ve been using that old rate. Now we know every new customer coming in is gonna be spending less. We have to predict that we have to account for that. So using that and then using this new order system that I described with the billing to be able to predict within those orders. It also has a date of when it’s estimated to implement based on historical, when, how long it takes for that service to implement. So now I know four weeks from now we’re gonna be implementing this amount of revenue, so this is how much it’s gonna go up by, this is how much it’s gonna go up by in five weeks from now.
And so we can better forecast and predict the future. So that’s what we’re starting to really get into, uh, data rails with. And then lastly, it’s just to your point that, uh, that I mentioned before when we met before the KPIs or customer lifetime value, uh, being able to understand behavior. Our, our business is fairly seasonal, being in recruiting for, for delivery companies, so during the peak season. So being able to predict that seasonality better and our, our metrics during Q3 and Q4 are gonna look different than Q1 and Q2. So being able to see the data and be able to talk to us with, that’s gonna be really impactful for us. And having all that data at our fingertips will, and then that’s all flowing into data or else, so being able to visualize it is the more important thing. I mean, you, you probably know I, being in an accountant where, where we live in spreadsheets, I’m, I’m perfectly comfortable with a long spreadsheet with, with numbers going across. But when you’re talking to an executive or CEO of a company, they don’t wanna see that and they shouldn’t have to. They wanna see the trend and they wanna see what’s important. And so calling that out, uh, ahead of time is probably the most important thing a finance function can do.
Glenn Hopper:
Yeah, that’s huge. And I love, as you walk through what you’ve done since establishing finance there to where you are now with, with technology, and it really is the, it’s, it’s, it’s the data maturity pipeline as well where you start off, you had to be sure that you had visibility into the existing stats for the business as it is now the customers as they are now, that gave you the descriptive, uh, view of, okay, this is where we are. You’ve moved in to the predictive with, uh, with your forecasting and, and with retention numbers. But now as you get additional retention numbers and ideas, then you’re teetering on the edge of being able to do prescriptive analytics where, you know, maybe 10 months or whatever, at some point there’s a, a churn risk or at least of some services or, or whatever. And you can start reacting and messaging to that. And that’s ripe for automation. Once you have, um, all the, if you have everything automated up to it, you can start taking actions that will pull the lever that change it, and that’s where you go into, okay, now forget the cost center moniker that, uh, that finance and accounting gets labeled with all the time. This is actually impacting the business. So as you’re on the cusp of that and starting to see that, I know it’s, it’s an exciting time.
Andrew Polito:
Yeah, yeah, absolutely. Yeah, that, that, that’s really where I see the finance function going, especially with the advent of ai, which obviously you’re, you’re the expert there, but not being that call center anymore and really driving the business forward is really what’s gonna set good fi great finance departments away from good finance departments. So,
Glenn Hopper:
So I’m wondering right now are, is there something that is, uh, maybe seeing where you’re getting all the automation, is there something that’s where you still see a gap and you’re, uh, starting to think, okay, we need to figure this out. Is there something where fp and a is still too manual, kind of for your liking, knowing what you’re doing and what you’ve automated in other areas?
Andrew Polito:
Yeah, it’s really that, that, that last part, what I, what I wanna really start working on is, is the better forecasting our business is extremely nuanced in the sense that all of our different service lines run at very different margins. And then that those margins even change from season to season. So during the hiring season one department’s, uh, running at a much different margin than they are from February to April, and we need to be able to plan for that right now. It’s really hard for us to not account for that manually. I’m really, I want to try to figure that out. The, the other piece too is just the different pricing. So then not only do we have the different margins that we’re living within, but also, and the different seasons, but also within those services now we have separate tiers. And so it’s almost, you know, if you’re a, if you’re a widget business, it’s the, it’s the premium op item versus the, versus the discounted item or whatever it might be.
It, it’s very similar. And so, and then it’s also very new, so we don’t have a history to rely on. So we have to rely on our, our own predictions to be able to account for that. But I think that we have the data at our fingertips to be able to help us make those predictions better just based on, uh, customer behaviors. But right now, that is a fairly manual process to be able to, to reforecast and just, and also just, uh, generally our cashflow management, uh, as well is still pretty, is is still pretty manual because we have those changing subscription levels and, you know, things that change from week to week. Our receipts are, you know, can fluctuate from week to week. Um, we don’t have a 12 month annual commitment contract that we know that we can count on. So it, yeah, so just, just being able to adjust for that in real time better. It’s, it’s, it’s pretty manual today.
Glenn Hopper:
Yeah. And we need to have you back in one year just to see where, where you’ve gone with, with your automations. ’cause it, it does sound like you’re making great progress there. And, uh, and super cool to hear all that. I’ve got like a laundry list of questions left. I’m noticing we’re running out of time here, so I’m gonna try to figure out <laugh>, I’m gonna try to figure out how to combine like three questions into one. One thing about small companies is it’s easier to do things like, um, use Excel macros and Zapier workflows to automate and even even the AI driven bookkeeping processes you’ve done where at a big company with all the, uh, you know, compliance requirements and, and everything, just the bureaucracy that comes with them. If, if you’re at a, you know, fortune 500 company, you’re not gonna be, um, probably just experimenting with Zapier on production kind of stuff.
So there is some flexibility here that lets you be more nimble and that’s great. But because you’ve seen that, if there’s a company out there that’s waiting for some massive waterfall project where they’re gonna have ai, we didn’t really talk about in detail about generative ai. But based on what you’re seeing, and, and I’ll, we can lump in automation in general with this, but where you think AI has the biggest near term impact, just from your hands-on experience. And I guess on the flip side of that, outside of whatever company constraints and what systems they can use, when you’re telling me about where you see that near term impact for small finance teams, what’s your message to your old buddies in accounting? This is a risk averse <laugh>, uh, group of people, and they’re probably hesitant to embrace AI and automation and for, in a lot of ways, for good reason, but you’re having success with it. So as a commercial to your risk averse, uh, counterparts, where’s the, uh, near term impact you’re seeing and kind of where do you see this going in the future? And what would your message to people who are still not experimenting with it be?
Andrew Polito:
Yeah. Well, on the first point about the near term impact, I think that AI’s really going to enable finance teams to do what they always wanted to do. But they didn’t have necessarily the skillset to be able to do. And what I mean by that is, uh, there was a talk from the CEO of Nvidia who’s, you know, one of the darlings of the AI world and and whatnot, and he was talking about that this AI evolution will become a, you know, will produce more millionaires than the advent of the internet. And because artists can become programmers and programmers can become artists using ai, and I kind of took that and think about that from the lens of a finance, right? If there’s something that you wanna do or be able to do, you know, I’ve already been spending time in a, you know, in using things like chat GPT and whatnot to tell me how to do it, and then eventually just use an agent to be able to do it.
So a lot of the, even a lot of the tools that we’ve built out to be able to create, you know, our real time, uh, how many customers we’ve added, dropped, whatever, like they’re, I’m using codes and, and coding that I don’t have any formal training in, but I was able to use an ai, uh, solution to help me write what I needed to do. So I didn’t need to know programming necessarily to be able to do that. So it’s enabled me to do what I, what I know that I wanna do, but I just before had no idea how to even get it there. I’ve been able to do that. And so that’s like what I think the most near term impact is, is like AI helping finance teams do what they always maybe wanna do, but they haven’t been able to do. And so then from, uh, from an understanding of, you know, people who are scared to make the leap into, you know, a small finance team or, you know, a, a less mature company and whatnot, it’s really like using it as a, if you don’t use it as a tool, someone else is going to, first of all, I think it’s, you know, just like anything else that, uh, any new technology, people that aren’t embracing it are, are likely going to fall by, unfortunately.
Uh, so you wanna be able to learn it and how to hone it, but also it’s gonna make you so much better at your job. My, my analytics that I do, I, I get started with, you know, a trend and sometimes there’s a trend that gets kicked out that I didn’t necessarily even pick up on at first. And it doesn’t mean I’m less intelligent, it’s just because there’s a lot more other things that I’m working on. So it’s just like that one thing and it kind of got me in the right direction and looking at things in a different way. And so it, it’s made me better at my job and made me more successful and made it, made it enable also me and my teams to focus on quality versus just getting the job done. So, uh, that would be my, it it’s gonna enable finance teams to be that value added function like we talked about, not just a cost center.
Glenn Hopper:
Love it. Love it. Alright man. So I got through almost every question I wanna do, but we got two questions we have to ask everyone. So we’re gonna, we’re gonna put a pin in in that and we’ll save it for when we bring you back next year to see where, where you’ve gone on your automation, uh, journey as a, as as go hq, uh, I guess doubles in size again. Yeah. <laugh> maybe. We’ll, we’ll see. But first question, what is something that not many people know about you?
Andrew Polito:
Well, I’m a father of, uh, about to be three under three. So I’m leading this finance and a growing company while also having, you know, very, very little ones at home. So thank, very thankful to know my family and my wife for that. But also, uh, I am a, I mentioned earlier I have, you know, a lot of, you know, I like to know a lot about little, like, a little about a lot of things. So I’m a pretty avid book reader. I probably own, you know, three, 400 books and they’re not just like, just business books or anything. Like, I have biographies of US presidents. I have philosophy books, uh, meditation, you know, whatever it might be. And then sci-fi, I have the entire game of their own series that’s been written so far, you know, on my shelf. And I’ve read that and, you know, so I, I kind of like bop around to a lot of different subjects. I’m not one of those people that just like, just reads nonfiction, just reads fiction. So yeah, that’s one thing that you know is about me.
Glenn Hopper:
Love it. And here’s a confession from me. This is bonus, uh, content for our audience. I hate business books. Uh, behind me back here, there’s, I guess there’s, I mean there’s plenty of economics books. I like economics books and they said there are some of those. But the, uh, entire, uh, works of Philip k Dick, the complete works of Kurt Vonnegut. I’ve got Thomas Pinch on over there. Yeah, there’s no business books back there, there, there may be. Oh yeah, probably. I’m just
Andrew Polito:
Cat, cat Cradle. VGAs one of my favorite books ever. Yeah,
Glenn Hopper:
Yeah, absolutely. Absolutely.
Andrew Polito:
Yeah, that’s all. We’ll have to talk more about that. Uh, maybe
Glenn Hopper:
Next year we’re gonna have finance book corner or something where we don’t talk about finance books. We just talk about fiction. I love it. I love it.
Andrew Polito:
Yeah. You Andrew, A Dream of Electric Sheep by Philip k Dick. Yeah.
Glenn Hopper:
Oh yeah, yeah.
Andrew Polito:
I love that one. That’s Blade Drum. Yeah. So,
Glenn Hopper:
Alright, now everybody’s favorite question. What is your favorite Excel function and why?
Andrew Polito:
I have to go with the classics. I I use them way too often. You know, the classic, just some if average, if count, if you know it just, they’re, they’re very versatile and can be. I just end up coming back to them a lot. Uh, from an Excel standpoint, I’m very much a traditionalist. I like, I I’m not, I’m not overly, I’m not an over expert by any means. I, I’m not, I’m not, you know, using a lot of the new fancy stuff. Like, I feel like you can get most stuff done with just, you know, some nest functions and low and some basic lookups and it gets, accomplishes 98% of what you need to do. So yeah, that, that, that’s it. So some if, yeah,
Glenn Hopper:
So don’t discount that. I was talking to, uh, someone the other day who’s known for, uh, that they teach courses on financial modeling and all that and they, uh, were talking about their favorite functions and it was keep the model as simple as possible when you can, if you, if you have to use a more complex formula, do it. But these old standbys are there for a reason and they work and they’re easy to explain and they’re predictable. So <laugh>. Yeah. Yeah.
Andrew Polito:
I love it. Yeah. Yeah, exactly. I feel like I read something too, like a hundred percent of stuff that happens next Excel goes to like five functions that’s like that, that’s everything. Yeah.
Glenn Hopper:
Well, Andrew, I really appreciate you coming on and look, we nailed it. We’re under an hour so I don’t get yelled at by the producers. So <laugh>, if somebody’s sitting in their car waiting to go into the office to finish the show, they’re uh, they’re gonna be happy that they didn’t have to sit <laugh> for an extra five minutes. So, um, thank you again for coming on the show and uh, I mean it, we’re gonna have to check in next year too.
Andrew Polito:
Absolutely. Yeah. Thanks for having me.
