“Happiness Is a Positive Cash Flow” was the catchy title of Frank Adler’s book first published in 1988. Today, his wisdom rings true as cash flow problems continue to be a major cause of business failure in the US. It’s not only how much money you make, it’s the timing and flow of the money coming in and going out that determines the health of your business. Here are seven ways to better manage your cash flow with field service software.
1. Understand the Difference Between Profit and Cash-Flow
By definition, profit equals revenue minus expenses. So as long as you are earning more than you are spending, you are in the clear, right? Wrong. While invoicing customers for your service creates revenue, it’s only when you collect that money that you have cash, and you need cash to run & manage your field service business. Without a positive cash-flow, business owners aren’t able to pay their employees or for the equipment and tools they need. So while, the revenue may be there, you need to know how to turn it to cash quickly.
2. Know Your Numbers
At all times, you need to know exactly how much money you have. If you don’t know your cash balance right now, it’s time to sit down, get organized, and understand your numbers. Financial guru, Sandra Simmons concurs, “When it comes to money, ignorance is NOT bliss. What you don’t know CAN hurt you.” Take control. Not sure where to get started? We recently hosted a webinar, “How to Think Like a CFO” that reviewed which reports you should be running on a daily, weekly and monthly basis. You can watch the on-demand version here to gain more insight.
3. Have a System in Place to Track and Collect
As a small or medium sized business, you may be tempted to be flexible with payment due dates. While this may be okay on a case-by-case basis, you need a solid plan that you can trust to ensure you are getting paid in a timely manner. We recommend looking into a field service management software solution that can track what stage your invoices are in. With the right solution, you can easily pull lists and reports to see who is 30, 60, 90+ days late. You can use those lists to send reminder emails, past due invoices, or even issue penalties if that is in your plan. No matter how you choose to track your accounts receivables, it’s vital to your business that you have a plan and start tracking.
4. Issue Prompt Invoices
Get your invoices out while the job is still fresh in your client’s mind. You’re more likely to get paid faster. Be clear, concise and specific about the work you did so there’s no confusion or gray area to dispute and delay payment. Prompt and easy to understand invoices make it easier for your clients to approve payment and get you cash faster. Send an email notification or phone call at the time of initial invoice.
5. Automate the Process
The easiest way to get paid on time consistently is to be the one in control. For recurring services, set up automatic billing. Both you and the customer won’t have to think about writing or collecting the check, it will be automatically debited from the customer’s account. Field service software solutions that are built specifically for lawn care companies (shameless self-promoting plug: WorkWave Service does this) have customized billing options in place. So if you are billing on a monthly, weekly, bi-weekly, every other Saturday and third Friday… we’ve got you covered. You can do it however it makes the most sense to your customers and your business.
6. Get More Business
If you have more cash flowing into your business it will be easier to manage your cash-flow. If you aren’t currently using anything other than “word-of-mouth” marketing, there are some easy, cost-friendly ways you can increase your customer count. Utilize your happy customers to grow your business. For example, create a Facebook page for your company that showcases your best work and ask your top customers to write positive reviews. If you do have a budget to work with, invest in Facebook ads that target potential customers in your area, or with a bigger budget, look into Google advertising.
7. Create Incentives for Early Payment
Everyone loves a discount. Offer a small percentage off for customers who pay early. No more details here, it’s that simple.
It’s a reality that you need a healthy cash flow to manage your business. Your skills may be in lawn care and landscape design, but if you don’t have strong business management processes in place, financial success may evade you and drag your business down. Start taking control of your cash-flow today
If you’d like to learn more about the different ways WorkWave Service can help you improve and manage your cash-flow call us today or visit here.