Tips for HVAC Business Owners Managing Company Finances
When HVAC professionals launch a business, they’re usually so busy thinking about air handlers, heat pumps and condenser coils they forget the other crucial components for success: balance sheets, working capital and accounts receivable.
Running a successful HVAC company is more than just enjoying the work and doing it well. HVAC business success also means understanding and managing the finances. So many HVAC business owners start their companies for the love of the trade, not the books. However, when financial literacy becomes an afterthought, business is sure to suffer.
To create a solid foundation for a company’s financial future, consider implementing the following measures:
- Establish sound billing and collections practices
Customers should expect charges for services rendered, but sometimes collecting the payment is challenging. The EverRest Group suggests technicians ask a simple question at the customer’s door: “Are you aware of today’s service charge?” At the end of a service call, use a detailed invoice to specify the work completed and the overall charges.
- Maintain a stable business credit rating
Lenders, suppliers and banks use credit scores to determine a company’s financial stability. Good business credit scores help companies grow and expand. Start by ensuring the company has a dedicated bank account, credit card and employer identification number (EIN) or federal tax identification number. Always pay bills on time and keep debt levels low. Make sure to monitor credit reports to flag errors and avoid inaccuracies that can lower a credit score.
- Keep up with tax payments
Businesses can be subjected to various local, state and federal taxes depending on the corporate structure, size and revenue. Businesses stay in good standing with tax collectors and out of legal hot water by meeting tax obligations. While HVAC business owners with an accounting degree might be able to navigate the U.S. tax system independently, all others should seek professional help. Hire an accountant or bookkeeper.
- Monitor business finances
Business owners should set aside time to review their finances regularly, even if they have a trusted accountant or bookkeeper. Not only will this practice help business owners get a better handle on their financial situation, but it will also help uncover any possible money mismanagement.
In addition, business owners need to look at key performance indicators (KPIs) that take a deep dive into business finances. The EverRest Group recommends three specific KPIs for growth:
- Replacement sales/equipment costs
- Group technician conversion rates
- Customer-care calling performance
By utilizing the EverRest-suggested KPIs, business owners can determine whether their efforts are working or if they need to make adjustments.
In addition, The EverRest Group has partnered with several companies that make operations and financials more manageable, including:
- EverRest partner Payzer creates software to simplify operations, improve collections and sell more jobs.
- Live Oak Bank offers loans and other financial solutions for business uses.
- Human resources management firm ADP provides payroll, benefits and other HR services.
The EverRest Group also developed Express Success, an exclusive program designed to help HVAC companies successfully implement the EverRest method. Contact us today for more information.