It’s wintertime, and your field services business’s customers are more focused on holiday shopping than on home repairs, maintenance or improvement. Winter weather, too, can keep many field services businesses from maximizing their income this time of year. If your company’s sales are down, how can you get through the holidays without financial worries? Try these tips for managing cash flow in your field services business during a seasonal slump.
1. Create a cash flow forecast. If you haven’t already done so, develop a 12-month cash flow forecast for your business based on your sales forecasts, expense forecasts and prior history. Then stay on top of it weekly (or daily, if necessary) to ensure your business doesn’t go into the red.
2. Collect on unpaid invoices. When cash flow is suffering, you can’t afford to let receivables lag. Monitor your receivables and contact customers as soon as their invoices are overdue. Be polite but firm in asking for payment. If the customer can’t pay in full at this time, work out a payment plan so at least you’ll get some of what you’re owed.
3. Get paid online. Lighthouse Field Services makes it easy to send branded web invoices to your customers from your office or the road. Customers can simply pay online with a credit card, so you get your payment right away.
4. Get paid at the job site. Why wait for the check to come in the mail? There’s no reason not to collect payment from customers at the time of service if you use Lighthouse Field Services, which enables collecting payment either on the job site or directly from digital invoices. Since your records update automatically when payment is made, your financials will always be accurate and you’ll know just how much working capital you have.
5. Reduce expenses. When you don’t have the normal amount of cash coming in, you’ll need to cut costs to stay in balance. Delay purchases as much as possible or make purchases using your trade credit or business credit cards so you can extend your payment due dates.
6. Accelerate income. Depending on your business, you may be able to ask customers for deposits, partial payments or advance payments before you start work. Offering a discount for early payment can help boost your cash flow, too; just make sure the discount isn’t so big that it hurts your profit margins.
7. Delay payments. Wait as long as you can to pay your business’s bills while still making timely payments to maintain your good credit. You’ll keep money in your business bank account longer this way, giving you more flexibility.
8. Look for alternative financing sources. It’s a good idea to have a couple of sources of working capital, such as a business line of credit or business credit cards, available to you during slow seasons.
Running a seasonal business doesn’t have to be stressful. If you follow the steps above, you can ease some of the pressure and maintain steadier cash flow.