How To Bring Some Consistency To The Constant Flux of Seasonal Highs And Lows

Now that summer is in full-on oven mode your HVAC business is also probably running at full speed. But even as you are filling your days with service calls and repair jobs, it is essential to do a quick check-in with your accounting habits, to make sure your business doesn’t break down and leave you stranded.

Based off of our 15-plus years of experience in outsourced accounting, here are five essential practices every HVAC contractor needs to consider for financial success.

(1) You Need Accurate Reporting

Accurate date drives good decisions. If you are hoping to hire another technician, renovate your warehouse, or order supplies, having a clear picture of your financial standing is of utmost importance. The sort of data that comes from accurate reporting will give you the confidence to know if it is time to expand, downsize, or keep plodding along. To do this, you will need to be looking at your:

• Profit and Loss Sheet
• Balance Sheet
• Job Costing Report
• Job Profitability Report

These foundational reports will be the added edge you need to make the best decisions and steer the company in the right direction.

(2) You Need To Get Paid

As the summer months bring long days and numerous service calls, one of the first mistakes HVAC contractors can make is to let jobs fall through the cracks and not invoice for weeks after job completion.

Without timely invoicing, your cash flow can end up limiting your ability to make sound business decisions hinder opportunities for greater growth. Regardless if you are billing customers at time and material, flat-rate, cost-plus, or based upon milestones, timely invoicing is critical to the financial stability of your HVAC business. 

(3) You Need to Monitor Payroll

Early starts and long days can mean extra service calls and higher profits. However, all this extra work can also mean massive overtime and increased payroll expenses. Without a proper understanding of employee time tracking and overtime reporting, all the additional revenue you thought you were bringing in could actually end up costing you more than you thought.

By monitoring your payroll, you will have the ability to take on the appropriate amount of work that will grow your business and respond to increasing customer needs.

(4) You Need To Have A Benchmark

Having organized books with up-to-date reporting is only half of the story. The real value comes when you can compare your HVAC business to industry benchmarks and identify the areas of strength and weakness. Other benchmarks that are important to track are the historical trends and seasonal averages within your own company history. 

By layering this comparative analysis over your current financial data, it can be the difference between hand-to-mouth survival and enduring financial success.

(5) You Need to Be Prepared For Every Season

Feast or famine is the seasonal pace of every HVAC contractor. When the weather is at its most extreme peaks, your phone is always ringing, your voicemail is full, and every employee is running full-tilt. But what about the downtime? What about the mild temps and laid-back weather? Will you have enough cash flow to be prepared for these seasons?

To ride out the slow times you will need to monitor your cash flow and chart out the anticipated annual expenses, giving you the peace of mind you need even when the trucks are sitting idle, and the phone is quiet. 

Proper planning and financial preparation is the comfort you will need to rest easy every spring and fall.