Managing business finances is no easy task when you’re in the field service industry. From billing and invoicing to payroll and taxation, there are several elements you need to consider to stay in the black. If you want your business to stay profitable and have a healthy cash flow all year round, you need to incorporate the following tips into your financial management strategy:
Keep a close eye on your expenses
It’s important to know exactly where your money is going and what you’re spending it on. Keep track of all your expenses, from big-ticket items like equipment and vehicles to small everyday purchases like office supplies and fuel. This will help you identify areas where you can cut costs and save money.
To get started, list out all your expenses for a month and track where your money is going. This will give you a good idea of your spending patterns and help you find ways to reduce your expenses.
A major pain point for many field services is manually creating and sending invoices to customers. This not only takes up a lot of time, but it can also lead to errors and delayed payments.
Accounting platforms like Xero, QuickBooks, and MYOB Online feature automated invoicing. Whenever technicians complete a work order or fulfil certain project milestones, these platforms will automatically generate an invoice, complete with all the necessary details like line items, tax rates, and discounts. Managers can then review the invoices and send them to clients with just a few clicks. You can even schedule payment follow-ups in advance to remind clients to pay on time.
Invest in your company’s growth
While it may be tempting to keep a large cash surplus on hand, reinvesting some of your profits back into the business can pay tremendous dividends. You could invest in new equipment and assets, training programs, technicians, or strategic expansion. Putting money into the right areas can set your business up for long-term success and help you achieve your growth goals.
If you’re not sure where to invest, speak to a financial advisor or consultant. They can help you assess your company’s financial situation and make recommendations on how to best grow your business.
Streamline your payroll
Much like your billing processes, automating payroll can save you a lot of time and hassle. When all of your technician’s work hours, rates, job-related expenses, and account details are logged in your system, it’s easy to pay everyone on time. Payroll software allows you to automatically generate paychecks, process direct deposits, and withhold the correct amount of taxes with a click of a button. You can even schedule these payments in advance so you never have to worry about missed or late payments again.
Stay on top of your taxes
In the field service industry, there are a lot of different taxes you need to pay: income tax, GST, payroll tax, and more. You also have to consider yearly tax deductions like work-related expenses and depreciation of business assets. Staying on top of all these components can be a daunting task, especially if all your records are on paper.
One way to simplify the process is by digitising and storing all financial records in your cloud accounting system. By storing job details, technician hours, and expenses in a central database, you can generate reports and calculate specific tax payments in a matter of seconds. You can also easily retrieve records on business purchases and track the depreciation of assets so you know exactly which deductions you’re eligible for come tax time.
Produce cash flow statements and plan ahead
A cash flow statement shows you how much money is coming in and out of your business. This includes revenue from work orders and other projects as well as expenses like payroll, rent, and supplier payments. With cash flow statements, you can get a clear picture of your business’s financial health and forecast shortfalls and windfalls based on seasonal trends.
Most accounting platforms offer cash flow statements as a standard report. After you have a few months’ worth of data, you can see seasonal patterns, which are invaluable for forecasting your monthly expenditure. For instance, if you know that revenue is always lower in the summer, you can plan ahead and make sure you have enough cash on hand to cover expenses.
Schedule your bill payments
To maintain a good relationship with your vendors and build good credit, you need to pay your bills on time. Set up automatic bill payments for supplier invoices and loan repayments with details, account numbers, and expense types in the database. If your accounting software has an accounts payable component, you can enter the biller’s recurring payments based on specific due dates. You can even schedule advanced bill cycles so you can take advantage of early payment discounts and avoid late fees.
Don’t be afraid to leverage business financing
Many business owners are afraid that applying for a loan will put them in debt or damage their credit score. However, it can actually be a smart way to finance expansion projects, increase buying power, and cover unexpected costs. Australian field service businesses can access various financing options, such as business term loans, lines of credit, and rent-to-pay financing. If you have a healthy credit score and a solid business plan, you may be able to qualify for financing with low interest rates and flexible repayment terms.
Pay yourself a wage
One of the biggest mistakes business owners make is not paying themselves a wage. They either reinvest all of their profits back into the business or use them to cover personal expenses. This can quickly lead to financial problems down the road.
As a business owner, you need to set aside money each month to cover your personal living expenses, such as rent, food, and transportation. You should also have an emergency fund to cover unexpected costs like car repairs or medical bills. Only after you have taken care of your personal finances should you reinvest profits back into your business.
Invest in high-quality software
When it comes to managing your finances, having the right software in place can make a world of difference. Field service software can expedite operations from processing work orders to dispatching technicians. Meanwhile, financial management software can help you track your income and expenses, generate reports, and stay compliant with tax laws.
When choosing field service management software, select a platform that can integrate seamlessly with your accounting system. This way, you can avoid duplicate data entry and ensure your financial information is always up to date. Field service management software also adds structure to your operations, from work order scheduling to invoice processing, which greatly increases efficiency.
WorkBuddy is a field service management software that integrates with world-class accounting platforms, so you can easily manage your finances and operations from a central platform. Book a demo with us today.