Six Tips for Maintaining Consistent Cash Flow Within Your Fire and Life Safety Business

When first starting your business, generating consistent cash flow can be difficult. Over the years, our team at Commercial Fire has been lucky enough to work with hundreds of FEDs. Here are a few things we have seen make the biggest difference in creating and maintaining long-term, stable businesses.

Analyze Expenses

One of the biggest things that can hurt your cash flow is overspending. That’s why it’s best to regularly review your expenses and identify areas where you can reduce costs. To ensure that outgoing cash doesn’t exceed incoming cash, Ramp recommends:

1. Gathering invoices, receipts, bills, and financial statements
2. Organizing expenses into different categories based on their purpose
3. Comparing current expenses to historical data from earlier periods
4. Analyzing the differences between budgeted and actual expenses
5. And identifying the activities that contribute most significantly to each category

By following the steps above, you’ll be able to identify opportunities to improve cost efficiency within your business.

Manage Inventory

Tracking inventory is essential for just about any business. Not only can it help you figure out what products you sell the most, but also which items you have in excess.

If you’re having trouble deciding which data to record and track, Forbes has you covered. They say to include the retail pricing, product costs, internal and supplier product numbers, supplier information, storage location, and quantities on hand. For less than 100 items, a software program isn’t necessary, as adding these to a simple spreadsheet can do the trick. From there, you can perform cycle counts by breaking products into sections and counting them on a rotating schedule. Another option is conducting periodic counts of a few items to help identify stocking, ordering, storage, and theft problems. Alternately, sourcing products from reliable suppliers that can ship same day will save you from tying up your cash in excess inventory. Using any or all of the tips above will help you to better manage your inventory.

Invoice Clients Efficiently

When your customers don’t pay their bills on time, it can stop you from paying your bills on time. Managing invoices and streamlining billing processes is a great way to combat this. According to Ignite Spot, it’s smart to follow up on overdue invoices, offer multiple payment options, track invoice statuses regularly, and create a clear payment policy.
While implementing these methods is a great start, that’s not all you can do. You can also take advantage of outsourced bookkeeping and virtual accounting services. For example, ESC Central is Commercial Fire's Preferred Central Monitoring Station and they provide Billing Services. All of these strategies will help to provide the financial stability and operational efficiency you need to succeed.

Create Cash Flow Forecasts

Projecting your expected income and expenses can help you predict cash shortages and surpluses. However, many entrepreneurs and founders don’t have the accounting background to do this. Luckily, drawing up a cash flow forecast is a simple skill that you can learn, and use, for the lifespan of your business. PwC encourages you to:

1. Select a length of time for your forecast
2. Create one column for each week or month
3. Add one row for each type of income
4. Place your sales and non-sales income into each week or month
5. Add up the income column totals to determine your net income
6. List all of the money going out of your account each week or month
7. Add up the outgoing column totals to determine net expenses
8. And then subtract your net expense from your net income to derive your total positive or negative cash flow

Completing a cash flow forecast at regular intervals throughout the year can help you to decide if, when, and where to cut costs or to expand your team and services.

Diversify Your Client Base

Relying too heavily on a small number of clients can leave your business vulnerable to disruptions if financial issues occur. By diversifying your client base, you’ll be able to feel confident in your company’s direction during hard times. Forbes says some surefire ways to do this include strategizing a digital marketing plan and creating a referral program. You can also expand your knowledge and offer various new Fire and Life Safety services to appeal to a broader customer base. This can help give you a mix of new small- and large-revenue customers.

While you’re working to attract new clients, be sure not to forget about your old ones. You can ask them for testimonials as well as cross-sell or upsell additional services. That way, you can grow your business and continue to build relationships with your loyal customers simultaneously.

Use QuickPay

Commercial Fire cares about the cash flow struggles that you may face. Our unique Affiliate Partner Benefit, QuickPay, can help you to grow your business and improve your bottom line. QuickPay ensures that:

• All inspections completed by the 15th of each month are paid within 10 days of receiving completed paperwork
• All work completed by the due date is paid within 15 days of receiving completed paperwork
• And all work orders that don’t meet the criteria are paid under the current billing terms

You can also use the CF Connect Portal to complete all of the documentation requirements for your Commercial Fire work orders and to monitor your team’s efficiency in completing those work orders. Overall, QuickPay allows you to stress less and focus on the job at hand.

Conclusion

Consistent cash flow is necessary for sustaining operations and driving growth. Acting on one or more of these tips can help improve financial stability, enhance customer relationships, and position your Fire and Life Safety company for long-term success.