How to Fix Your Landscape Business Cash Flow Issues

cash flow

What’s the life blood of any lawn and landscape business? Cash flow.

You use the money that comes in from customers or other means to buy equipment, and pay expenses and employees. Of course, you want positive cash flow, which allows you to make new investments, such as hiring more employees or opening another location. What you don’t want is negative cash flow, or more money paying out than coming in. That’s when businesses get in trouble.

Statistics Don’t Lie

According to SmallBizTrends, 40% of small businesses report having cash flow issues within the last year. WePay research concurs, sharing that 41% of businesses have had cash flow challenges.

Furthermore, Score says a whopping 82% of small businesses fail due to cash flow problems. It’s clearly the No. 1 risk.

cash flow

“More companies fail from lack of cash flow than profitability every year,” explains Fred Haskett, an industry consultant with The Harvest Group. He shared this during a session called “The Top 10 Best Practices: What All Companies Should Know” during Real Green Systems’ Solutions 2020 conference. Real Green Systems is an NALP supplier member.

How to Fix Cash Challenges

Feel like you have cash challenges? Don’t fret. Haskett shared his best ideas on how to fix them during his session.

The major ways he suggested include:

  • Get paid to the closest period of time you do the work
  • A better solution: Get paid before the work is done
  • Minimize your debt
  • Create cash reserves

Secure the Money Before You Need it Via:

  • Loans
  • Bank lines of credit
  • Secure capital equipment line

Have a Robust Invoicing Process:

  • Put calendar dates as due dates on invoices – not net 30
  • Timely and accurate invoicing
  • Invoice extras as performed
  • Invoice maintenance first of month

Have a Robust Accounts Payable Process:

  • Meet payment terms or call customers
  • Develop relationships
  • Shop for lowest pricing

Monitor Monitor Monitor

  • Daily, weekly, monthly
  • Train your bookkeeper to monitor
  • Have a rolling 90-day cash flow budget

Show Me the Money

  • Send statements and include copies of past invoices
  • Schedule phone calls to check in with customers and remind them to pay
  • Create letters for reminding customers to pay that go from light to medium to heavy
  • Have a stop work policy if invoices aren’t paid

Have a Late Payer Process

  • Who’s responbile to collect; make sure you have a point person
  • Use collection agencies
  • Small claims court

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