MANAGING CASH FLOW IS KEY FOR SNOW REMOVAL BUSINESSES

Fall brings unique financial stressors for snow contractors. Check out these 5 tips for managing the lifeblood of your business as effectively as possible!

1. Consider a retainer or readiness fee. Customers may balk, but they have likely been burned in the past by no-show service providers. Readiness and retainer fees are becoming more common and should be considered.
   
2. Monitor cash flow to eliminate guesswork and surprises. If you use software that does this for you, use it! If you need to build a simple forecasting spreadsheet, do it. Consider factoring in some of the risks, including the need for more materials, equipment breakdowns, and late payments from customers or those whom you service as a subcontractor.
3. Ask suppliers for longer payment terms. As you review your finances, consider asking your suppliers for more grace in payment terms. It's better to be proactive and ask than to fall behind on your commitments. Plus it’s a great test of loyalty in vendor relationships.
4. Arrange for 6-month (rather than 12-month) equipment lease payments. Instead of paying on them now, see if you can get them to start in January, when you have cash coming in.
5. Bundle small equipment purchases into a lease rather than paying cash individually. This will save you a lot of time spent researching and buying, get you more ready for the winter and any issues/breakdowns, and help you distribute the cash outlays over time vs. at crunch time.
   
   The bottom line is that a successful winter season starts with preparing for it and understanding that there’s a difference between cash flow and profit. There are plenty of companies that are profitable on paper but run out of cash. But if you know your numbers and plan ahead, you can head into the winter season with confidence in your cash position.
   

Download Winter Cash Flow Management in pdf format