Landscaping Cash Flow Management

6 Bookkeeping Habits to Help Landscaping Company Manage Cash Flow

Landscaping professionals to provide a valuable service to the public and private property alike, with skills that take years to learn and even longer to master. With all of this work, it’s understandable that strict bookkeeping and daily accounting aren’t at the top of your priority list, but without them, even the best landscapers can find themselves in a bind when it comes to their cash flow. Fortunately, there are a few simple bookkeeping habits for landscaping companies that can help regulate cash flow and keep your business in the black while allowing you to stay focused on the work that needs to be done!

Why Is Effective Bookkeeping for Landscaping Businesses Important?

Because landscaping and similar trades are project-based businesses, they don’t operate under the same financial principles as, say, a grocery store, which supplies a set amount of goods for a relatively stable price throughout the year. Instead, landscaping companies need to take jobs that will pay more than that business’ combined expenses to complete the job—and this is where things can get tricky.

Labor, insurance, taxes, materials, repairs, etc.—all of these expenses are different from job to job, and unforeseen expenditures on top of this can quickly turn what seems like a sweet job into a profit-draining hassle. Good bookkeeping accounts for the minute details that affect a landscaping company’s cash flow, accounting for subtle changes in price and fees while making sure you and your crew get paid on time—even through the months when work is slow.

Taken altogether, good bookkeeping allows a company to set a realistic budget, but even more importantly, it allows landscapers to accurately predict which jobs will be profitable based on past expenses and experience. Cash flow bookkeeping keeps your books balanced and unprofitable work off your plate.

Bookkeeping Habits to Increase Cash Flow for a Landscaping Company

However, managing cash flow for landscaping companies isn’t as simple as just comparing expenses and income. There are variables to account for that can drastically affect your daily operations if you aren’t careful; that’s why starting with a few of these landscaping cash flow management habits can help you stay on top of your finances year-round.

1. Monitor Your Transactions Daily

The first step in any and all bookkeeping is to keep a thorough record of all of your transactions—every single day. You can use a simple spreadsheet to start organizing your information by date, the exact amount spent, and what it was for. However, you might consider investing in bookkeeping software that can keep track of multiple accounts and present data in different ways. For example, you might want to know which months you spend more on fertilizer. Instead of searching out the information manually, accounting software can categorize each expense and bring it up for review with a simple keyword search. Every week you should also file or digitize your receipts. You never know when you might be subject to an audit, so tracking receipts is vital to proving certain expenses as well as simple inventory management.

2. Get Payments Faster

When it comes to cash flow management, it always helps to have cash flowing in! Getting accounts receivable paid as quickly as possible can help prevent fees and interest payments or other potential issues when paying out expenses. You might ask customers to place a credit card on file so you can charge them on the day of service, or generate invoices weekly and charge their credit cards then. By requiring payments promptly, you can stay on top of your cash flow when the next job needs to be done instead of waiting weeks or months to get paid for work that’s already complete.

3. Check Financial Data Each Month

Habits are built with consistency over time. Choose a day at the end of every month to reconcile your expenses and make sure you didn’t miss anything in the shuffle over the past few weeks. Finding time for frequent budget reconciliation means you are less likely to overlook expenses—especially one-time fees like repairs or overtime—instead of waiting until the end of the year when you might need to deal with business tax services.

4. Spread Out Your Long-Term Payments

Everyone knows what it’s like to get hit with a massive expense out of nowhere. Maybe a crucial piece of equipment needs replacing or a botched job requires you to work overtime to make things right. In these worst-case scenarios, huge payments can negatively impact your cash flow. You might consider spreading out your payments over different methods or accounts to make those significant expenses more manageable and avoid big interest payments on the full amount.

5. Figure Out Where to Invest

Perhaps one of the most useful bookkeeping habits for landscaping companies is establishing which aspects of your business require a greater monetary or time investment—and the only way to know where your money needs to go is to monitor where it’s currently going. You might notice, for example, that golf courses provide a better profit margin than individual homes, and investing in branding or advertisements aimed at golf courses stands to increase your cash flow over time. Or maybe a certain supplier offers a good price on fertilizer, but the transportation fees mean you actually end up spending more to acquire the same amount from a supplier that costs more but is located closer. Bookkeeping and proper account management allow for these kinds of insightful applications of your financial data, but the data you use has to be timely and accurate.

6. Hire a Professional

It’s natural to feel a little overwhelmed by the extent of the accounting side of a business. Not only can improper cash flow management lead to financial troubles and potential bankruptcy if mishandled, but poor accounting can also lead to big tax issues and even potential audits. Fortunately, this is why professionals exist! Hiring bookkeeping and accounting services is a business expense just like any other, and doing so is both a protection against cash flow issues and a way to delegate the kind of work that you might just have the time to handle. Hiring professional bookkeeping for landscaping businesses allows you to focus on the kinds of work that you know best—the actual landscaping!

Investing in these bookkeeping habits for landscaping cash flow management is the first step in keeping your books balanced and your company profitable—but you don’t have to do it alone. Appletree Business Services has years of experience helping landscaping businesses and other project-based companies get a handle on their cash flow and find the jobs worth taking. Contact Appletree to see how one of our qualified CPAs or business advisors can help your company.

Share

Comments are closed.