HVAC Consulting Service | HVAC Business Financial Analysis

	home
	service plans
	customer retention
	internet strategy
	customer acquisition
	financial analysis
	HVAC leads & sales
	testimonials
	press
	online store

Use Financial Analysis to Lower Risk, Raise Profitability

Recession-proof contractors (RPCs) focus intently on their company’s financial statements and projections.

RPCs are especially obsessed about cash. They collect or are actively collecting “old” monies and they stop doing business with customers who don’t pay. Their business has a tight credit policy; CSRs and field professionals know they need to collect COD or get a credit card number at the time of service.

RPCs also buckle down and cut office expenses, including support staff, occupancy costs and general office expenses. When possible, items such as service vans are leased to conserve capital. And all possible items are renegotiated favorably, from insurance to pricing/terms with vendors.

Some key metrics that RPCs analyze and control include:

Average age of receivables*:

accounts receivable x 365
annual sales

*commonly known as “DSO”— Days Sales Outstanding

You should target less than 35 days, although 40–45 days is acceptable on net 30 day terms. The industry mean is 44.7 days.

Quick ratio (ability to pay current obligations):

current assets – inventory
current liabilities

Your target should be 1.5+; the industry mean is 1.24.

Debt-to-equity ratio (overall measure of company solvency):

total liabilities
total equity*

*total equity = total assets minus total liabilities

Your target should be less than 1; the industry average is 1.29. During the last recession, companies failed in order of debt-to-equity ratios, from highest to lowest.

Here are some other key metrics:

price points and average gross margins

asset and equity ratios

Inventory levels – lower them as much as possible without diminishing
service, thus maximizing the return on assets

How Warm Thoughts Can Help You Analyze Your Business Finances

No one knows your business better than you and your in-house or retained financial personnel.

But our consultants are steeped in the financial challenges and realities of the HVAC industry, having formerly worked in or operated their own successful HVAC businesses.

Better still, our consultants have years of invaluable experience consulting with a wide range of other businesses like yours, during both up and down economies.

Combining our depth of personal experience and breadth of experiences with other HVAC contractors, we offer unsurpassed expertise and awareness to the financial aspects of your business.

Working with you and your key personnel, Warm Thoughts knows what to look for and what needs to be cut, maintained or increased in order for your business to thrive.

And we have the emotional distance of a consultant to make the tough recommendations that you and your personal financial partners may not be so willing to make.

To learn more about how Warm Thoughts can help you analyze your financials and succeed in a down economy, click here.

Other ways to recession-proof your business:

Service plans
Customer retention
Customer Aquisition
Sales leads

“We needed to change our price and reduce some of the coverage we used to offer. We were prepared for a lot of negative reaction from customers. But the way you marketed it, there was no real pushback at all. Now we are making more money on our plans with less grief, and enrollments are up.

—Tom Scarangello, Scaran Heating & A/C, Staten Island, NY