Building relationships and financial reports

Q. How do I develop an ongoing relationship with property managers?

A. Since my company is a commercial landscape maintenance firm, I have the opportunity to work for a number of property management companies. Working with these types of customers can be a challenge, but it can also be rewarding and profitable if you approach it in the right way. About 15 years ago, I started working with a property manager that I am still working for today. When I first met him, he would show up on the job site every week, and we would drive around the property, stopping to look at different landscape issues or to talk to the residents. This weekly exercise went on for years, and I learned a lot from him and about what type of things property managers look for in their contractors. Here are a few key things I learned:

1. Communicate. When they have a question, they want the answer immediately. This may seem unreasonable, but the fact is that if you boil down what a property manager's job is, it's to get yelled at all the live-long day. So, if a homeowner calls a property manager because the landscape company knocked down the bird bath Aunt Esther bought him, the property manager wants to know two things. First, that it's going to be taken care of, and second, when it is going to be taken care of.

2. Trust. They have to trust that you will do what you say you will do. For example, if you say that you will be out on Thursday to take care of the bird bath and you don't show up to do it, you just blew any trust that property manager might have had in you. If they don't trust you, they won't use you.

3. Take care of damages. Damages are another big issue for property managers. When you show up to take care of the bird bath and notice that it is not only knocked down but also has a crack and will no longer hold water, you now have a new problem. How do you approach it? You could just stand the bird bath up and walk away, which is a bad idea. Or, you can replace the bird bath before the property manager has to call you yet again for the same issue, a good idea.

If you communicate, build trust and take care of problems for your property managers, what will they do for you? They will sell your company to their other clients and give you more opportunities to bid new properties. If they have another landscape company that they aren't happy with, they might replace them with you. As they grow their customer base, that will allow you to grow with them.

Steve Rak
Rak Consulting, LLC

Q. What financial reports are important for my business?

A. Every company has financial information, such as profit and loss statements, balance sheet and job cost reports that it uses to determine its success in the marketplace. There are other relevant reports that can assist you in running your business and that need your attention on a regular basis.

Accounts receivable tells you the company's outstanding payments from customers you have done work for or sold goods to. It is laid out by days outstanding to let you know how long that money has been owed from the date of the invoice. This assists you with cash flow projection and can help determine when there may be a problem with a customer not paying in a timely fashion. Most companies allow 30 days before payment is expected; however, you can change the terms and demand payment upon receipt of the invoice.

This is generally based on industry standards and your need to turn around payment to your suppliers. An aging report will rank the receivables by the number of days from invoice. This will again assist if a customer is slow to pay or is allowed more than 30 days before payment is received. No customer should pass the 30-day period without a call requesting payment.

Accounts payable refers to the payment, such as material costs associated with a job, utilities, monthly rent, etc., that the company must make to its suppliers and vendors. These are also laid out on the basis of the terms of payment by each vendor or supplier. Thirty days is the standard term in many construction-related purchases. However, under the current economic conditions, many vendors and suppliers are requiring COD (cash on delivery), which requires you to pay on delivery of the product. This in turn requires companies to have sufficient cash on hand to pay for materials at the time of purchase.

The cash flow report is tied to the accounts payable and the accounts receivables report in determining when the company can pay its vendors and suppliers. It tells the company when cash is available to pay the vendors and suppliers based on the terms of repayment they agreed. Typically, the repayment schedule is projected based on the 30-day payment schedule and projects how much cash in hand is needed to make payments. The cash flow report will typically include payroll and tax payments to track the cash needed.

The financial system is important to any successful business operation, large or small. Start with an accounting system and select a software package that fits your needs.

Richard Wilbert
SiteSource Business Coaching

 

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