Cash Collection Cycles Can Kill You

Hey there entrepreneurs,

Welcome to the Better Business Brief, where I share takeaways from:

running businesses I’m building to sell for millions
My advisory with other business owners building to sell for millions
tips and tricks you can use to do the same

Most people think the difference between a “good” business and a “bad” business is profitability.

But in practice, a profitable business can still be stuck in the mud if it’s starved for cash.

One of the most overlooked differences I see when comparing business models is cash flow timing…

AKA how long it takes to actually get the money in your account after making the sale.

To illustrate, let’s compare two sides of the same industry: residential HVAC vs. commercial HVAC.

So today, in less than 5 minutes, I’ll give you:

💵 Why cash timing matters more than you think
🏠 Residential vs. commercial HVAC cash flow
🚀 How we’re fixing the problem in our own business

Right now, maybe in your own business, you're feeling like you can't grow as fast as you'd like to even though you're making money...

The way you collect your cash might just be the problem...

#1 – Why Cash Timing Matters

When you sell something, you’re not done.

You still have to collect.

If you can’t collect quickly, you can’t reinvest quickly.

That means marketing slows down.

Inventory purchases slow down.

Hiring slows down.

Even a business with great margins will feel like it’s running uphill if every dollar earned takes months to show up in the bank.

#2 – Residential HVAC: Cash on Delivery

In residential HVAC, payment is almost always COD if you’re doing it right…

cash or card the day you do the work.

That’s beautiful for growth.

You finish the job, you’ve got the money, and you can immediately reinvest in marketing, tools, or labor to take on more work tomorrow.

Your growth cycle is short, your stress is lower, and you can fund expansion without outside capital.

#3 – Commercial HVAC: The 90-Day Slog

Commercial HVAC can have huge contracts, but the cash cycle is brutal.

You might do the work today and get paid 90 days later.. or more.

In the meantime, you’ve already paid your techs, bought the parts, and maybe even subbed out some of the labor.

If you don’t have a mountain of working capital, the only way to grow here is to slow down or borrow.

Both can kill momentum.

How We’re Combating This

In our own company, we’ve been growing the residential side of the business more and more…

not just because it’s more profitable on paper (which it is), but because it frees up cash to fuel growth everywhere else.

Residential cash flow gives us the bandwidth to take on those slower-paying commercial jobs without starving the business.

It’s the oxygen that keeps the fire going.

We’re also collecting deposits on commercial jobs now.

This is meant simply to cover our labor so we don’t have to finance the job for the customer while we wait for them to pay.

If you’re in a business with long cash cycles, ask yourself:

Can you add a faster-paying service line?
Can you structure deposits or progress payments?
Can you shorten your terms with existing clients?

Because in growth, speed to cash is everything.

If you’re a business owner struggling with these issues, these are the types of things we fix in our advisory work. Check out what options we offer here to help you start collecting cash quicker:

https://www.scaleforsale.com/

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Happy value-building to you!

See you next time for Better Business Brief,

-Brody