HVACR Business

JUN 2015

Help hvacr contractors master the critical components of business management.

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HVACRBUSINESS.Com HVACR Business J U N E 2 0 1 5 23 issue. A technician doesn't know how to diagnose properly or an installa- tion crew doesn't know how to install properly. Make sure there is a installation check sheet that crews must complete. Even airline pilots do a check sheet every time before they take off. This prevents "forgetting about something important." 5. Paying Overtime and Charging Regular Time Most residential maintenance agree- ment customers pay no overtime charg- es. In these cases, even if you are pay- ing your technicians overtime you are charging the customer regular rates rather than overtime rates. You still have the same selling price to the customer. Margins are often lower by a percentage point or two in busy times of the year be- cause of no overtime charges. You can be busy and be less proftable because your margins are lower! 6. Maintenance Agreement sales and expenses If you account for a maintenance agreement sale when the sale is made rather than when the work is performed, in months that you have sales and no maintenance work, your margins will be higher. In months where you perform a lot of maintenance you have no revenue and all of the labor and material expenses so your margins will be lower. This is fnancial statement fruit salad for maintenance. Remember that when the sale is made your company has a li- ability until it performs the work. This liability goes on the balance sheet. Assuming that you perform two main- tenance procedures per year, when you perform the frst maintenance you ac- count for half the sale and create a rev- enue for half the sale. If you are noticing gross margins de- creasing and none of the frst six issues are present, then unfortunately you have No. 7. 7. Theft Employees don't charge customers for materials they use on their service calls. Or line sets and other copper parts disappear. Or an employee picks up two motors instead of one needed for a job and keeps the second motor. Or, parts which should be on the truck are not on the truck. Theft is usually discovered during inventory counts when the actual in- ventory is much less than what it is sup- posed to be based on the balance sheet value. Hopefully, this is not the case in your company. Watch your gross margins each month. Ensure they stay consistent. If not, these seven frequent occurrences should give you where to look for the issues. Fix them so you can make great business decisions based on accurate f- nancial data. n Ruth King is president of HVAC Channel TV and holds a Class II (unrestricted) contractors license in Georgia. She has more than 25 years of experience in the HVACR industry, working with contractors, distributors and manufacturers to help grow their companies and make them proftable. Contact her at ruthking@hvacchannel.tv or call 770-729-0258. waterfurnace.com/HVACR 7 Series The most effcient heating and cooling system you can sell. Variable Capacity Technology The frst variable capacity geothermal heat pump available to homeowners. It runs at exactly the capacity needed instead of the one or two speeds of traditional equipment. Aurora Controls Aurora communicating controls provide advanced diagnostics and service capabilities. Troubleshooting as well as many startup calculations that were once manual are done automatically on the AID Tool making maintenance a fraction of the effort. Energy Monitoring Internal energy monitoring components measure actual power consumption rather than estimating. Homeowners can easily review an instantaneous or 13 month history of their unit's energy usage. Aurora communicating controls provide advanced diagnostics and service capabilities. Troubleshooting Variable capacity geothermal technology. Available today. To see what else makes the 7 Series so different visit waterfurnace.com/HVACR 700A11 41 EER 5.3 COP 2014 AHR EXPO ® WI N N E R WaterFurnace is a registered trademark of WaterFurnace International, Inc. ©2014 WaterFurnace International Inc.

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