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How to Improve Cash Flow and Grow Your Service Business

Profile picture of Brittany Foster, freelance author for Jobber Academy.
Brittany Foster
Nov 14, 2024 9 min read
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If you struggle to cover business expenses between when a job ends and when a client pays, you could benefit from learning how to improve your cash flow. 

Successful service businesses rely on cash inflow to hire their first employees, invest in new equipment, and save for a rainy day. 

It’s time to boost your financial health and produce a steady cash flow every month. 

What is cash flow?

Cash flow refers to the money that comes into and goes out of your business bank account. It’s made up of your income, like payments from clients, and bills, such as your overhead costs and operating expenses

You can have both positive and negative cash flow in a given month. 

Positive cash flow is when you cover your bills and still have additional funds left over. 

Negative cash flow is when you spend more than you bring in. 

Most service businesses experience both, especially if they’re impacted by seasonal demand, like lawn care or snow removal. 

The goal is to have as much healthy cash flow as often as possible so you can use the funds to grow your service business. Extended cash outflow means you’re going into debt, and the more you accrue, the harder it will be to pay it back.

1. Keep an eye on your financials

If you don’t review your finances regularly, you won’t know whether you’re cash flow positive or not. 

Start by adding up your income and expenses every week. Then, review them each month on your cash flow statement to see your monthly cash flow. 

From there, use your predicted expenses and scheduled jobs to calculate a cash flow budget to predict next month’s cash flow as well. 

Here’s a simple formula you can use for weekly and monthly cash flow forecast: 

Cash flow = total cash inflows – total cash outflows

So, let’s say your expenses for the month were $3500, and your income was $5000. Your monthly cash flow would be +$1500. 

This will help you identify what your cash flow looks like long-term so you can make adjustments to your expenses and pricing before cash flow issues become a problem. 

You can also use an AI tool like Jobber Copilot to monitor and analyze your data. It can help you improve cash flow by giving you: 

  • Tips to boost conversions over the coming month
  • Insights about how quickly your customers pay you after getting an invoice
  • Advice on how to use marketing tactics to generate new leads
Make the most out of your data with Jobber Copilot.

2. Optimize your invoicing

Your invoicing strategy is one of the most important parts of getting paid on time and in full. To make the most of your invoices, be sure to: 

Use a professional invoice template. Invoices that provide clear, detailed information about the services that were provided, the total amount due, and how a client can pay you are the most likely to be paid. Use an invoice template to ensure your invoices are consistent and easy to understand. 

You can also use invoicing software like Jobber to create and send effective invoices, making it easy for clients to pay you. 

READ MORE: What to include on an invoice 

Set clear payment terms. Payment terms, like when the total amount is due, whether you charge late fees, and how a payment can be made clarify essential information to your clients. Being upfront about when, how, and why clients should pay you to avoid penalties encourages them to pay you faster. 

Invoice immediately. When you invoice clients directly impacts cash flow. If you invoice clients too late, you may not be paid in time to cover your monthly expenses. Send invoices immediately after a job’s done or within 48 hours to stay top of mind with customers. 

Jobber makes it easy to create accurate invoices with just a couple of clicks. When the job is done, instantly generate a professional digital invoice and send it to your customers by text or email.

Option to invoice now or later when you mark a visit complete in Jobber

Pro Tip: Offer a small early payment discount, like 10%, to encourage timely payments.

Send payment reminders. Track each customer in your CRM so you know when you have an outstanding invoice. Then, if an invoice goes past the due date, send the client a reminder. Sometimes, invoices slip a client’s mind, so sending a quick email is a good way to nudge them into action to avoid late payments.  

READ MORE: When to send an invoice to get paid faster

3. Make it easy for customers to pay you

The more inconvenient it is to pay you, the longer clients will take to do it. Accepting online credit card payments and ACH payments gives clients a way to pay you that doesn’t involve withdrawing cash or heading to your office. That way, they can pay you anytime, anywhere.

You can use Jobber’s credit card processing software to start accepting online payments, which will help increase business cash flow.

READ MORE: How to accept credit card payments on your phone

4. Reduce your expenses

Healthy cash flow doesn’t always rely on getting paid faster or charging more for your services. It can also be done with proper expense management. 

Depending on your service and industry, you can try: 

  • Downsizing your office space or hiring remote administrative workers
  • Reviewing your bills to see if you can cut an unnecessary expense from your phone, internet, or software bills by renegotiating contracts
  • Taking a look at your inventory and equipment to evaluate what you use and what you don’t, then sell anything that’s gathering dust
  • Leasing equipment instead of buying, especially if it’s something you only need for a single contract
  • Talking to your suppliers about discounts for bulk orders or early payment discounts
  • Hire subcontractors for seasonal work or one-off jobs instead of employees

5. Increase revenue

If you’ve cut costs as much as you can, but you still have poor cash flow, look at how you can increase revenue instead. Start by: 

Upselling services: Consider your service pricing and whether you can increase your profit margins by offering tiered pricing, packages, or upsells. Note which services clients book the most and think about whether it would make sense for you to bundle them together to increase the value of each job. 

For example, let’s say you own a cleaning business and most of your clients book you for biweekly cleanings. If you notice a lot of them also book additional appliance deep cleans, it might be a good idea to offer a premium package at a higher price that includes a basic clean, appliance deep cleans, and another service like carpet cleaning or interior window washing. 

Generating more leads: More leads mean the potential for more jobs. Expand your lead generation strategy by developing a referral program, using a lead generation platform, or leveraging existing clients to get repeat customers

Planning for seasonality: If you have a seasonal business, like landscaping, pressure washing, or roofing, prepare for the off-season by: 

  • Offering seasonal services like holiday light installation or snow removal
  • Reducing your costs, like staffing and rent
  • Setting aside money in your busy season to cover costs during slower months

Cross-selling: When you’re on a job, consider whether the client would benefit from another service. For example, if you work in HVAC and you’re installing a new furnace and you notice the client’s air conditioning unit has seen better days, you could suggest a newer, more efficient option.

6. Raise your prices

The service pricing strategy you use makes a big difference in your cash flow. If you don’t charge enough, you won’t be able to cover costs.

How much you charge depends on the job costs, like materials and labor, as well as your markup and profit margin. But you also need to factor in competitor pricing, your experience level, and what level of service you offer. 

For example, do you provide a premium experience or work in a niche, like luxury bathroom remodels? 

While increasing prices can be uncomfortable, sometimes it’s necessary. As long as you communicate your value and reasoning to clients, set a fair rate for what you offer, and have a strategy in place, there’s no reason it shouldn’t go smoothly. 

Just make sure to write an effective price increase letter to ensure your clients know when prices will go up and by how much.

Raise your prices. You need to review your pricing and make sure that you’re charging the right billable hour for your services. You’re probably too low, and it’s the quickest way to pull that profitability lever on your gross profit and bring it up.

Headshot for Adam Sylvester
Adam Sylvester Charlottesville Lawn Care 

7. Get a loan

If you typically have financial stability, but need additional funds for a large purchase, like equipment, consider getting a small business loan, line of credit, or business credit card. 

Low-interest (or no-interest) loans help you cover costs without significantly impacting your monthly expenses since you can pay them back over time. 

Just make sure you have the funds to pay the new monthly payment so that you don’t wind up with cash flow problems instead.

8. Offer customer financing to win more jobs

Sometimes, clients need work done even if they know they’ll struggle to pay for it—like emergency plumbing repairs or mold removal. 

When this happens, it puts both of you in an awkward situation. 

That’s where financing can come in handy. If you offer financing to customers, you get paid upfront by a lender while the client makes monthly payments over time. 

This prevents your cash flow from being impacted and keeps you from having to deal with unpaid invoices.

9. Ask for deposits

Not all clients have good intentions. If you’re paying for job materials or supplies upfront, you’re putting yourself at risk if the client doesn’t make good on their invoice. 

Unfortunately, it’s impossible to tell whether a client’s going to pay you until it’s too late. 
Asking for a deposit is a great way to navigate this issue because it ensures you get the immediate cash you need to cover costs and gets the client financially invested in the job from day one.

10. Choose clients wisely

When someone reaches out to ask for a quote or book a job, take a look at their client history. Do they typically pay on time? If they have a habit of paying late or only making partial payments, it might be time to fire them

Your cash flow relies on building a list of trustworthy and high-quality clients. Focus on doing business with the ones who pay you on time and in full over the ones who don’t. 

READ MORE: How to manage, prevent, and resolve short paid invoices

11. Promote recurring services

The more recurring clients you have, the more consistent and reliable your cash flow will be. If you offer recurring services, like house cleaning, lawn care, or snow removal, make sure your clients know about them. 

Get as many clients onboard with ongoing work as possible by making sure to promote it as much as possible through your marketing efforts. 

For example, use Jobber campaigns to let clients know when they should book you for annual maintenance or switch from your mowing to shoveling service.

Keeping up with cash flow

To grow your service business, you need positive cash flow. But it’s not as simple as setting prices, booking jobs, and calling it a day. 

Instead, it requires consistent oversight, management, and strategy. Jobber can help with cash flow management by monitoring payments, maximizing the value of invoices, and communicating with clients.

Originally published in July 2017. Last updated on November 14, 2024.

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