Integrated financial management is not accounting. It’s a system of financial management for a landscaping business that relates the most important financial processes to each other in such a way that, at any point in your financial cycle, you will have a clear and focused picture of where your business stands, where each individual job stands, where you’re in great shape, where you need a little work and what your next steps should be.
When all of your financial pieces are related to one another, it allows you an extremely accurate 360-degree overview of your landscaping business’s financial status.
Must be complicated, right?
Not really. Integrated financial management takes financial processes and information that you’re most likely already using and tweaks them so they work with each instead of next to each other to provide you with timely, useful information to manage and grow your landscaping business.
These processes include:
- Lead Tracking;
- Estimating and pricing;
- Job tracking;
- Accounting; and
- Budgeting.
See? Stuff you do all the time.
Introducing the integrated financial management cycle
The four elements of management success include sales (you can sell the work), leadership (your team is with your firm because of you), productivity or technology (you know exactly what your marketplace needs and how to provide it) and financial savvy. This last element is, unfortunately, a common weakness for landscape contractors.
Business leaders who are financially savvy know:
- How to price their work;
- How much overhead to put on their jobs;
- How much profit to put on their jobs;
- How to control business costs;
- How to stimulate volume; and
- How to impact profitability.
The integrated financial management cycle gives business leaders the tools they need to do all of these things in a manner that integrates all their financial information and provides instantly useful and actionable results, not just a handful of reports that require the services of an accountant to translate.
The cycle starts with a lead. That lead becomes an opportunity and, hopefully, an appointment. The appointment results in a request for a proposal. The RFP becomes an estimate that leads to a contract. The contract is accepted and job tracking begins. Job tracking interfaces with the accounting systems, which interface with the budgeting process, which provides the pricing factors, which is how you came up with the estimate in the first place. It’s all tied together.
Voila!
Accounting may be the foundation for the integrated financial management cycle, but it’s what springs from the accounting process that makes the system work amazingly well for landscape contractors!
Why is an integrated financial management system important?
Hmmm. Integrated financial management. It sounds complicated. It sounds boring. You’re a landscaper, not an accountant. You do your own books and you’re doing OK, or you have people who do your books for you, right? Of course.
But…
Whether you install landscapes or bake cookies for a living, you’re a business owner. As a business owner, your most important job is to maximize profits for the sake of your company, your family, your employees and your future, right?
Simply put, if you’re not using integrated financial management you’re losing money.
Next week, in a follow up to this post, we’ll dive deeper into the integrated financial management cycle and tackle a topic we should all be thinking about this time of year: budgeting!
This post is an excerpt from the ebook, “The Landscapers Guide to Integrated Financial Management,” published by A Better Way 2 Learn. LM columnist Frank Ross, co-founder of A Better Way 2 Learn, will take part in A Better Way 2 Learn’s 2013 Financial Management TeleSummit, which kicks off Tuesday, Dec. 3. This live, three-night event is being presented by A Better Way 2 Learn Financials, GoiLawn and Landscape Management Register here.
