HVACR Business Magazine recommends that you always know the ratio between your accounts receivable and your accounts payable to make sure you can see a cash flow problem coming.
That’s an excellent plan, and in order to know what to do if – or, realistically, when – you see that problem on its way let’s look at how the HVAC industry responded when a serious threat to its business appeared on the horizon.
Equations Matter
Everything changed for HVAC with the publication of a scientific paper in Nature magazine in 1974, in which Mario Molina and Sherwood Rowland proved that chlorofluorocarbon (CFC) gases, commonly known as “freons,” were destroying the ozone layer. It’s very unusual for any scientist to discover an incontrovertible proof, but their equations were so elegantly irrefutable that the aerosol spray, refrigeration and plastic foam industries immediately knew they had a serious problem on their hands.
In four years – the speed of light when it comes to law making – CFCs were banned in the US. Ten years after that – warp speed for global treaty making – the Montreal Protocol banned them worldwide. And a mere decade after that, in 1996, a year after Molina and Sherwood were awarded the Nobel Prize, the CFC phase out was completed. Former United Nations Secretary Kofi Annan said that the Montreal Protocol was “perhaps the single most successful international agreement to date.” The world has never seen anything like it before – and it all came from a set of equations.
Works for Some…
This is all awesome news if you’re a penguin living in Antarctica or a human in New Zealand, because CFCs will stay in the stratosphere doing their damage for a century. In 2006 the largest hole in the ozone layer ever recorded hit 29.6 million square kilometers (more than three times the size of the United States), and with some luck that will be the biggest one ever recorded, because since then it has settled down to the 24 million square kilometer range and the EPA predicts it will be almost gone by 2050.
…But Not for Others
But that’s all a lot less awesome if you’re the HVAC industry having world governments literally drain an essential ingredient from your equipment. Now, it is true that CFCs are still recycled and used, and that one of the industry’s responses to this crisis was to improve leakage on cooling systems from the ten-percent-a- year range to the less-than-one-half-of-one-percent range.
But that’s not a long-term solution. It’s like using your savings account to cover your receivables when cash flow is tight. That will work, but its short term with no thought to the future of your business.
Regarding CFCs, the industry knew they needed a long-term solution, so creative chemists worldwide invented a whole slew of new refrigerants and tested all of them with their long-term environmental impact in mind. As anyone working in construction knows, consumer demand for environmentally correct building materials has skyrocketed to the point that it often trumps cost. So HVAC professionals interested in working on the most lucrative projects with the greatest business development potential scramble to understand how HVAC equipment can earn points towards a LEED certification.
Solutions Matter More
That’s three long term solutions in one: first you take care of the planet for your grandchildren. Second you gain critical knowledge that is in demand. And third you expand the number of projects you can bid, and position yourself to work on ones that are well funded.
But what if you can’t afford the training or the time or the materials to position yourself because that other irrefutable equation – the one about your accounts receivable and accounts payable – has you hamstrung?
What if you can’t spend time on professional development because your free time is spent chasing after accounts past due? That’s the opposite of business development in many ways because it has a negative impact on your state of mind and can also damage relationships that may lead to referrals in the future. Add to that the fact that collecting past due accounts can have legal implications that may actually introduce new problems to take up more time.
Let professionals certified in every state take the problem off your hands. And rather than pay exorbitant percentages on accounts they successfully collect, why not hire a provider who charges a flat fee to do all the work and who pays you 100% of the settlement when successful?
Keep your mind on the future of your business and make these equations work for you. Learn how here.
