Cash Flow Mistakes to Avoid When Running a Mobile Fleet Car Washing Business
Many small business owners think they are home free when they secure large corporate or government accounts. That’s just not the reality because it can indeed be the start of a really challenging road ahead with regards to cash flow. An entrepreneur that doesn’t understand this issue will have a rude awakening. Now then, let’s use the example of a mobile car washing and fleet washing business, so I can explain all of this to you.
Beware of taking on too many accounts too quickly, especially government vehicle cleaning contracts. They often pay very slow – and when cities, counties, states, and federal agencies are cutting costs, they tend to string out payments to time-spans that you wouldn’t have expected. I can remember receiving “vouchers” from the California Highway Patrol and CalTrans for washing their vehicles on several occasions when the State of California didn’t approve their state budget on time. That wasn’t very funny – imagine taking those to the bank to deposit? The teller looks at you like you are a Martian trying to make a deposit in Mars Planetary Units?
Many agencies have sent me payments 120-days late, without any increase in the invoice, even with a contract stating that 2% was agreed upon for payments over 60-days. This has occurred with cleaning school bus fleets, county snow removal vehicles, municipal pool cars, and police department vehicles. And very large corporate fleets, especially utility companies are notoriously slow, you always eventually get your money, but it doesn’t help if you have bills to pay now.
Think of it this way, when you take on a large account of this type you are really buying the account and becoming their revolving line of credit, thus you are a bank philosophically speaking, worse, you can’t earn the interest that banks do and often eat that cost, even if your contract says they must pay you by a certain date after the invoice is received.
Okay so, what should you do? Well not long ago I was discussing all this with a mobile car washing and fleet washing entrepreneur in the state of Alabama. I suggested to him that he should still attempt to get larger fleet accounts, because those were his bread-and-butter accounts, but in the meantime to get as many “on the spot cash paying customers” as possible, therefore he could pay his operating expenses, workers which have to be paid weekly or biweekly, and other expenses until those checks finally come in for the big fleet accounts.
One concept is to have many customers who have personal cars at office buildings and put them on a regular route during the week during the work day. Because during the workday most of the fleets are out, and they can only be cleaned in the evening hours or on the weekends. Being paid on the spot by individuals for washing their cars each week will keep him in the money flow, until those big checks finally come in. Indeed I hope you will please consider all this and think on it.
