Home services providers can become victims of their own success if they’re not prepared to scale important processes and home service software to match growth. Hiring more technicians and buying additional equipment are the obvious steps. Less obvious but equally important is scaling the accounting function, including the technology it relies on. Small degrees of growth can translate into drastically larger, faster and more complex accounting obligations. And if a home services CFO and their team can’t meet those obligations, it creates countless liabilities that make success less sustainable and financial disaster more likely.
The home services sector saw a record-breaking 23% increase in median revenue in 2020. Projections suggest the industry will grow at a brisk 18% pace for years to come, driven by the evolution of the home into a tech-driven space that enables so much of our lives. These impressive growth figures are good news for anyone involved with home services. But they’re also cause for alarm.
How accounting becomes inadequate
When home services companies begin offering new services, expanding into fresh markets, or serving more customers, it affects the accounting function in two ways:
- It puts pressure on the existing accounting system. If that system was designed for small companies, basic accounting requirements, or introductory users, it probably isn’t equipped to handle greater speed, scale, or sophistication. The result: errors, delays, inefficiency and incapability that may cause basic accounting functions to break down – putting a company in financial jeopardy when it’s otherwise on an upward trajectory.
- If the software for service delivery and accounting are not integrated, the disconnect only grows with the company. Data from the service delivery side of the equation must be manually entered into the accounting software, which is inefficient and error prone. And even when data moves accurately from one system into the other, there will always be gaps in visibility and understanding when the side of the business that generates revenue operates separately from the side that manages revenue.
Both these issues relate to the accounting software in place. Whether it’s QuickBooks or a similar option that was built for simplicity rather than scale, growing pains are inevitable ... until they become untenable. At some point, all growing companies will need to reconsider their accounting software and possibly their service delivery software too if they’re serious about maintaining momentum.
Seizing the moment with software
With demand for home services set to shoot through the roof, there's a high risk that rapid growth will exceed what accounting can accommodate, especially as companies evolve and expand simultaneously. Competitive companies will need to be efficient, agile and innovative. Software can help or hurt all those efforts.
We will discuss the specific software home services companies need in our next post. but it comes down to this: A comprehensive platform for field service planning and delivery plus a mature financial management solution. Most important of all, both tools should work in sync, sharing data and automating processes so that home services CFOs (and other executives or investors) maintain financial fitness and focus throughout growth spurts. Now is the time for companies to reconsider their software, before the home services industry transforms any further.
