How HVAC Contractors Can Fix Bookkeeping and Understand Profit Before Going Broke - Ruth King

In this episode of the HVAC Know It All Business Edition Podcast, co-hosts Gary McCreadie and Furman Haynes from WorkHero sit down with financial expert Ruth King, Founder and CEO of Financially Fit Business and CEO of Business Ventures Corporation. They talk about the importance of understanding your finances as a contractor, especially when you're starting to scale your business. Ruth King is a seasoned business advisor who specializes in helping contractors get their finances in order. With years of experience working with contractors, Ruth has invaluable insights on how to manage cash flow, profitability, and how to structure your books for long-term success.   Expect to Learn: - The key differences between accrual and cash basis accounting, and why accrual is critical for contractors. - How to set up clean books and the importance of having the right bookkeeper. - Why it's essential to separate service and install divisions on your P&L as you scale. - How to handle deferred income from maintenance contracts for proper financial reporting. - Tips for managing cash flow, avoiding the common "cash-flow trap" that many contractors face. - Why paying yourself a salary as an employee is a smarter choice than an owner's draw for growing your business. - Key financial ratios, like working capital, and how to use them to assess the health of your business.   Episode Breakdown with Timestamps 00:00  – Introduction 01:32 – First things Ruth looks for in a contractor's financials 03:22 – Clean books: What does it mean for a contractor? 04:22 – Evaluating a good bookkeeper 05:41 – Upfront billing for maintenance contracts 07:22 – Avoiding "trash in, trash out" in bookkeeping 08:44 – Integrating CRM with QuickBooks 10:19 – Departmentalizing your P&L 11:38 – Owner's draw vs. paying yourself a salary 12:48 – The importance of paying yourself as an employee 14:27 – Key numbers to track on your P&L 15:43 – How to calculate working capital 17:35 – Cash Flow vs. Profitability   This Episode is Kindly Sponsored by: PartsTown: https://www.partstown.com/hvac-parts   Follow our Guest Ruth King: LinkedIn: https://www.linkedin.com/in/ruthking1/ Ruth's Website: https://ruthkinghvac.com/ Company Website: https://financiallyfit.business/ Company LinkedIn: https://www.linkedin.com/company/financially-fit-business/ Company Facebook: https://www.facebook.com/people/Financially-Fit-Business/100090849001161/   Follow Gary McCreadie: LinkedIn: https://www.linkedin.com/in/gary-mccreadie-38217a77/ Website: https://www.hvacknowitall.com Facebook: https://www.facebook.com/people/HVAC-Know-It-All-2/61569643061429/   Follow Furman Haynes: LinkedIn: https://www.linkedin.com/in/furmanhaynes/ WorkHero: https://www.linkedin.com/company/workherohvac/ Instagram: https://www.instagram.com/workhero__/