Field service operations is a game of margins. For some businesses, those margins are razor thin—some experts estimate that the standard profit margin for a successful HVAC company is only 6%. Why is that, exactly?
Field services companies face all the same overhead costs that any service-based business deals with, like payroll, office expenses, insurance, and IT—but it’s more than that. In order to meet customer demand, field services providers like HVAC and plumbing companies have to invest deeply in trucks (not to mention the additional fuel and insurance costs that come with them), specialized tools, and inventory. Air conditioning systems and water heaters aren’t exactly cheap, and that means more of a field services company’s dollars are tied up in expensive overhead than other kinds of service providers.
Simply put, business owners in this industry looking to aim higher than that 6% need to maximize efficiency wherever possible. Almost impossible to do with old-school tactics, that search for increased profitability is possible with the right resource scheduling software.
What is a service resource?
In the field services industry, a “service resource” is anything a business uses to generate revenue, including (but not necessarily limited to):
- Billable technician time
- Vehicles to get to project sites
- Equipment inventory for sale
- Basic supplies like pipes, wires, and even duct tape
It might not be intuitive to imagine something as basic as duct tape factoring into scheduling, but it’s as critical a resource as any other; without it, jobs can’t be done. Technicians end up going back and forth for tools, supplies, and equipment, and that creates even more overhead in the form of wasted time and fuel.
How does field service scheduling software impact profitability?
Modern field service scheduling software impacts profitability by bringing together everything from route scheduling, to technician job assignments, to inventory and warranty management to help make sure no job starts without everything in place to make it go as planned.
Have you ever gotten a call from a technician who can’t make it to a scheduled job on time because their current assignment is running long, only to lose a customer to competition who can be there right away? What about a technician who worked to get a new A/C unit on site only to find out before installation begins that the customer’s current system was still under warranty?
These issues can and do happen without disastrous results, but they also add up quickly. Consider this: Industry experts estimate that 5% of HVAC contractors make 95% of the profit in the HVAC market. According to Bill Ligon of Contracting Business, that’s because at least 90% of HVAC contractors are using QuickBooks for their accounting and basic critical pricing decisions based on incomplete data. They may understand the basic overhead costs associated with completing a sale; it’ll cost $X in technician hours, plus gas to get to the job and any materials used on site.
But what about insurance? Or the amortized cost of the truck that’s sitting at a job site? Or the opportunity cost of having one technician do two jobs across town from each other instead of having them take close jobs—and making sure they have everything they need on their truck for those jobs?
That 5% of HVAC companies making the majority of the profit are pricing based on the costs of all of their service resources that are tied up in a job. With QuickBooks or a simple scheduling tool alone, no business can hope to get a full enough picture of their true operating costs to price confidently.
Acumatica: Fully-integrated multi-resource scheduling for field service companies.
That’s where a truly comprehensive field service management software solution makes all the difference. By integrating accounting, route scheduling, inventory, and warranty information in one tool, Acumatica Field Services Edition closes the loop and offers field services businesses a clear look at their overhead.
More than that, though, Acumatica makes it easier to schedule resources so they are where they need to be at the right time, every time. That means less time and money wasted on repeat visits, calls back and forth with the home office, and inefficient routes. In the HVAC game where a single percentage point can mean the difference between growth and stagnation, technology is the key to increasing profitability.
Ready to see Acumatica in action? Click here for a five-minute demo and case studies detailing how Acumatica unlocks new efficiencies for every role in your company.