CFO Services for HVAC Businesses
A fractional CFO for HVAC companies fixes the three numbers that decide an HVAC year: install-to-service mix, deferred revenue on maintenance agreements, and cash through the shoulder season.
Built for HVAC owners between $3M and $15M who run on ServiceTitan or a similar field system and keep their own bookkeeper and CPA. A working CFO in your corner a couple of times a month, reading the P&L the way an HVAC owner does.
Forecasts that look 13 weeks out, not 13 days.
Where HVAC money actually leaks.
The P&L of an HVAC company hides three things a generic financial statement never shows: when the money arrived, which department earned it, and how much of it has already been promised to a customer. Those three are all timing problems, which is why how cash flow actually works in a home service company is where I start with every new client.
Without a forecast built on the seasonal calendar, the shoulder seasons get financed on the line of credit and the busy months pay it back. A company that only sees a blended gross profit does not know which department is carrying the other.
Three leaks, in the order we find them.
- Seasonality. Summer and winter carry the year. Spring and fall carry the payroll.
- Maintenance agreements. Cash received for visits not yet made, booked as revenue on the day of the sale.
- Install versus service mix. Install produces the revenue, service produces the margin.
That is the gap a CFO who reads HVAC numbers fills.
DEFERRED REVENUE ON SERVICE AGREEMENTS
Why a maintenance agreement flatters the P&L.
An annual agreement is paid up front and delivered over twelve months. Booked as revenue on the day it is sold, it makes the busy season look better than it was and the slow season look worse than it is.
The cash arrives first.
The customer pays in month one. Nothing about that payment tells you whether the two visits behind it will be profitable, or when the technician hours will land.
The cost lands later.
The spring and fall tune-ups land in the months the company is least busy, which is exactly why the agreement was sold. On a cash P&L those months show cost with no revenue.
The balance sheet should carry it.
Unearned agreement revenue is a liability until the visit is made. Carried correctly, the owner can see how much of next quarter is already sold, and a buyer can see it too.
Recognised as the visits happen, the P&L stops lying in both directions.
SEASONALITY
Cash through the shoulder season.
Summer and winter carry an HVAC year. Spring and fall carry the payroll anyway, and the gap between those two facts is financed somewhere, usually on a line of credit drawn in a hurry. I wrote up what I tell HVAC clients heading into shoulder season if you want the version I give owners in September.
Drawn on a date the forecast chose, three weeks early, the same draw is a planned cost. Drawn on a Thursday because the balance did not clear, it is an emergency with interest attached.
What the seasonal forecast carries
Agreement visits scheduled into the slow months, with the technician hours they consume.
The draw and the repayment, both dated, before the shoulder season starts.
Install backlog converted into cash by the week it is expected to land.
The tax deposit, which lands in the quarter least able to absorb it.
SYSTEMS
Working alongside ServiceTitan and the accounting team you already have.
Most CFOs review financial statements. We make sure the numbers feeding those statements are right in the first place. Your bookkeeper keeps the books and your CPA keeps filing.
- ServiceTitan and other field software wired to QuickBooks so they stop fighting.
- Invoices, payments, inventory, payroll, and job costs flowing correctly end to end
- Operational reports reconciled against the accounting so the two actually agree
- QuickBooks Desktop to Online migration, without losing your history
- Financial reports you can trust enough to make a decision on
Because if the data is wrong, every KPI, dashboard, and forecast is wrong too.
THE FIRST 90 DAYS
What we change in the first 90 days with an HVAC company.
Boring but effective. Clean books first, then a forecast you can steer with, then the numbers that decide pricing and hiring.
Days 1 to 30: clean books, on time.
Month-end close by the 10th. Real accrual accounting. A chart of accounts split by install, service and maintenance. ServiceTitan and QuickBooks talking to each other.
Days 31 to 60: cash flow you can see coming.
A 13-week cash forecast built on your seasonal calendar, not last month's bank balance. So you know before the shoulder season whether you can make payroll.
Days 61 to 90: numbers that drive a decision.
Weekly gross profit by department. Real labor burden per technician. Pricing tied to actual cost data. Agreement revenue recognised as the visits happen.
Method first. The results come after it, on purpose.
PROOF
What changed at a $15M multi-trade HVAC shop.
The result below is a client of the practice. The five operators after it are Profit and Grit guests, quoted on the same three numbers: install-to-service mix, maintenance agreement revenue and shoulder-season cash.
CLIENT RESULT
From books in shambles to a real forward view.
A $15M multi-trade HVAC shop came in with the books in shambles. Months of cleanup, then we built out projections that actually meant something.
The owner went from guessing at next quarter to running the business with a real forward view.
Reported by Tyler Martin, California-licensed CPA.
FROM THE PODCAST
What HVAC operators on Profit and Grit say about the same three numbers.
Lawrence Castillo walked into Brody Pennell with 34 employees and about $6 million in revenue and grew it into a $70 million operation with 150-plus people, in a Los Angeles market where the weather creates no urgency at all. Every install goes through a gross margin calculator before the job starts.
Katy Higgins built a $12 million company on a mix she was taught early: 60% install, 30% service, 10% maintenance. Darren Yarbrough took a family shop from $5M to $11M and still likes the maintenance agreements, because you can depend on them through the shoulder seasons.
Dillon Caraway will tell you why a line of credit you can draw on in the shoulder season is a cash flow tool rather than a warning sign, and Keith Flores sums up the goal in four words: weather-enhanced, not weather-driven.
The Home Services Cash Flow Scorecard.
15 questions. 5 minutes. A real answer about where your business stands.
You answer 15 plain-English questions about how your business actually runs. You get a score, a one-page read on what's working, and the two or three places your cash is leaking that you probably already suspect.
Get your score
We'll send results straight to your inbox.
The Home Services Cash Flow Scorecard.
Find out in five minutes whether your numbers are helping you run the business or hiding the problems that are costing you cash
How You Close Your Books
How You Track Cash
How You Price Work
How You Read Your Numbers
Analyzing financial indicators...
Your Priority Fixes
WHO THIS IS FOR
Built for HVAC owners between $3M and $15M.
Below $3M the owner is still running calls and knows every job. Above $15M the dispatch board and the install schedule need a finance lead in the building every day. In between is where the agreement book and the install backlog get too big to hold in your head.
Sound familiar?
- You run install and service, and you suspect one is carrying the other.
- You have a bookkeeper and a CPA. Nobody is telling you what the numbers mean.
- You want the maintenance agreement book to count for what it is actually worth.
- The shoulder season is financed on the line of credit and nobody plans the draw.
WHAT IT COSTS
$2,500 to $10,000 a month.
Flat monthly fee. You never get billed for a phone call.
What moves you inside that range is scope, not revenue. A $4M shop with clean books and a bookkeeper who closes the month sits near the bottom.
Multiple entities, a ServiceTitan file that has never tied out to QuickBooks, and a year of unreconciled statements sit near the top. Onboarding is an additional $2,000 to $5,000, charged once, based on what the first sixty days have to untangle and set up.
The first call is about whether we are a fit. From there I go through your financials and come back with a fixed monthly fee, usually within a few days.
→ What drives fractional CFO cost for an HVAC company
WHAT GOOD LOOKS LIKE IN HVAC
A real gross margin target, from an operator who publishes his.
We do not ask you to take a margin target on faith. Mark Paup runs Golden Rule Plumbing, Heating, Cooling and Electrical in Des Moines, a $30 million company he started from a shop he bought at 24 out of a newspaper ad, and on his episode he names the gross profit he runs each department to.
Fifty percent on HVAC service and fifty percent on replacements is a target you can hold your own P&L against this afternoon, once install and service are separate lines. If your blended number looks close but your service book is carrying install, the blend is hiding the gap. The benchmark report is where we publish the wider set.
GROSS PROFIT TARGET, HVAC
~50%
“HVAC service, we want to be around 50. And then we run about 50% on HVAC replacements. But as a company, my goal is 52%, as they combined every blend.”
Mark Paup, Golden Rule, on The Big Five Numbers Every Trades Owner Should Track. Gross profit after direct labour and material.
HVAC CFO QUESTIONS
What HVAC owners ask before the first call.
Short answers, in the terms an HVAC company actually uses.
What does a fractional CFO do for an HVAC company?
What gross margin should an HVAC company run at?
Mark Paup, who runs a $30M plumbing, HVAC and electrical company in Des Moines, targets around 50 percent gross profit on HVAC service and around 50 percent on replacements, with a 52 percent blended company goal, stated on the Profit and Grit podcast. Gross profit there is after direct labor and material. There is a fuller set of HVAC margin benchmarks here, broken out by revenue range.
How should maintenance agreement revenue be recognised?
As a liability when the customer pays, released to revenue visit by visit as the work is delivered. Booked as revenue on the day of sale it flatters the busy season and starves the slow one, and it hides how much of next quarter is already sold. Carried correctly it is also the first thing a buyer looks at.
What is the right install-to-service mix for an HVAC company?
There is no universal answer, but the archive gives a real reference point: Katy Higgins was taught to build toward 60 percent install, 30 percent service and 10 percent maintenance, and grew a $12 million company on it. The important part is knowing your own split, because install produces the revenue and service produces the margin.
How do HVAC companies get through the shoulder seasons?
By planning the draw instead of reacting to it. A 13-week forecast built on the seasonal calendar shows the gap weeks before it arrives, so the line of credit is drawn on a chosen date and repaid on a chosen date. Maintenance agreements sold to fill those months are the other half of the answer. Here is how to build that forecast, week by week.
Do you work inside ServiceTitan?
GET STARTED
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