A Monthly Three-Report Check for Family Propane Dealers Before Tax Season

The Situation

Unbilled service work leaves a family propane dealer waiting for cash while the heating-season P&L can still look healthy. Before tax season, put the balance sheet, income statement and cash-flow statement beside each other for a monthly check on what is owed and what has actually been collected.

A summer cash squeeze can be hard to see in the income statement alone.

The Facts

Harvard Business School Online recommends reading the statements together. Its guide distinguishes the balance sheet's dated record of assets, liabilities and owners' equity from the income statement's revenue and expenses over a period. The cash-flow statement follows money in and out.

ATB Financial's questions about receivables, payables and cash on hand can help prepare that review. The U.S. Small Business Administration's finance guidance is another reference for managing the books.

Business Impact

You already plan the stops and look after the accounts that keep a propane route working. Bring that same care to the paperwork back at the office. Take a completed delivery ticket for an autofill account: find its invoice, then its payment.

Check tank-rental billing against the discount agreed with the customer. Keep service calls waiting to be invoiced apart from bills waiting to be paid, and give each exception to the person who can resolve it.

Key Takeaways

• Our read: unbilled service tickets and discounted tank rentals are worth tracking monthly, since a strong heating-season P&L can mask an off-season cash squeeze.
• Set your own cash-on-hand benchmark with your accountant; standard guidance does not set one for a seasonal business like propane.

Action Steps

1. 1.Pull last month's balance sheet, income statement and cash-flow statement for the same period; HBS Online recommends reading the statements together.
2. 2.Match completed delivery tickets for autofill accounts to invoices, then check which invoices remain in receivables.
3. 3.Flag any service call or tank-rental discount that's gone unbilled or uncollected and route it to whoever handles invoicing before month's end.
4. 4.Ask your CPA or bookkeeper to set a monthly cash-on-hand benchmark for your seasonal swings before your next annual meeting.

Competitive Advantage

The propane office can bring account-level knowledge to the bookkeeper's review. Assign responsibility for each billing question so it has somewhere to go after the meeting.