How much cash should a pool service business keep?
In most of the country a pool service company earns most of its revenue in the warm months and far less in winter. Fixed costs like trucks, insurance and the office keep going all year. So the cash you build in summer has to carry you through the slow months.
The starting numbers are an example. Replace them with yours.
How cash moves in a pool service business
- Revenue swings with the season. Fixed costs do not.
- Chemicals and parts are bought ahead of the work, so cash goes out before the invoice.
- Route customers billed monthly pay steadily. Repair and equipment jobs come in lumps.
- Keeping good techs through winter means paying them when revenue is lowest.
Why the usual rule falls short
A pool route that covers its costs easily in July can run short in January. The reserve you need is set by your slowest months, not your average month.
How the calculator works
| Result | Formula |
|---|---|
| Minimum to keep | 2 × payroll per run + 1 month of fixed bills |
| Comfortable level | Monthly costs × (days to collect ÷ 30 + 1) |
| Weeks your cash covers | Cash ÷ weekly costs |
These rules come from a CFO's judgment, not from a survey. A reserve is a snapshot. A 13-week cash forecast shows the week your cash will run lowest.
Common questions
How much cash should a pool service business keep in the bank?
At least two payroll runs plus one month of fixed bills. A comfortable level covers your costs for as long as customers take to pay, plus one more month. Enter your own numbers above for your answer.
Why not use three to six months of expenses?
A pool route that covers its costs easily in July can run short in January. The reserve you need is set by your slowest months, not your average month.
Get this done for you every Monday
One Page CFO reads your QuickBooks, builds your 13-week cash forecast and your one-page report, and a CFO checks both. $500 a month.
Also for pool service owners: the pool service business monthly financial report.