Plumbing Company Funding for Vans, Equipment and New Technicians

What makes plumbing cash flow steady and what strains it

Emergency and repair work pays fast and rarely stops, but growth, big commercial jobs and slow-paying accounts strain the balance.

People do not postpone a burst pipe or a failed water heater. That makes plumbing less cyclical than many trades, and service calls usually pay at the end of the visit. A company with a healthy mix of repair, maintenance and replacement work tends to see predictable deposits.

Strain comes from three places. The first is hiring: a new technician costs wages, a vehicle, parts stock, tools, insurance and training before the first dollar of billable work is earned. The second is large projects such as repiping, commercial buildouts or work for property managers, which are billed on terms and paid slowly. The third is seasonal variation. In cold regions, frozen pipe calls surge in winter. In some areas, slower months follow.

A plumbing company that wants to double in size usually needs to fund both the people and the inventory ahead of the revenue. That is the heart of its funding need.

What plumbing company owners fund

Common uses are service vans, sewer cameras and jetters, parts and water heater inventory, payroll for new techs and marketing.

• Service vans. Fully upfitted trucks are a major purchase.
• Specialty equipment. Sewer cameras, hydro-jetters, locators, pipe-lining gear and pressure testers that open new, higher-margin work.
• Parts and water heater stock. Keeping common items on hand so you can finish the job in one visit.
• Hiring. Wages and training during ramp-up.
• Software. Dispatching, quoting and payment tools.
• Marketing. Local search ads, truck wraps and maintenance plan campaigns.

Equipment such as vans and cameras suits equipment financing. Payroll and parts stock suit working capital or a line of credit.

Payback math for a sewer camera and jetter

Specialty drain equipment pays back when the added jobs it enables, at a healthy margin, cover the monthly payment and the technician time.

Illustrative example. A two-van company buys a sewer inspection camera and a jetter for $28,000, financed with total repayment of $33,600 over 36 months, or about $930 a month.

Before the purchase, the company subcontracted drain inspection and jetting jobs or turned them down. With its own gear, it books eight jobs a month at an average of $450, or $3,600 a month. Direct costs, such as technician time and fuel, are about $1,500, leaving $2,100. That covers the payment of $930 with about $1,170 a month to spare.

Test the weak case. At three jobs a month, revenue is $1,350, direct costs about $560, leaving $790, which does not cover the payment. So the question for you is how many drain calls you already see and pass on. Count them for a few months before buying. Camera findings also generate follow-up repair work, which adds upside but is hard to guarantee. See the equipment payback period guide.

Which ROI Funder products fit plumbers

Equipment financing for vans and gear, a line of credit for parts and payroll timing, and working capital for hiring pushes.

If most of your work is plumbing in new residential construction or residential remodels, note that many funders restrict those categories. Service, repair and commercial work is usually easier to place. Funding is never promised, and each file is reviewed on its own.

What funders look for

Funders look for a state license, insurance, steady deposits and a reasonable level of existing debt.

Plumbing licensing is state and sometimes local. Funders will expect that you hold the right license for the work you do, and that your general liability and workers' compensation insurance are current.

A plumbing company with years of operation and steady service revenue has a straightforward file. A company that relies mainly on one builder, however, has more concentration risk. If that describes you, build a base of service and maintenance customers to balance it.

ROI Funder considers 500+ FICO, 6+ months in business and $20,000+ in monthly revenue. A complete file is the application plus three months of business bank statements. Approved, complete files can fund the same business day. The application uses a soft credit pull, so there is no impact on your credit score and no obligation to accept an offer.

Planning payments around the plumbing calendar

Choose payments you can cover in your slowest month, and use fast cash for fast-returning uses only.

If your slowest month is 25 percent below your average, size your payments to that month. A plumber in a warm climate may see a steady year. One in a cold region may see a winter surge and a spring lull.

Use the speed of cash wisely. A hiring push pays back over several months, so a payment structure that ends within a few months can be heavy. A longer, fixed payment on a van that lasts for ten years is easier. Our guide to daily, weekly and monthly payments shows how each affects the cash you hold between jobs.

Compare each offer on total repayment, term and monthly-equivalent payment. A larger payment over a shorter period may cost less in total but be harder to carry. The right pick depends on how quickly the money earns.