Latest / Scaling Up with Fexingo: How Small Businesses Become Mid-Market Companies / How One Plumbing Company Scaled to 100 Million by Fixing Billing
Transcript
- Lucas: We talk a lot on this show about unconventional growth levers. Things like removing a storefront, cutting inventory, replacing a sales team with a referral engine. But today's angle is maybe the most boring thing you could possibly fix — and it unlocked a hundred million dollars. Luna: Boring is usually where the money hides. What are we looking at? Lucas: A plumbing company in the Pacific Northwest. Started by a guy named Tom Furlong back in 2008. By 2018, he was doing about five million in revenue — solid, profitable, ten trucks on the road. Then he hit a wall. Revenue stayed flat for two years. He tried more marketing, more vans, more hires. Nothing budged. Luna: So what finally moved the needle? Lucas: He looked at his billing. Specifically, the gap between when a job finished and when cash actually hit the bank. That gap was averaging thirty-seven days. He had plumbers finishing jobs, handing paper invoices to homeowners, mailing copies to commercial clients, and then waiting. Thirty-seven days. Luna: That's brutal for a service business. You're paying wages, buying parts, fueling trucks — all before you see a dime. Lucas: Exactly. So Tom's insight was: we don't need more customers. We need to collect what we've already earned faster. He brought in a consultant named Maria Chen, who had fixed billing for a tree service company in Portland. She mapped out the entire cash cycle and found that the delay wasn't just about slow payers — it was about how the company billed. Luna: What was the specific bottleneck? Lucas: The bottleneck was paper. Plumbers would finish a job, write up a paper ticket, drive back to the office, hand it to a data entry person who typed it into QuickBooks, then an invoice got printed and mailed. That whole chain took three to five days just to get the invoice out the door. Then the customer had thirty days to pay. So even a fast-paying customer took over a month. Luna: So they moved to digital invoicing on the spot? Lucas: Not just digital. They rebuilt the entire workflow around mobile payment capture. Each plumber got a tablet with a square reader. The moment a job was done, they'd generate the invoice on the tablet, email it or text it, and if the customer was there, swipe a credit card right then. For commercial clients, they switched to ACH with a three-day term instead of net-30. Luna: That's a big cultural shift. Plumbers aren't exactly known for wanting to do paperwork on the job. Lucas: Tom told me it was the hardest part. He had to convince his techs that this wasn't extra work — it was their paycheck arriving faster. He tied it to their commission structure: if the job was paid same-day, the tech got a five percent bonus on that job. That got their attention. Within six months, eighty percent of residential jobs were paid at the time of service. Luna: And the cash flow impact? Lucas: Dramatic. Their average collection time dropped from thirty-seven days to four. That freed up about eight hundred thousand dollars in working capital in the first year alone. Tom used that cash to buy two more trucks and hire a dedicated sales rep. Revenue started growing again — fifteen million by 2021. Luna: So the billing fix was the unlock, but it wasn't just the technology. It was also the incentive redesign. Lucas: Right. The technology was a tablet and a credit card reader. That's not exotic. The incentive — five percent same-day bonus — that's what changed behavior. And it changed the company's culture. Suddenly the plumbers cared about cash flow because they felt it in their own pockets. Luna: Was there a second phase? I imagine they didn't stop at residential. Lucas: They didn't. Once residential was humming, Tom went after commercial. Commercial clients are harder because they have procurement departments, purchase orders, thirty-day terms baked into their systems. But Maria found that even among commercial clients, about forty percent would pay within a week if you offered a two percent discount for early payment. So Tom implemented a dynamic discounting system: net-10 with a two percent discount, or net-30 standard. About half the commercial clients took the discount. Luna: So he traded two percent margin for faster cash. That's a good trade if the cash is used to grow. Lucas: It was. By 2023, the company was doing forty million. And here's the key: they hadn't increased their marketing spend at all. They just redeployed the cash that had been sitting in accounts receivable. Tom told me, 'The money was already there. I just had to collect it faster.' Luna: Now they're at a hundred million, you said? Lucas: Yes. As of last quarter. They crossed a hundred million in trailing twelve-month revenue. And they did it largely by acquiring smaller plumbing companies in neighboring states — using their own cash flow to fund the acquisitions. No bank loans, no outside equity. The billing system became a competitive advantage because they could integrate acquired companies onto their platform and immediately improve those companies' cash flow by thirty days. Luna: That's a flywheel. Better billing → more cash → more acquisitions → more scale → even better billing systems. Lucas: Exactly. And it all started with a paper invoice and a thirty-seven-day wait. I think the lesson for any service business listening is: look at your cash conversion cycle before you look at your marketing funnel. You might be sitting on a hundred million dollars you just haven't collected yet. Luna: That's a strong way to frame it. And honestly, if today's conversation moved your thinking in some small way — maybe you're looking at your own billing cycle differently — that's the kind of thing that makes this show worth doing. Lucas: And if it was worth a coffee to you, there's a link. It's buy me a coffee dot com slash fexingo. That's all lowercase, one word. No pressure at all. Just a way for listeners who find value here to keep the show ad-free and independent. Luna: Yeah, we don't run ads. So listener support is what keeps us going. Appreciate anyone who chips in. Lucas: Back to the plumbing story. One thing I didn't mention: the billing overhaul also improved customer satisfaction. When customers pay on the spot, there's no surprise bill in the mail. They know exactly what they owe, and the plumber can explain the charges face to face. Complaint calls about billing dropped by seventy percent. Luna: That makes sense. Most billing disputes come from delayed invoices and forgotten conversations. Real-time payment eliminates that ambiguity. Lucas: Tom also told me that the move to same-day payment reduced his bad debt write-offs to nearly zero. Before, he was writing off about one percent of revenue as uncollectible. That's fifty thousand dollars on five million. On a hundred million, that would be a million-dollar problem. Now it's negligible. Luna: So the system pays for itself multiple times over. Any advice for a business owner listening who wants to start this process tomorrow? Lucas: Tom's advice was: don't try to change everything at once. Pick one route — say, residential service — and pilot the mobile payment process with your three best plumbers. Get the kinks out. Show the rest of the team that it works and that they'll earn more. Then expand. He said the biggest mistake is rolling it out company-wide on Monday and expecting everyone to be on board by Friday. Luna: That's solid. Small pilot, prove the economics, then scale. It's the same principle they used to grow the whole business. Lucas: Exactly. And if you want more detail on the exact software stack Tom used, we'll put a link in the show notes. But the core takeaway is: look at your billing cycle. Measure it. Then ask yourself — what would you do with an extra thirty days of cash? Luna: For a lot of businesses, that's the difference between stalling and hitting a hundred million. Lucas: That's the episode. See you next time.