How to Get Paid: Addressing Cash Flow Issues Within Equestrian Businesses

Photo by Lauren Mauldin


The lesson schedule is full and everybody is going to the show this weekend. So why is the business bank account empty? So often, in our industry, a company struggles with being strapped for cash and the reasons aren’t readily seen. Let’s look at some areas that create this problem for the business.

A major area to investigate for cash flow issues is competitions or shows. For most businesses, their current business procedures have the fees absorbed by the business and then split out among those participating. This means that the business lays out all the cash at the event and then must wait to be reimbursed through billing to clients after the event.

Here are some of the problem areas we can identify:

  • There are so many things to do at the event that the trainer is pulled in a million directions. Cash is used for random expenses (having to buy something because it was left at the home farm, something broke you need or you didn’t bring enough) and there are no receipts.  These expenses are absorbed by the company instead of being part of billing. [I swear I had $100 in cash when I came to the show this weekend…where did it all go?]
  • If the next show follows shortly after, by the time the van is unpacked and repacked, there is little to no time left to bill for the first show. A majority of the time, after the second show, many of the billable items for the first show are forgotten.
  • The summer schedule is so packed that billing gets pushed lower on the priority list and when the invoice does go out, it has 3 competitions worth of charges on it leading to many of the clients feeling that this lump sum is “too high” and many owners will resort to offering discounts to make them happy, resulting in lost income.
Photo by Lauren Mauldin

What needs to change in order to fix this? Here are a some suggestions:

  • Ask vendors at the show if they will “start a tab” for you. You give the vendor a signed blank check, or better yet, a credit card, and all charges go to this account. At the end of the show, you close out the account provided with a full description of all expenses.
  • Ask the show management to put Trainer Splits on the individual accounts of the clients, so that they pay their part directly. Examples would be night watch, tack/feed room, or other show charges.
  • If the “team” is just you, designate a sealable pouch or envelope as the place for all receipts. Put a small note on the receipts at the moment you get it, so you can forget about it until later, when the billing is being done. A handwritten note, “Repair to Billy’s halter,” will keep you from trying to figure out what that $12 was a week later!
  • Keep a running list so that you can record billable items as you go, a clipboard with a list of riders that you can mark as you go (think lessons given at the show, rides, course walks, training) is easier than trying to recreate after you are finished.
  • Ask for retainers from clients before the event. Before the show even starts, you probably have a pretty good general idea of what the charges are going to look like when the billing is done, so get a deposit based from this estimate prior to the event. That way, if you don’t get billing done right away, the majority of the charges have been paid. The client showed using their money, not the businesses! An added benefit is that if you are behind on billing, there will be less shock to the client because they have already paid most of the expenses.

If part of the financial structure of the business includes interest fees, late charges, and bounced check fees, then this information should be within a written policy and provided up front to clients. The specifics on how and when these charges will be applied should be detailed as part of the legal document signed by the client. An easy way to do this is to create and update a “Price Sheet” every year and have a signature line on the bottom. Send this form to the clients by email and have them return a signed copy for the records. If they ever complain that they “didn’t know anything about it,” you can pull out the signed page where they acknowledge reading your policies. I would recommend speaking with a lawyer for the wording necessary to be in compliance with state and federal laws and with a CPA on the interest rate allowed where the business is located. Also, keep in mind for document collection, as it may be helpful to you.

One of the hardest parts about the industry is how the relationship between trainer and client can sometimes cross from “professional” to “personal.” For example, if a child that rides in the barn and takes lessons every week, there will likely be financial consequences if the parents decide to divorce (not to mention the mental effects to your student as well). Same with an amateur rider going through a personal crisis. As with most people you spend a lot of time with, we feel strong empathy towards that person in their time of distress. This tends to create an uncomfortable situation when financial issues arise. We can see how this plays out below.

The rider starts to miss due dates on the invoices already sent out.   Nothing is said because of their current situation, yet it lingers out there every time they come to the barn. There is no written policy regarding payment, just that, “Everybody knows payment is due when they get the bill.” Now, the balance is accruing and it starts to affect the interactions with the client. They start to avoid calls and stop coming to the barn because they feel embarrassed about not paying. The relationship crumbles, the invoices aren’t paid, and the rider leaves the barn.

Photo by Lauren Mauldin

The issue is, how to get a client to pay? A way to alleviate the issue is by having a written policy in place regarding the billing policy. For example, your written policy, that every customer signs, states the following:

  • Invoices are due and payable 15 days after presented
  • Any invoice open for 30 days will automatically be charged on the credit card on file
  • Accounts over 45 days will be put on a prepaid retainer plan
  • Accounts over 60 days will result in a hold on services
  • Accounts over 80 days will be submitted for legal actions

This is part of their new client packet they sign, and a copy is kept in the records. It is discussed as part of the informational talk with a new client and they have a copy that they take home with them. They fill in a form that has the credit card account and their signature authorizing you to charge the card for any overdue invoices. When these types of issues come up, they already have an understanding about what the procedure is.

With these policies in place, let’s look at how different the same scenario plays out:

The rider starts to miss due dates and gets behind by 30 days. The invoice is automatically paid by the credit card from the Credit Card Authorization Form in their file and a receipt is sent to them. The trainer can pull the rider in for a personal talk and ask if they need to make some changes until they can get financially on their feet. The rider feels better being able to come to the barn and see their horse. The trainer can support them without feeling animosity regarding the status of the account and the relationship continues. The barn becomes a refuge for them instead of a reminder of difficult times.

Photo by Lauren Mauldin

Can the policy be adjusted on a case-by-case basis? Absolutely, and that is a decision made when looking at a particular situation. A word of caution to try to remain fair and keep your policy in place. You don’t want to get yourself into trouble offering concessions to some but not others. Other choices include a payment plan, decreasing services, or working off balances. Those are business decisions that can be made for that specific account.

The goal is to keep your professional business running with a fair and simple policy that everyone is aware of.   The policy helps keep the business in a better financial situation by keeping cash coming in to pay for bills in a timely manner. It also keeps the relationship between business owner and client within the parameters stated in the written policy so that everyone understands their responsibilities.   Keeping misunderstandings to a minimum helps the relationship thrive.

Pamela N. Saul, CB
Farm & Equine Business Services, LLC

3031 Mt. Carmel Cem. Rd.
Brookeville MD 20833
Cell: 301-520-3937

Pam Saul is a Certified Bookkeeper (CB) and the founder of Farm & Equine Business Services (F&EBS) and Saul Bookkeeping, residing in the Agricultural Reserve in Montgomery County Maryland on her family’s 200-acre Rolling Acres Farm. Hailing from a longtime ‘horse family’, Pam is part of the family-run team behind Rolling Acres Show Stables; her sisters, Patty Foster and Mary Lisa Leffler are two of the top Trainer/Rider combinations and her parents, Samuel & Janice Nicholson have run Rolling Acres Farm for over 46 years.  Pam’s background led her to start her own bookkeeping business having first-hand knowledge of how challenging it is to keep finances for the equestrian business. 

Pam’s background gives her a unique understanding and insights that clients routinely benefit from.  Using cloud-based services, F&EBS can work with any small to medium-sized business located in the United States.  For businesses that are not equine focused, Pam draws on her 20 years as a QuickBooks ProAdvisor and her national standard as a Certified Bookkeeper operating Saul Bookkeeping to care for the bookkeeping needs of those business as well.

This article is not to be construed as financial advice. It is given for educational and informational purposes only.

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