For every security systems integrator delving into recurring monthly revenue (RMR), here is a quick checklist of nine “2015 New Year’s Resolutions” from legal expert and Security Sales & Integration columnist Ken Kirschenbaum of Kirschenbaum & Kirschenbaum
1. Update Contracts – Among the new clauses terms that dealers should now include are ones related to issues involving encryption. He says you should never be using a service agreement that is more than one year old.
2. Manage Cash Flow Better – Kirschenbaum says that RMR growth will depend not only on aggressive sales efforts but diversification of your services. So he recommends dealers focus not just on intrusion and fire monitoring but CCTV video surveillance and video streaming. “Manage your cash flow better and try and retain your RMR accounts. Charge for installation and keep ahead of the monitoring charges by charging quarterly, semi annually or annually in advance. If you’ve been selling off your RMR contracts cut back as best you can,” he says.
3. Check Insurance Coverage – “Not all insurance companies are the same and not all premiums are equal. You need to have confidence in how your carrier handles your claims. The last thing you need is aggravation from your carrier’s claim’s department when you have a claim,” he says. That means making sure your Errors & Omissions coverage is sufficient, along with life, health and disability insurance.
4. Incorporate Your Business – “If you are still conducting business in your own or an assumed name you need to incorporate; do it now,” he says. “You don’t want to continue to invite personal liability for your business activities. I recommend a business corporation, sub chapter S election, and despite some accounting advice to the contrary, elect to be on a cash basis.”
5. Update Licenses – This is a no brainer. If your state has licensing, make sure you are up to date. Also, be sure to check the licensing agreements for every jurisdiction in which you conduct business.
6. Review Accounts Receivables – “It is essential to stay on top of your receivables. You may need to become more aggressive with your collection efforts and procedures. Don’t carry subscribers who are in default, which means falling out of their regular payment schedule or more than 30 days in arrears,” notes Kirschenbaum.
7. Think about Exit Strategy – Even if you are not even close to thinking about retirement or selling your business, developing an exit strategy is a good thing to do. “If transition to family members is your plan then perhaps you need a Trust and should start transferring stock to that Trust, or to your kids now. If you think you might sell out then you need to start running your business like a business. In either event, you should be increasing your RMR under contract,” says, adding that you might want to engage an attorney (like him!).
8. Pay Down Debt – Kirschenbaum wisely recommends that integrators manage their business to operate within its means. In particular, he says that if a dealer is selling its alarm subscriber accounts to make ends meet, it is not a good long-term strategy. “If you sell your accounts to your dealer program you may as well get a job with benefits, you’ll probably end up with more money, vacation time, health benefits retirement plan and less headache,” he comments.
9. Negotiate with Suppliers – For both distributors and manufacturers, now is a good time to check to see if you are getting a fair deal. If not, switch. “If you pay your bills you have a right to be demanding,” he says.
This article originally ran on SSI‘s sister site cepro.com.
