Budgets Built in Days Provide Single Source of Truth
Headquartered in Kansas City, Heartland LLC is a private equity sponsored business with a roll-up strategy in the commercial landscape maintenance, property enhancement, and snow removal sector. They deliver services through leading commercial landscape firms across the United States.
When acquiring a new company, Heartland will reach out to founder-owned commercial landscape and maintenance companies with the opportunity to grow with a large organization. The acquired companies keep their brand, service delivery, and staff. Heartland provides financial backing and a systems architecture that includes production, ERP, and FP&A systems, treasury, payroll, and insurance services, as well as other back office support.
The company’s aggressive growth strategy is both M&A and organically focused. From 2019 to 2023 they went from 5 companies to 23, and plan to continue growing at the same pace or faster.
Accelerating growth with flexible FP&A software
“My first year here the budget was a chaotic collection of Excel spreadsheets that were emailed around, and lost version control with each hop. The budgets themselves had two different charts of accounts, ledgers, and revenue recognition methods. It became very evident that we needed one source of truth for all things budgeting and forecasting.”
In 2017, then-new CFO Peter Welch identified a need for an FP&A software platform that would support the company’s growth plan. At the time, Heartland had just two companies: one used QuickBooks, and the other used Asset, a platform designed for the landscape business.
He landed on Centage as the most straightforward and scalable solution.
“I’ve worked with other platforms in previous jobs, and found them to be quite rigid in terms of building a budget. Heartland needed much more flexibility. We’ve acquired companies that do $20 million in sales but have never built a budget before. Centage allows us to load revenue, personnel and operating expenses as values, and we have a budget in the system in very short order. The following year we can get more sophisticated, adding scenario-based drivers, related costs along with actual production costs, those kinds of things.”
Single source of truth across 20+ companies and dozens of departments
“Centage has made it easy for us to standardize our drivers, our way of looking at revenue and cost of goods sold.”
One of the biggest benefits of using Centage is that everyone in Heartland now has a single source of truth for the budget, forecast, and actuals. Centage has streamlined the budgeting process to the point where Heartland can assign just four people to build the budgets for all of the platform companies.
This standardization has provided Heartland’s finance team with much-needed visibility into the overall health of the business. They can easily see trends in revenue, operating expenses, and headcount for planning purposes, all without reaching out to an individual business for input.
Streamlined monthly reporting and guidance mapped to seasonal business needs
“We work outside, which means our volume is highly dependent on weather events… Our labor force can flex from 1,500 in the winter, to 3,700 in the summer.”
Centage allows Heartland’s FP&A team to track metrics around its direct labor force quickly and easily. Heartland has a three-person FP&A team that is tasked with creating quarterly and semi-annual reforecasts for the branded platforms. The team also provides monthly guidance and flash results so that each company can track its progress to plan.
Heartland recognizes revenue once services are actually performed. Labor is the company’s biggest line item, and has the biggest impact on profitability. But labor costs can be a moving target, as the landscaping business is highly seasonal. Centage allows Heartland to map their regular reporting to seasonal business needs and changes.
What-if scenario planning enables rapid response to changing market conditions
“We used Centage to do some worst-case scenario planning, such as losing 50% of our revenue and planned hours. It was a huge benefit to forecast the impact on our revenue.”
When the Covid-19 pandemic led to state-mandated lockdowns, Heartland went into scenario planning mode, running sensitivity models based on a range of potential outcomes. For example, the FP&A team wanted to assess the impact on its financial statements if their restaurant and hospitality clients canceled service.
In the end, while Heartland lost some clients as anticipated, the company saw an uptick in business from homeowners associations, driven by peoples spending more time at home and wanting to enhance their environments. “We were fortunate that our worst-case scenario didn’t come to pass, but it was still helpful to know what it would look like so that we could plan ahead.”
Flexible reporting means easy transition for newly acquired companies
“We don’t initially connect to their ledger through Centage. We manually map over their results into our chart of accounts, and upload it into a pro forma version of our budget so that we can immediately begin reporting their results as part of ours. We rely on this until we’re able to fully migrate them into our backend systems. It’s a very easy transition to get new companies into our reporting.”
Integrating an acquired company into Heartland’s backend system is a complex process. It takes time to enter the chart of accounts into Heartland’s ledger and ERP system. In 2021, Heartland acquired seven companies, all of which needed to feed into the overall P&L. Centage’s flexible reporting has streamlined and sped up this process.
Scalability to support a diverse, rapidly growing business
“If we get a new company, the connection with Acumatica is seamless, which is very much appreciated. We create our new company, we set up all the identifiers, and as soon as I deploy the model, I don’t have to do anything.” – Eric Glassman, Director of FP&A, Heartland
Scalability is another key requirement for Heartland. The company tracks results for each branch of each company it acquires, which ultimately means tracking revenue and labor costs across dozens of separate branches. Centage lets Heartland track any number of data dimensions, making it extremely scalable in a branch-based and highly diverse business. It also integrates seamlessly with their ERP software, Acumatica, accelerating the process of adding a new company to the budget system.
Heartland is now able to build budgets for all of its companies in a matter of days, all based on common drivers and methods for recognizing and reporting revenue.
The result is a trusted and shared version of truth which gives the company the confidence to make strategic decisions, such as which companies to acquire next, and when.
See what else!
Case studies from similar industries
