What financial reports do contractors need to review regularly?
Job cost reports are the most important financial report for any contractor. They show whether individual projects are profitable, how actual costs compare to your estimates, and where you’re losing money. Review these weekly on active jobs. Waiting for monthly reviews means catching problems after the job is done and the money is already gone.
A profit and loss statement shows how your business performed over a period. Revenue minus expenses equals profit. For contractors, the monthly P&L reveals patterns like rising material costs, labor inefficiency, or overhead creeping up. Compare month over month and year over year to spot trends before they become problems.
Cash flow projections matter more for contractors than most businesses. You might show a profit on paper while running out of cash because you’ve bought materials for three jobs but only collected on one. A cash flow forecast shows money coming in and going out over the next few weeks. Review weekly when jobs are active so you know whether you can cover payroll and supplier invoices.
Accounts receivable aging tells you who owes you money and how long they’ve owed it. Sort by 30, 60, 90+ days overdue. The older a receivable gets, the less likely you’ll collect. A profitable job isn’t profitable if you never get paid. Review weekly and follow up immediately on anything past 30 days.
Accounts payable aging shows what you owe suppliers and subcontractors. This helps with cash planning and prevents damaged relationships with vendors you depend on. Review weekly to avoid late fees and keep your credit lines healthy with suppliers.
A balance sheet shows your overall financial position at a point in time. Assets, liabilities, equity. Review monthly or quarterly. It tells you things the P&L doesn’t, like whether you’re accumulating debt, whether retained earnings are growing, and whether you could handle a slow season without borrowing.
Work in progress reports matter if you have larger projects spanning multiple months. They compare costs incurred to billings sent on each job. Overbilling means you’ve collected more than you’ve earned, which creates problems down the road. Underbilling means you’re financing the project out of your own pocket.
Most contractors run their business on gut feel because their project cost tracking isn’t set up correctly. They know they’re busy but can’t tell which jobs actually made money. Getting these reports built and reviewing them on a regular schedule changes how you bid, how you manage projects, and whether you keep the profit you thought you earned.
If your books don’t produce useful reports right now, a Richmond bookkeeper familiar with construction accounting can set up the tracking you need. The reports themselves aren’t complicated. The discipline to review them regularly and act on what they show is what separates contractors who grow from those who stay stuck wondering where the money went.
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More Questions
Should I use cash basis or accrual accounting for my business?
Most small businesses do fine with cash basis because it's simpler and matches what you see in your bank account. Accrual makes more sense when you need an accurate picture of profitability across longer billing cycles or carry significant inventory.
Read answerWhat's the best way to track costs for each project?
The best approach is capturing every cost as it happens and assigning it to the right project in your accounting system. This means tracking labor hours, materials, subcontractor bills, and direct expenses separately for each job so you know your actual profit margin on every project.
Read answerHow do I manage cash flow when customers pay in stages?
Structure deposits to cover your initial costs, invoice the same day you hit milestones, and track billed versus received separately. A cash reserve covers the inevitable gaps between completing work and getting paid.
Read answerWhen should I switch from doing my own books to hiring a bookkeeper?
There's no universal trigger point. The signs are usually falling behind on reconciliation, making recurring errors, or spending hours each month on something that pulls you away from actually running your business.
Read answerCan QuickBooks handle inventory tracking for my business?
QuickBooks Plus and Advanced can track inventory, calculate cost of goods sold, and set reorder points. Basic retail or wholesale operations work well with the built-in features. More complex needs like manufacturing or multi-location tracking may require third-party integrations.
Read answerHow do I set up job costing in QuickBooks Online?
Enable the Projects feature in QBO Plus or Advanced, then configure your chart of accounts to track costs by category. The software setup is straightforward but the structure you choose determines whether your job reports are actually useful.
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