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
Do I need to track tips differently for payroll purposes?
Yes. Tips are taxable wages that require separate tracking, withholding, and reporting. Employees must report tips to you, and you must withhold income tax, Social Security, and Medicare from the total.
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Track the landed cost of each product including purchase price, inbound shipping, and packaging materials. Use accounting software with inventory tracking enabled so COGS records automatically when items sell.
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Multiply your taxable sales for the period by the applicable tax rate. In most of the Richmond area, that's 5.3%. The key is making sure you've correctly identified which sales are taxable and reconciling against what you actually collected.
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It depends on what you're selling. If you're selling products and installing them, the labor is usually taxable with the materials. If you're providing a pure service without selling goods, the labor is often exempt.
Read answerHow do I handle progress billing in QuickBooks?
Enable progress invoicing in QuickBooks settings, then create invoices from estimates for partial amounts. The feature is straightforward but only works well if your estimates are accurate and you track costs alongside billings.
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