What Your Bookkeeper Should Tell You Monthly

In our experience working with plumbing, HVAC, and electrical contractors across the $5M to $30M revenue range, we’ve noticed something troubling: most bookkeepers report numbers without context. They hand over a P&L, maybe a balance sheet, and disappear until next month. But your bookkeeper should be a strategic partner, not just a number-cruncher. They should tell you what the numbers mean, flag problems before they become disasters, and help you make better decisions. Here’s what you should expect to hear every single month—and what good bookkeeping for contractors actually looks like on a monthly basis.

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The Real Revenue Picture: Accrual vs. Cash

This is where most contractor conversations go off the rails. You had a $200,000 job in March that you won’t finish until May. In cash accounting, you see zero revenue in March. In accrual accounting, you recognize revenue as work is completed. For a contractor, accrual accounting isn’t optional—it’s essential to understanding your actual profitability.

Your bookkeeper should tell you something like this: “We recognized $185,000 in revenue this month, but you collected $127,000 in cash. Here’s why—we have $89,000 in completed work that customers haven’t paid us for yet, which raises accrual revenue but not cash. Going the other direction, you collected $31,000 in customer deposits for jobs we haven’t started, which adds to cash but isn’t recognized as revenue yet. Net those out and accrual revenue ends up $58,000 above cash collected this month.” That context matters. If they’re just saying “cash in was $127,000,” you don’t actually know whether you’re making money.

Many contractors we work with started on cash accounting because it felt simpler. But when you’re carrying job deposits, doing long-term commercial jobs, or invoicing on net-30 terms, cash accounting is lying to you. Your bookkeeper should explain this gap every month and help you understand it as a feature, not a bug.

What to ask: “Walk me through revenue. How much did we really earn this month, and why doesn’t it match cash collected?” If they can’t answer that clearly, something’s wrong.

Gross Margin and What’s Hidden in Cost of Goods Sold

Your gross margin tells you whether your jobs are actually profitable before you pay overhead. But if your chart of accounts is wrong, your gross margin lies.

We worked with a plumbing contractor who thought his gross margin was 48%. Sounded great. But we found that field-staff workers’ comp and payroll taxes—about $90,000 a year—were sitting in operating expenses instead of COGS. His real gross margin was 44%. That’s not a disaster, but it changes how you price jobs. He was underpricing replacement work because the labor he was costing into jobs was missing the full payroll burden.

Your COGS should include only direct costs of jobs: materials, direct labor (technicians and installers), labor taxes and benefits for field staff, equipment rental, subcontractors, permits, and commissions if you pay them per job. Vehicle costs, facility rent, office staff, and admin overhead belong in operating expenses, not COGS.

A second-order problem: field labor often doesn’t include the full benefit load. We see contractors who account for hourly wages but forget that a technician actually costs 25-40% more when you add payroll taxes (~8-12%), workers’ comp (5-15% in skilled trades, higher for roofing), health insurance and benefits if offered (~10-15%), and PTO accruals. If you’re not allocating the full loaded cost to jobs, you’re underpricing.

Your bookkeeper should tell you: “Your gross margin this month was 42%, and here’s the month-over-month trend. We’re seeing labor efficiency trending up, but material costs on emergency calls are running 8% higher than budgeted. That’s worth investigating.” They should also flag if COGS categories look unusual or if you’re missing something (missing permits, underallocated benefits, or subcontractor expenses).

What to ask: “Is this margin what you expected? Are there any COGS categories that look odd or concerning?” And periodically: “Are we capturing the full cost of field labor—wages, taxes, and benefits?”

Working Capital: The Cash That’s Not Actually Yours

This is where contractors get blindsided. You have a profitable P&L but negative cash flow. Why? Because you’re holding customer deposits, carrying accounts receivable, and tying up cash in inventory.

Your bookkeeper should explain this monthly. Here’s what we look for:

Undeposited funds. These are payments from customers that you’ve marked paid in your job costing system or invoice tracking, but they haven’t actually been deposited into the bank account yet. We see contractors with $50,000+ sitting here. It looks like cash, but it’s not actually working for you.
Accounts receivable aging. How much of your revenue is still outstanding, and how long is it sitting there? If you invoice on net-30 and 45 days have passed, you have a collection problem.
Customer deposits (deferred revenue). If you take 50% deposits upfront like many contractors do, that’s a liability on your balance sheet until you complete the work. Your bookkeeper should track this carefully and reconcile it to actual job progress. We’ve seen cases where contractors had $200,000+ in deposits but no corresponding WIP (work in progress) balance, which means they either haven’t set up job costing properly or they’re not tracking the liability accurately.
Inventory or materials on hand. If you stock materials for quick turnaround, that’s cash sitting idle. How much, and is it turning over or sitting stale?

Here’s what this looks like in conversation: “Your balance sheet shows $245,000 in accounts receivable from invoices we sent out. Forty-two percent of that—about $103,000—is over 30 days old, mostly the three commercial jobs from December that are taking longer to pay. You’re also holding $67,000 in customer deposits, which is real cash on hand today but represents revenue you still owe work for. So while the P&L looks profitable, you’re carrying a meaningfully tighter operational cash position than the headline numbers suggest—and it’s all driven by slow collections. Here’s my recommendation for invoice terms next quarter.”

Working capital management is critical for contractors, and your bookkeeper should be flagging these dynamics monthly.

What to ask: “What’s our working capital position? How much cash are we carrying in AR, deposits, and WIP, and what’s the trend?”

Job Costing and the Jobs That Are Actually Profitable

Not all revenue is created equal. A small emergency call might be 60% margin. A large commercial project on net-30 terms might be 35% margin even if it looks solid on paper. Your bookkeeper should be helping you understand which types of work actually make money.

This requires real job costing. That means every job gets a code, every expense gets attached to that job code, and every revenue line gets attached too. At month-end, your bookkeeper should tell you which jobs are profitable and which are lagging.

In our experience, contractors miss profitability on jobs when:

They forget to allocate a pro-rata share of benefits, taxes, and vehicle costs to the job. The job looks “accounted for” with labor and materials, but it’s really only at 80% fully loaded cost.
They invoice the customer without all changes and extras. They complete extra work, forget to bill it, and swallow the margin.
They take on long-duration commercial projects without proper percentage-of-completion accounting. Without it, costs pile up month after month with no offsetting revenue until the job finishes—making January through April look like a string of unprofitable months when the job is actually fine. With proper WIP tracking and POC accounting, the P&L matches revenue to costs as the work gets done.

Your bookkeeper should tell you: “Here’s your profitability by job type this month. Replacements are running 48% margin, emergency calls 54%, and your two commercial projects are at 38% and 42% respectively. The lower margins are normal for those longer-term jobs, but here’s what we’re tracking monthly to make sure we’re not bleeding money.”

What to ask: “Can you show me profitability by job type or customer? Are there any jobs that are underperforming or taking longer than expected?”

The Balance Sheet and What It Reveals

A lot of contractors skip the balance sheet conversation. They focus on the P&L. That’s a mistake. The balance sheet tells you whether the business is actually healthy.

Your bookkeeper should walk you through it. Here’s what matters:

Are your current assets tracking properly? Cash, AR, inventory should all be reasonable. If cash is growing but AR and inventory aren’t declining, something’s off.
Are your fixed assets accurate? If you own vehicles or equipment, are they recorded at the right value? What’s the depreciation policy? (We see a lot of contractors with outdated fixed asset registers.)
Is your accounts payable reasonable? Are you paying vendors on time, or are you holding payables longer than agreed? That’s a sign of cash flow stress.
Do your owner distributions make sense? If you pulled $50,000 out of the business this month and the P&L only shows $30,000 in profit, you’re drawing ahead of earnings.
Is there equity building, or are you staying flat? Over time, does the balance sheet show retained earnings growing? If not, where is profit going?

Your bookkeeper should say something like: “Your balance sheet is solid. Cash is up $34,000 from last month because we collected on three invoices. AR went down by $12,000. Your current ratio is healthy at 2.1, which means you have $2.10 in current assets for every $1 in current liabilities. That gives you flexibility. On the downside, we’ve added $41,000 in accounts payable this month—that’s normal for your quarterly material orders, but it’ll reverse in the next month.”

What to ask: “Is my balance sheet getting stronger or weaker? What’s the trend in cash, AR, and payables over the last quarter?”

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The Questions Your Bookkeeper Should Be Asking You

It goes both ways. A good bookkeeper doesn’t just report—they ask questions. They should be saying things like:

“Why did materials cost jump 12% this month? Is there a supplier change we need to adjust for?”
“We have $67,000 in accounts receivable over 60 days old. What’s the status on collections? Do we need to follow up?”
“You took a $25,000 owner distribution last month, but the business only made $18,000 in profit. What’s the plan for the next few months?”
“We added a new service line this month. Should we set up separate job codes so we can track profitability?”
“Your largest customer is $89,000 behind on invoices. That’s material. Want me to pull an aging report and we can talk strategy?”

These aren’t complaints—they’re coaching. Your bookkeeper should care enough about your business to ask hard questions.

Common Problems We See and What to Watch For

Across our client work and the 200+ home services acquisitions we’ve reviewed across our buyside experience, certain patterns repeat:

Cash basis accounting that masks profitability. You think you’re running thin margins because cash flow is tight, but accrual accounting shows you’re actually doing fine. The working capital needs just haven’t been solved.
GL setup that conflates COGS and OpEx. This distorts gross margin and makes job costing unreliable. Common culprits: vehicle costs in COGS, office salaries in job codes, facility overhead mixed with direct labor.
Job costing that’s incomplete. Labor gets tracked, materials get tracked, but nobody allocates benefits, payroll taxes, or overhead. So jobs that “cost $15,000” actually cost $19,000 when fully loaded, but the pricing is built on the $15,000 figure.
Deferred revenue (deposits) that’s not reconciled. You have $150,000 in customer deposits listed as “income received in advance,” but you don’t actually know which jobs they relate to or when they’ll be earned. That makes month-end close messy.
AR aging that’s never discussed. Your invoicing system says $200,000 is outstanding, but nobody’s actively managing collections. That’s a cash crisis waiting to happen.
Inventory buildup that’s invisible. You stock materials for quick turnaround, but there’s no monthly check on shrinkage, obsolescence, or slow-moving stock. Cash sits idle.

Your bookkeeper should flag these before they become problems.

Monthly Bookkeeping for Contractors: The Report You Should Expect

Here’s what a good monthly bookkeeping conversation should include:

Profit and loss with prior month and year-to-date comparison, plus a note on the key drivers of variance
Balance sheet highlighting cash, AR, deposits, and payables with trend commentary
Cash position explaining the gap between P&L profit and actual cash movement
Job profitability by category or customer, even if it’s summary level
AR aging report with follow-up recommendations
2-3 key metrics that matter to your business (gross margin, working capital, average invoice size, collection days, etc.)
A written note on anything unusual, any action items, and any decisions you need to make

All of this should take 30-45 minutes to discuss. If you’re getting reports but no conversation, you’re not getting full value.

How to Get Better Monthly Bookkeeping

If your bookkeeper isn’t providing this level of insight, you have options:

Have a conversation. Tell them what you need to hear and why. Maybe they’re waiting for you to ask. Many bookkeepers operate reactively—they’ll do more analysis if you make it clear you value it.
Formalize the monthly close. Set a specific day when reports are due and a specific format you expect. That creates accountability.
Consider a virtual CFO or bookkeeper. If you’re running $5M+ revenue, you might benefit from someone who does strategic reporting, not just transaction recording. A good P&L analysis becomes the foundation for real decision-making.
Invest in better systems. If you’re still using spreadsheets, upgrade to cloud accounting software (QuickBooks Online is the standard for contractors). It makes monthly close faster and reporting more reliable.

A solid monthly close process saves time and prevents surprises. Make sure your bookkeeper is following a consistent checklist each month—bank reconciliation, AR review, invoice reconciliation, balance sheet cleanup. It matters.

Questions to Ask Your Bookkeeper Right Now

If you want to raise the bar on your monthly reporting, ask these questions in your next conversation:

“Can you walk me through how we’re recognizing revenue? Are we on accrual or cash basis, and is that the right choice for our business?”
“What’s our actual gross margin, and are all job costs being fully allocated to them?”
“How much cash do we have tied up in working capital right now, and is that trending in the right direction?”
“Which of our service lines is most profitable, and do we have job costing that’s reliable enough to guide pricing?”
“Is our chart of accounts set up correctly to distinguish COGS from OpEx, or are there things mixed in that shouldn’t be?”
“What are the biggest operational risks you see in our financials right now?”

A good bookkeeper will appreciate these questions. They’ll see you’re serious about using data to run the business. And if they can’t answer them clearly, you know it’s time to make a change.

The Bottom Line

Your bookkeeper should be more than a transaction recorder. They should be a monthly business advisor, helping you understand where money is coming from, where it’s going, and what decisions you need to make. They should flag problems early, explain the numbers in context, and ask tough questions about your business.

If you’re not getting that, push for it. Good bookkeeping for contractors isn’t about compliance—it’s about clarity. Your business depends on clean, timely, accurate financials—and on someone who cares enough to help you understand them.

Not getting this from your bookkeeper?

If your monthly conversation isn’t covering the items above, we’ll show you what proper home-services bookkeeping looks like. Built for contractors, benchmarked against PE-grade standards.

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Related Resources for Contractors:

External Resource: U.S. Small Business Administration: Accounting Basics

What Your Bookkeeper Should Tell You Every Month