Understanding where money disappears in contractor business operations is crucial—it’s not theft, but poor tracking systems that hide where profit goes.
You’re booked solid. Revenue’s climbing. So why does the bank account feel tight? For most contractors, the problem isn’t revenue—it’s visibility. When your accounting system doesn’t show where money goes at a detailed level, you’re bleeding profit without realizing it.
Here are five places money disappears—and how to find it.
1. Job Costing That’s Too Broad
You billed $85,000 for that renovation. But did you make money on it?
Most contractors lump expenses into “Materials,” “Labor,” “Subcontractors.” You see monthly totals—not what individual jobs cost.
A framing contractor discovered residential jobs averaged 18% margin while commercial jobs were at 4%. They’d been underbidding for two years.
How We Fix it: Assign every expense to specific jobs. Run monthly Job Profitability Reports. Dig into the variances so you don’t have to.
2. Vendor Pricing That Creeps Up
One client’s lumber pricing drifted up 8–12% over 18 months without notification. That’s $31,000 in extra costs.
Fix it: Pull six months of invoices from top vendors. Compare unit pricing month over month by vendor.
3. Labor Costs Without Job Detail
If your books show “Wages – $28,000” for the month, you can’t see which jobs ate hours or if overtime is killing margin.
An HVAC contractor discovered one team took 25% longer on identical jobs. Adjusting crew assignments recovered $48,000 annually.
Fix it: Track labor by job. Calculate Total Labor Cost ÷ Total Revenue after each project.
4. Small Purchases in “Miscellaneous”
Drill bits. Fasteners. Fuel. When dumped into “Miscellaneous,” you can’t track costs or recover them in pricing.
One contractor found $17,000 in tool purchases that should’ve been assigned to jobs or capitalized.
Fix it: Break “Miscellaneous” into Small Tools, Consumables, Equipment Maintenance, Vehicle Fuel.
5. Estimates vs. Actuals Gap
A residential builder ran 10–14% over budget because material costs climbed but his estimating template hadn’t updated. Over two years: $115,000 in lost profit.
Fix it: Run Estimate vs. Actual Reports after every job. Update assumptions.
Most contractor businesses struggle to see where money disappears because profit leaks through poor tracking. All five problems are fixable with proper structure.
Grow With Confidence.
Finalyze helps contractors set up accounting systems that support real growth. From job costing to tax strategy, we handle the finances so you can focus on the field. Let’s talk growth. Book your complimentary strategy session today.