Contractors are often profitable on paper and short on cash, because revenue, costs and payments rarely happen at the same time. Specialized bookkeeping makes the timing visible: receivables aged by job, customer deposits recorded correctly, retainage tracked, WIP showing over- and under-billed jobs, and current books that let you look ahead instead of back.
"We had a good month, so where's the money?" is one of the most common questions contractors ask. The answer is almost always timing. Materials are bought and crews are paid before the customer pays. Draws are billed on a schedule that doesn't match the work. Retainage is held back until the end. Insurance work pays in pieces. The profit is real, but the cash is somewhere else.
Why the profit and loss doesn't show cash
The profit and loss statement shows revenue earned and costs incurred. It doesn't show money you're still owed, money you've collected for work not yet done, or money tied up in retainage and materials. Seeing cash clearly means looking at the balance sheet and the job detail alongside the profit and loss.
What specialized bookkeeping makes visible
- Receivables by job and by age: who owes you, for which job, and how long it's been outstanding.
- Customer deposits: money collected before work is done is recorded as a liability, not income, so you don't mistake it for profit you can spend.
- Retainage receivable and payable: what customers are holding back from you, and what you're holding back from subs, until it's released.
- WIP (over- and under-billing): whether you've billed ahead of or behind the work on each open job.
- Payables: what you owe suppliers and subs, and when it's due.
- Loan and line-of-credit balances that match the lender's statements.
Over-billing and under-billing
Over-billing (billing ahead of the work) brings cash in early, but that cash is needed to finish the job; spending it elsewhere creates a shortfall later. Under-billing (doing work faster than you bill) means you're financing the customer's project. A WIP schedule shows which jobs are which, so you can adjust billing before it becomes a cash problem.
Current books are the starting point
Cash visibility only works if the books are current. If reconciliation is three months behind, your receivables and payables reports describe the past. A structured month-end close means the numbers you look at reflect last month, not last quarter.
From visibility to decisions
With current, job-level books, cash conversations get specific: which customers to follow up with, whether a billing schedule needs to change on a large job, whether a large purchase or hire should wait a month, and how much cash is really available after deposits, retainage and upcoming payables are accounted for.
How Bookkeepers Lane helps
We close the books every month, track jobs, deposits, retainage and WIP where they apply, and report AR and AP aging and cash-flow visibility in an interactive dashboard built on your QuickBooks data. Advisory conversations then focus on cash timing: when money comes in, when it goes out and where it gets stuck. Every engagement starts with a free Books Review.
Want to see what this looks like for your business?
Every engagement starts with a free Books Review of your current books and QuickBooks structure — what’s working, what isn’t and what to do next.