Top 5 Financial Reports Every Contractor Should Track
Using Bookkeeping To Make More Money
Staying on top of finances is crucial for any construction company looking to grow and maintain profitability. For small business owners in the construction industry, reviewing key financial reports regularly can provide valuable insights into cash flow, job costs, and overall financial management. Understanding these reports helps business owners make informed decisions, avoid financial pitfalls, and achieve peace of mind.
As part of client bookkeeping solutions for contractors, maintaining accurate financial records in QuickBooks bookkeeping services for contractors ensures you have the right financial data at your fingertips. Whether you're a real estate investor bookkeeping client or a construction business owner, these reports will help keep your business financially healthy. These reports are:
Profit and Loss Statement
Balance Sheet
Job Cost Report
Cash Flow Statement
Work In Progress (WIP) Report
1. Profit and Loss Statement
The profit and loss statement, also known as an income statement, provides a clear overview of a construction company's revenues and expenses over a specific period. Reviewing this report monthly allows business owners to track profitability, identify trends, and make adjustments to keep their construction projects on budget.
This report helps assess financial data related to project cost and ensures that revenue goals align with actual performance. Bookkeeping for construction businesses plays a vital role in generating accurate profit and loss statements that support sound decision-making.
Why It Matters
Identifies profit trends
Highlights cost inefficiencies
Helps set accurate project pricing
2. Balance Sheet
A balance sheet offers a snapshot of a construction company's financial position at any given time. It details assets, liabilities, and equity, helping contractors understand their financial standing and how their resources are allocated.
Regular review of the balance sheet allows small business owners to monitor debt levels, cash reserves, and overall business health. It also provides insights into financial stability, ensuring they can take on new construction projects without overextending resources.
Key Insights
Determines financial strength
Helps with loan approvals and financing
Tracks overall business net worth
3. Job Cost Reports
Tracking job costs is essential in construction accounting to ensure each project remains profitable. Using standardized construction cost codes, a job cost report breaks down expenses related to labor, materials, subcontractors, and other project-specific costs.
By reviewing job cost reports monthly, construction businesses can analyze project performance, identify cost overruns, and adjust budgets accordingly. Proper job costing is key to effective project management and financial planning.
Benefits
Pinpoints cost overruns before they become a problem
Ensures proper pricing of future jobs
Helps manage project budgets efficiently
4. Cash Flow Statement
Cash flow is the lifeblood of any construction business. A cash flow statement provides detailed insights into incoming and outgoing cash, ensuring that contractors can cover expenses and plan for future growth.
Monitoring cash flow on a monthly basis allows business owners to anticipate potential shortfalls and make strategic decisions to maintain operational stability. QuickBooks bookkeeping services for contractors ensure accurate tracking and forecasting of cash flow to support long-term success.
Why Cash Flow Matters
Ensures the business can meet payroll and expenses
Helps plan for large equipment purchases
Identifies periods of slow revenue to adjust spending
5. Work in Progress (WIP) Report
A WIP report is crucial for tracking the progress and financial performance of ongoing construction projects. It provides insights into project costs incurred versus completion percentages, helping contractors avoid overbilling or underbilling.
Reviewing the WIP report monthly allows construction companies to stay on top of project profitability and adjust resources accordingly. It is an essential tool for effective project management and financial oversight.
Benefits
Prevents inaccurate revenue recognition
Helps manage cash flow across multiple projects
Ensures profitability before a project is completed
Conclusion
Regularly reviewing financial reports such as profit and loss statements, balance sheets, job cost reports, cash flow statements, and WIP reports is essential for maintaining a healthy construction business. These reports provide small business owners with the financial data needed to make informed decisions and achieve their business goals.
As a construction bookkeeping specialist, I am a Certified QuickBooks Online ProAdvisor, Intuit Trained Bookkeeper, Certified QuickBooks Online Payroll ProAdvisor, and a Certified Knowify Advisor. I specialize in helping construction businesses and real estate investors take control of their finances with confidence.
If you're looking for client bookkeeping solutions tailored to QuickBooks bookkeeping services for contractors or real estate investor bookkeeping, contact me today! Let’s get your financials in order so you can focus on growing your business.
Schedule a discovery call here: https://checkbookkeeping.com/scheduling
