It was October 20 when he found out August had lost money.
August had felt like a great month. Three crews out every day, two big jobs running at once, the phone never stopped. The account balance looked fine. Nobody had a reason to worry.
The books for August closed in the third week of October. By then he had already bid September and October the same way: same price, same kind of job, same assumptions about material and labor. Two more months of work priced on numbers that turned out to be wrong (example numbers).
Nothing was hidden. Nobody made a mistake on purpose. The number just arrived seven weeks after it could have helped.
That’s the real cost of a slow month-end close. Late numbers aren’t wrong. They’re history by the time you read them.
What the month-end close process actually is
“Closing the books” sounds like something your bookkeeper does to keep the tax return happy. It’s more useful than that. A close is the process of making last month’s numbers true, so you can make this month’s decisions with them.
For a contracting company, a real close covers six things:
- Reconcile every bank and credit card account. Every transaction in the books matches the statement, and every statement transaction is in the books. No mystery deposits, no unrecorded card charges from the supply house.
- Bill everything that’s finished. Every completed job and every approved change order has an invoice. This is where money hides (more on that below).
- Age receivables. Who owes you, how much, and how late. Retainage tracked on its own, so it doesn’t make your receivables look healthier than they are.
- Match payables. Supplier statements tie to the bills you’ve entered, and every bill is coded to a job.
- Review job costs. Labor hours, materials and subs posted to the right jobs, then compared to the estimate. This is where you find the job that’s running over while it’s still running.
- Update the WIP schedule for jobs that span months. For progress-billed work, compare what you’ve billed to what you’ve actually earned based on percent complete. Billed ahead of the work is overbilling: the cash in the account isn’t fully yours yet. Billed behind is underbilling: you’ve done the work and you’re financing it. Both change what the month really made.
Then the month gets locked, so nobody posts a stray July bill into a period that’s already been reported. The output is a P&L, a balance sheet and a job-cost report you can trust.
If what you’re paying for today stops at “the bank feed is categorized,” that’s the gap we described in what contractor accounting services should actually include.
Seven finished jobs nobody invoiced
One plumbing contractor spent a single Sunday morning going through his Q3 numbers. He found seven finished jobs that had never been invoiced. Together, about $9,400 of work done in July and August, waiting on paper (example numbers).
Nobody stole anything. Each job got finished on a busy day and fell between the truck and the office. The tech thought the office had the ticket. The office never got it.
This is exactly what step two of a close catches, every month, instead of once a quarter when somebody happens to look. The busiest months hide the most, which is why they need the closest look. Unbilled work is also one of the quieter reasons a contractor can be busy and still broke: the work is done, the payroll is paid, and the invoice doesn’t exist.
45 days or 10 days?
Plenty of contracting companies close 45 to 60 days after month-end. If you’re used to finding out how the year went in April, 45 days sounds fast.
It isn’t. A 45-day close means every price you set this month runs on numbers from two months ago. Material prices, crew costs and callbacks all move faster than that. By the time you see a problem, you’ve already repeated it.
A better target is ten days, give or take. Not because it’s neat, but because it’s still useful. A September close finished by October 10 can change the bids you send on October 11.
That target isn’t fantasy. In one Sage Intacct survey of finance teams, construction companies averaged about 8 days to close, and “best in class” across industries was two weeks or less. Bookkeepers who work with $1 million to $10 million contractors commonly quote 5 to 10 business days for a clean close. If yours takes much longer, it usually points to a process problem (receipts that come in late, costs that aren’t coded to jobs, tickets stuck in trucks), not to the company being too complex.
Growth is usually what breaks it. We’ve sat across from owners with 40 trucks, a full board and a waiting list in July whose books closed two months late (example numbers). Nobody did that on purpose. The company simply outgrew the way the books were being kept.
The 20-minute read
Here’s the part that most often gets skipped. Closing the books and reading them are two different jobs. Usually only one gets done.
A lot of owners spend Sunday entering numbers: receipts, invoices, the stack on the passenger seat. That keeps the records current. It doesn’t tell you anything.
Reading is different, and it takes about twenty minutes once the close is done. Four questions:
- What came in? Revenue for the month, and how it compares to the last few.
- What went out? Costs, especially labor and materials as a share of revenue.
- What’s owed? Receivables you’re waiting on, and payables you owe.
- What’s left? Profit, and cash.
Then one more look: which jobs made their margin and which didn’t. If you can’t answer that, job costing is the missing piece, and no close will fix it on its own.
Twenty minutes, same questions, every month. If the close is done by the 10th, that’s the meeting you put on the calendar for the 11th. You already do the hard part. The easy part is the one that pays.
Why construction bookkeeping speed matters right now
It’s late October. Two months are left in the year, and in a lot of companies the books still stop at August.
Every year-end decision runs on one number: what this year actually made. Equipment purchases, bonuses, owner pay, how much cash to hold for the slow months. If the books close sixty days late, that number is a guess, and all of those decisions get made with the lights off.
The fix isn’t more effort in December. It’s a close that keeps up. November only works as planning time if October is already on the books. That’s the whole premise of year-end tax planning for contractors: planning needs real numbers, and real numbers need a close.
Where your numbers stand
A fast close is the foundation of Financial Control, the first of the six levels of a contracting business. Everything above it, from tax strategy to pricing to eventually selling, runs on numbers that arrive in time to use. The free 5-minute Contractor Growth Assessment scores your business on all six levels and shows how current your numbers really are.
Take the free Contractor Growth Assessment →
General information only. Stories are composites and all figures are example numbers.
