Revenue Was Strong. Cash Was Not.

On paper, this contractor had a solid year. But his bank balance rarely reflected that.

The culprit: slow invoicing and slower collections. Jobs were being completed in one month and invoiced the next. Some invoices sat unpaid for 60 to 90 days with no follow-up system in place. By the time payments came in, new material costs had already gone out.

We helped him set up a consistent invoicing workflow, payment terms with a late fee policy, and a simple AR aging report he could review every week. Within 90 days, his average collection time dropped significantly.

He Was Paying Himself Last

This one comes up almost every time. Business owners in construction and trades tend to absorb whatever is left over after all the bills are paid. Some months that’s a good number. Other months it’s almost nothing.

When we mapped out his actual monthly draws against the revenue he generated, the math did not work in his favor. He was effectively paying himself less than he would have earned working for someone else.

We introduced a simple owner pay structure based on a percentage of gross revenue collected, not what was left over. This one change made the business feel more sustainable and gave him a clearer picture of what the business actually needed to generate to support his life.

Material Costs Were Leaking

Not through theft or waste, but through a lack of tracking. Supply runs were frequent and often paid with a personal card, a company card, and sometimes cash. Materials bought for one job occasionally ended up on another. There was no consistent way to match costs back to specific projects.

This matters because without accurate job costing, you can’t know which types of jobs are actually profitable for you. We’ve worked with contractors who discovered that their most common job type was also their least profitable one. That’s a hard thing to find out, but far better to know than to keep chasing the wrong work.

Subscriptions and Recurring Charges Had Multiplied

Over 12 months, we found software subscriptions, equipment rentals, tool accounts, and vendor charges that the owner either forgot about or assumed were no longer active.

In total, these added up to several hundred dollars per month in spending that was not being reviewed or evaluated. This is extremely common. When you’re running jobs, managing a crew, and handling everything else that comes with owning a contracting business, reviewing your recurring charges is rarely a priority. But it adds up fast.

Tax Surprises Were an Annual Event

The contractor had been filing taxes with someone who did fine work during tax season but was not available for questions throughout the year. Because no one was tracking estimated tax payments or flagging major income swings, he faced a significant tax bill two years in a row. Both times it felt like it came out of nowhere.

This is one of the most common frustrations we hear from contractors and small business owners across San Diego County. Tax season should not be a surprise. With proper planning throughout the year, you can make quarterly payments that reflect your actual income, time major purchases strategically, and avoid penalties.