Part 1 of 4 of the “Bookkeeping Fundamentals” Mini-Series
If you read Part 5 of 5 (Being Brave) of our “Building a Niche” Mini-Series and you actually WERE one of the people thinking “What exactly did they cover in that presentation??”….
THIS ONE’S FOR YOU!
For those that haven’t read that 5-part series, you clearly should, but until you do, let’s get you caught up:
- We got asked by the Painting Contractors Association of Portland to speak at their group’s monthly meeting
- We accepted the invitation
- We then thought:
“Ummm…. What do we want to cover that will be meaningful?”
“Will anyone show up if the word ‘accounting’ is the focus of the presentation??”
“What if they start throwing pub food at us to indicate their lack of satisfaction???”
We wanted to summarize all of the knowledge we’ve gained as a team across the years… but present it in a way that would hold the attention of – and be remembered by – busy firm owners who need to get back to the stack of work waiting for them back at the office.
Brainstorming took us to what we’ve heard the most from our clients over the years:
“I don’t have time to do the bookkeeping”
“I don’t know how to do bookkeeping”
“I hate doing the bookkeeping”
“I don’t get anything out of the reports”
“I don’t trust the data in my books”
This helped us to come up with an agenda to address those things specifically:
- Common accounting challenges for trades
- How to get great books
- How to read your reports
- Who can do your books
Accounting Challenges for Trades
We started with a story that has played out a million times:
“You’re a painting contractor that’s landed their dream job! You create an estimate for the work that catches all the things you may have missed in the past. You get a deposit of 50% of the total job and you start the job. Job’s going well but you notice that the job is only ¼ of the way complete and your bank balance is really low – are you going to be able to make payroll at the end of the week?? What is happening???”
The work in construction and trades happens differently than in many other industries. The sequence of doing the work versus getting paid for the work can create unique accounting blind spots. Unlike retail, you don’t get all the money up front when a “sale” is made. You’re often investing in materials, labor, and time long before that final payment hits the bank — and that timing difference can make your financials look dimmer than they really are.
But that’s only one of several areas where contractors have issues. After years of working with small and mid-sized construction and trade businesses, we’ve seen that most of the frustration, confusion, and distrust of the numbers comes down to six things:
- The sale-to-payment gap
Cash flow feels like a rollercoaster because work happens long before the money arrives. - Lack of, or inaccurate, job costing
It’s nearly impossible to know which jobs are actually profitable when labor and materials aren’t tracked per project. - Change orders and scope creep
Jobs evolve, but the books don’t always keep up. That “missing” profit is often sitting in unbilled or untracked work. - Retainage and delayed payments
When money is held back until project completion, it distorts the financial picture and creates unnecessary stress. - Misaligned timing of expenses and revenue
Materials and payroll hit before the income does, creating those dreaded “phantom losses.” - A weak connection between the job and the books
Field systems like JobTread, HouseCall Pro, or Jobber don’t always flow cleanly into accounting software, which leads to mismatched or incomplete data – this is one of those places that causes owners to say, “I don’t trust my numbers.”
When we shared these points during the presentation, most of the heads in the room were nodding along.
These weren’t abstract accounting concepts – they were daily realities for the people sitting in those chairs.
In the next part of this series, we’ll walk through what “great books” actually look like and why they matter more than most owners realize.
Serving small businesses across the U.S., our team sees these patterns repeatedly, especially when owners lack strong job costing or financial clarity tools. For many, improving bookkeeping, accounting workflows, and WIP reports becomes the turning point.
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