Bookkeeping Tips for Contractors and Trades Businesses

Contractor bookkeeping is different from standard service bookkeeping because projects, draws, and cost timing can distort margins fast. A few process improvements make a big difference.

Set Up Job Costing Correctly

• Track labor, materials, subs, and equipment by job.
• Use consistent cost codes across all projects.
• Review job-level gross margin monthly.

Control Change Orders and Billing Timing

• Record change orders immediately when approved.
• Link billing milestones to project progress.
• Track unbilled work separately to avoid revenue blind spots.

Manage Receivables and Retainage

• Separate retainage receivables from standard AR.
• Monitor aging weekly for large invoices.
• Escalate overdue balances with documented follow-up.

Reconcile Vendor and Subcontractor Costs Monthly

• Match bills to jobs before month-end close.
• Review open purchase commitments by project.
• Clear duplicate or uncategorized costs quickly.

Watch These Contractor Red Flags

• Revenue is rising while job-level margin is falling.
• Large AR balances tied to a few projects.
• Frequent reclassifications after month-end.

Need Better Contractor Reporting?

We can build bookkeeping workflows for trades and contractor businesses so job profitability and cash position stay clear throughout the project lifecycle.