What Contractors Should Review Every Month (and What to Ignore)
Contractor Pain Point: “I Look at the Reports… and Still Feel Blind”
Most contractors do something at month-end. They open QuickBooks, glance at a Profit & Loss, maybe check the bank balance, then move on.
But the feeling is always the same:
Jobs felt busy, but margins don’t line up
Cash moved, but you’re not sure why
The reports exist, but they don’t answer real questions
This isn’t because you’re not reviewing enough.
It’s because you’re reviewing the wrong things — and skipping the controls that actually protect margin.
This is a systems issue, not a discipline issue.
Early in this process, most contractors benefit from using a structured close instead of “winging it.” A simple control like the Month-End Close Checklist helps force the right reviews to happen consistently instead of relying on memory or gut feel.
Why This Happens: Accounting Software Shows Everything (and Helps With None of It)
QuickBooks and similar systems generate dozens of reports by default. Most of them are:
Backward-looking
Too aggregated
Disconnected from job-level execution
Without a defined review system, contractors default to:
Bank balance checking (cash ≠ profit)
P&L skimming (too late to fix anything)
Ignoring job cost reports entirely
The issue isn’t lack of data.
It’s lack of monthly decision structure.
What to Review Every Month (and Why It Matters)
1. Job Cost Reports (Open Jobs Only)
What to do:
Review job cost detail only for active jobs:
Labor vs budget
Materials vs budget
Subcontractor costs vs budget
Why it matters:
This is where overruns start — not at the end of the job.
What breaks if skipped:
By the time the P&L shows a problem, the labor is already spent.
This review only works if jobs are set up correctly upfront. If they aren’t, see:
2. Account Reconciliations (The Control That Makes Every Other Report Trustworthy)
What to do:
Confirm the following are reconciled every month:
Bank accounts
Credit cards
Payroll clearing accounts
Loan and equipment accounts (at least quarterly, monthly if active)
Why it matters:
Job cost reports, labor analysis, and WIP only work if the underlying balances are accurate. Reconciliations are how you confirm the system matches reality.
What breaks if skipped:
Job costs look right but are missing expenses
Labor appears over or under budget due to timing errors
Cash flow decisions are made off incorrect balances
If accounts aren’t reconciled, every report you review afterward is suspect — even if it “looks reasonable.”
This is why reconciliations are a required step inside a disciplined Month-End Close Checklist, not an optional cleanup task.
3. Labor Allocation Accuracy (Not Just Payroll Totals)
What to do:
Confirm labor is posted:
To the correct job
Under the correct cost code
In the correct period
Why it matters:
Labor is the most common silent margin leak.
What breaks if skipped:
You think jobs are profitable because labor is misallocated elsewhere.
This ties directly to:
4. WIP Movement (Even If You “Don’t Do WIP”)
What to do:
At a minimum, confirm:
Costs incurred this month match job progress
No large swings without explanation
Why it matters:
You’re either overstating profit or hiding losses if WIP isn’t controlled.
What breaks if skipped:
False confidence — or unnecessary panic — based on timing issues.
A clean monthly process makes this review possible. This is exactly what the Month-End Close Checklist enforces when followed consistently.
5. A/R Aging by Job (Not Just Total)
What to do:
Review receivables by:
Job
Age
Retention held
Why it matters:
Cash flow problems usually start as job-level billing issues.
What breaks if skipped:
You finance owners and GCs without realizing it.
Invoice discipline depends on workflow:
6. Change Order & Unapproved Cost Exposure
What to do:
List:
Unapproved change orders
Costs already incurred against them
Why it matters:
This is “unprotected labor” sitting on your books.
What breaks if skipped:
You normalize working for free.
What to Ignore (or De-Prioritize)
P&L Line-by-Line Analysis
By the time overhead tells a story, the job damage is done.
Last Month’s Closed Jobs
Focus forward. Closed jobs are for post-mortems, not monthly control.
Insider Notes / Contractor Gotchas
Monthly review ≠ cleanup. Cleanup happens before review.
If job cost reports look “messy,” the issue is setup, not reporting.
Skipping one month compounds errors into the next.
Reviews should follow the same order every month — no improvising.
Contractors who struggle here usually haven’t standardized their close. A structured tool like the Month-End Close Checklist prevents missed steps and inconsistent reviews.
Real-World Impact: What Changes When This Is Done Right
When monthly reviews are systemized:
Labor overruns show up early
Billing issues surface before cash crunches
PMs become accountable to numbers they trust
Profit becomes predictable, not accidental
This is not admin work.
This is margin protection.
If you want a fast gut-check on whether your current setup supports this level of review, running a Job Costing Health Report alongside your close can expose structural gaps most shops miss.
Summary Framing
Contractors don’t need more reports.
They need fewer, better, repeatable reviews tied directly to job execution.
Monthly review done right is:
Forward-looking
Job-focused
System-driven
That’s how accounting becomes an operational control — not paperwork.
Related Contractor Resources
Frequently Asked Questions
1. Do I really need to review this every month?
Yes. Monthly is the minimum frequency where issues can still be corrected without permanent margin damage.
2. How does this work in QuickBooks?
QuickBooks supports this if jobs, cost codes, and labor allocation are set up correctly. The system only reports what it’s told to track.
3. What happens if I don’t do this?
Problems surface at job close instead of mid-job, when fixes are no longer possible.
4. Is this required or just best practice?
It’s not legally required, but it is operationally necessary for contractors who want predictable profit.
5. When should I fix this if it’s already messy?
Immediately. The longer incorrect data rolls forward, the harder it is to unwind.
If labor overruns, reporting confusion, or job cost surprises keep happening, it’s usually a setup and systems issue. Dialing in job setup and monthly review structure early is one of the fastest ways to protect margin.
Contractor Accounting Services
Disclaimer:
This content is for general educational purposes only and does not constitute tax, legal, or accounting advice. Individual circumstances vary, and tax and reporting requirements can change. Always consult a qualified CPA, tax professional, or legal advisor for guidance specific to your business.
