A roofing contractor bookkeeping routine: job costing, deposits and a thirteen week cash view

A roofing contractor bookkeeping routine is less about software than about regularity. The job costing rules, the treatment of deposits, the retainage line and the weekly cash view set out below are the parts that decide whether a busy roofing firm stays solvent.

What to take away

Not accounting or tax advice. Set your structure and your treatment of deposits with an accountant who works with contractors in your state.

Four rules for job costing

Break any of these and costs land in overheads, where they cannot be attributed to a job type. At that point every ranking you produce is a guess, and every price built on it inherits the guess.

A roofing chart of accounts

Set the accounts up once and the four rules above have somewhere to land. Income splits by service line: residential repair, residential replacement, commercial and service work. Direct costs sit under the job: crew labor, shingle and accessory material, disposal, subcontractors, permits, equipment and change orders. Overhead sits apart from all of it: trucks and fuel, insurance, office and sales.

Labor is the account that decides whether this works. Hours booked to overhead instead of to a job make every job look more profitable than it was, and every overhead figure meaningless.

Deposits, honestly

The rules that govern deposits for home improvement work are state rules, and they are written down. Every state that licenses home improvement contractors publishes them: the Contractors State License Board in California, the Home Improvement Commission in Maryland, and the equivalent licensing board or home improvement registration office in your state. What you want from that source is the home improvement contract requirements it enforces, the disclosure or cancellation notice it prescribes, and whether the state caps what you may collect before work starts. Take the contract wording from a lawyer who works with contractors in your state rather than from another contractor's form.

Two habits regardless of the rules. Hold the deposit against the material it was collected for rather than treating it as available cash. And record it as a liability until the work is performed, so your accounts never tell you that you are richer than you are.

A firm that spends deposits is borrowing from customers to fund last month, and the arithmetic only works while the pipeline grows.

Retainage and stage payments

On commercial work you may meet retainage, where a percentage of each progress payment is held back until the work reaches substantial completion, and often a further slice until the lien period or the warranty period runs out. It is normal, and it is also cash you have earned and cannot use. It is released against a document, such as a certificate of substantial completion, an architect's certification or the owner's written acceptance, so what triggers payment is an event you can date rather than a due date.

Track it as a separate line rather than as a slow receivable, because it behaves differently: it does not become late, it becomes due on an event. Then check whether the event has happened, because nobody will remind you.

On residential work, tie stage payments to observable events rather than to dates: material delivered, tear off complete, installation complete, cleanup and inspection complete. That keeps the schedule and the invoice in the same conversation, and it gives the customer a reason to care about access on the days the crew needs it.

Why cash and profit disagree

Three timing gaps do most of it.

Material float. You buy the system before you install it and install it before you invoice. The days between the supplier's due date and the customer's payment are days you fund.

Collection lag, which varies enormously by customer type. Homeowner repairs are fast. Commercial invoices run on terms. Claim funded work can wait on a carrier and sometimes on a mortgage company endorsement.

Seasonality. The months with the most working days are not the months with the most collections, because collection follows work by weeks.

A profitable job whose money arrives in eight weeks does not pay this week's payroll. That is not a profit problem and it cannot be fixed by working harder.

The thirteen week cash view

One sheet, thirteen columns, updated weekly.

Lay the sheet out as a grid you can read in one glance. Thirteen columns across the top, one for each week, headed with that week's ending date. The rows run down the left in the order above, opening cash at the top and closing cash at the bottom. Closing cash in one column becomes opening cash in the next, so the sheet rolls forward every week instead of being rebuilt, and the whole thing stays on one page.

Update it every week with what actually happened, not with what should have. Two months of that and you will predict your own cash better than any forecast a system produces, because you will have learned which customers pay when.

The renewals and expiries that belong in the fifth row are listed in the roofing contractor licensing and compliance guide.

Records, and how long to keep them

Keep a job file that ties together the quote, the change orders, the invoices, the receipts and the disposal records. The retention schedule for those files is set out in IRS Publication 583, Starting a Business and Keeping Records, which explains what to keep for tax purposes and how the period of limitations for a return decides how long. Read it before you shred anything.

Roofing has a specific reason to keep them longer than the minimum: a complaint about a roof can arrive years later, at a property sale, and the file is what answers it.

Protecting the books

Bookkeeping now sits in systems holding customer addresses, payment details and photographs of people's homes. Treat that as part of the finance function rather than as an IT afterthought.

Small Business Information Security: The Fundamentals, published by NIST as NISTIR 7621, explains the basics for a firm with no security staff, and the Cyber Essentials toolkit from CISA covers the controls to put in place first.

Three matter most: business-owned accounts instead of personal ones, multi-factor authentication on banking and accounting, and a written rule that payment details never change on the strength of an email alone. That rule blocks a fraud that targets contractors constantly.

The wider system choice sits in the roofing contractor software and KPI guide.

The monthly hour

Once a month, do four things and nothing else.

Reconcile the bank. Age the receivables and call the oldest one. Compare three finished jobs against their estimates. Update the thirteen week view properly rather than by adjustment.

That hour is worth more than any reporting package. Where the money came from in the first place is covered in the roofing contractor marketing and growth guide, and whether the jobs behind it are worth taking is covered in best markets for a roofing contractor business.

The largest single line in the whole ledger is people, and how it is built is set out in the roofing contractor hiring and training guide.

Common questions

Do I need a bookkeeper?

Sooner than most owners think. The job costing discipline is what you are buying, and an owner doing it at eleven at night does it badly.

Cash or accrual?

That is a decision for your accountant, and it depends on your size and structure. Whichever it is, run the thirteen week cash view alongside it, because neither method tells you what is in the account next Friday.

How do I chase a late payment without losing a customer?

Early, politely, in writing, and by the same rule for everybody. Late chasing is what damages relationships, because it arrives as a surprise.

What if a job loses money?

Reconcile it before concluding anything. Most losing jobs are scope growth or lost days rather than a pricing error, and changing a price to fix an estimating problem makes every future quote wrong.