5 Numbers Every Contractor Should Know Each Month
You don’t need to become an accountant to understand your business finances.
But if you’re running a contracting business, there are certain numbers you should be able to find quickly.
Not because you need to stare at spreadsheets all day.
Because knowing your numbers helps you make better decisions.
Here are five numbers every contractor should review regularly.
1. Revenue
Start with the obvious one:
How much did the business generate?
Revenue tells you how much you’ve billed or earned, depending on your accounting method and reporting period.
But revenue by itself doesn’t tell you whether you’re making money.
That’s why it should always be considered alongside your costs and margins.
Ask yourself:
Is revenue increasing or decreasing?
How does this month compare with previous months?
Are we on track with our expectations?
Is revenue concentrated in a small number of customers or jobs?
Revenue is the starting point — not the finish line.
2. Gross Profit Margin
This is where things get more interesting.
Your gross profit is what’s left after accounting for the direct costs associated with generating your revenue.
For contractors, those costs may include labour, materials and subcontractors, depending on how the business is structured and how costs are classified.
A simplified example:
Revenue: $100,000
Direct costs: $65,000
Gross profit: $35,000
Gross profit margin: 35%
The percentage is useful because it allows you to compare performance over time.
If revenue increases but your gross margin falls significantly, that’s something worth investigating.
Ask yourself:
Are we making enough gross profit from the work we’re taking on?
3. Accounts Receivable
How much money are customers currently owing you?
This number matters because sales aren’t particularly helpful to your cash flow if customers aren’t paying.
Look at:
Total outstanding invoices
Overdue invoices
Aging of receivables
Largest outstanding balances
Average time customers take to pay
A contractor can have strong revenue and still experience cash-flow pressure because too much money is sitting in accounts receivable.
Ask yourself:
How much money have we earned that hasn’t actually reached the bank yet?
4. Accounts Payable
Now look at the other side.
How much does the business owe?
Your accounts payable balance can include amounts owed to suppliers, subcontractors and other vendors.
Reviewing this regularly helps you understand upcoming obligations and avoid unpleasant surprises.
Ask yourself:
What bills are coming due, and do we have the cash available to cover them?
5. Job Profitability
This might be the most important number for a contractor.
You don’t just want to know how much work you’re doing.
You want to know whether that work is profitable.
Look at individual jobs and compare:
Estimated costs vs. actual costs
and
Expected profit vs. actual or projected profit.
Over time, this can reveal patterns.
Maybe one type of project consistently produces better margins.
Maybe labour is regularly exceeding estimates.
Maybe material costs are eating into your profit.
Maybe certain customers or types of work aren’t worth the amount of time they require.
Ask yourself:
Which jobs are making us money — and which ones aren’t?
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Bonus: Cash
Although I called these the five numbers every contractor should know, there’s one number you should never ignore:
Cash.
Just remember that your bank balance isn’t the same thing as profit.
Think about cash alongside your receivables, payables and upcoming obligations.
The goal is to understand:
How much cash do we have, what is committed, and what’s coming next?
That’s much more useful than simply checking your banking app.
Turn Numbers Into Decisions
The real value of financial reporting isn’t knowing five numbers.
It’s knowing what those numbers are telling you.
For example:
Revenue is up.
But gross margin is down.
What happened?
Or:
Revenue is strong.
But cash is tight.
Why?
Or:
You’re winning more work.
But job profitability is declining.
What’s changed?
Those questions can lead to better business decisions.
Make Your Monthly Numbers a Habit
You don’t need to spend hours reviewing your finances.
Set aside time each month to review your key numbers and ask what has changed.
A consistent monthly review can help you spot trends before they become major problems.
And if you’re not confident that the numbers you’re looking at are accurate, that’s an important issue to address first.
Want a Simple Monthly Process?
The Contractor’s Monthly Bookkeeping Checklist gives you a practical starting point for reviewing the key areas of your books each month.
If you’d like to talk about your bookkeeping, financial reporting or current processes, you can also book a free Contractor Business Call with Bricked Bookkeeping.
BOOK YOUR FREE CONTRACTOR BUSINESS REVIEW
You don’t need to become an accountant.
You just need to know your numbers.