Why So Many Restoration Owners Don’t Trust Their P&Ls And How to Fix it

The small financial disciplines that create clarity, confidence, and real profit.

 
I’m still seeing the same issue with a lot of restoration owners . . . a lack of financial understanding. Not just at the high level, but at the ground level too.

The Low Level: Bookkeeping Discipline

I’m talking about basic bookkeeping . . . the kind of daily and weekly habits that determine whether your reports are accurate or garbage.

Most owners don’t fully understand their P&Ls, so they don’t use them. And I get why. Two main reasons:

• They’ve never really learned how a P&L is structured.
• The data on their P&L is wrong, so the numbers can’t be trusted.

When your data is bad, the reports are useless. You can’t make smart business decisions on inaccurate information.

Another big one I see all the time is a poorly structured chart of accounts. If your P&L doesn’t show gross profit by division, you’re flying blind.

You should be able to see:

• Revenue for water, fire, mold, contents, and reconstruction
• Cost of goods sold tied to each of those revenue streams

With that setup, you can quickly figure out your gross profit by division — no financial analyst needed. You’ll know which parts of your business are healthy and which ones are dragging you down.

Where It Starts Falling Apart: Invoicing

Weak invoicing discipline destroys accuracy. Here’s what that looks like:

• You sell a $100,000 rebuild job and take a $33,000 deposit.
• You invoice it before any work is done.
• That deposit hits your P&L as revenue, but you have no costs yet.

The result: your P&L looks amazing, but it’s fake profit.

The opposite happens too:

• You produce a ton of work in June but don’t invoice until July.
• Now June shows all the costs and none of the revenue.
• You look unprofitable, even though that’s not reality.

So now every time you review your P&L, you’re playing mental gymnastics.
“Well, it looks off because of that deposit,” or “Yeah, we’ll make that up once we invoice those jobs.” That’s no way to run a business.

No Job Costing = Flying Blind

If you’re not tracking labor, materials, and subs to each job, you have no idea where you’re making or losing money.

It’s not hard, but it does take:

• Discipline
• The right people in the right seats
• A repeatable process for tracking costs

Once this is in place, you’ll never want to go back. It changes everything.

Why I Don’t Trust CRMs for Job Costing

A lot of people say, “We track that in our production management system.”
I’m not a fan of this approach. Keep your job costing in QuickBooks and push data to your CRM . . . not the other way around.

Why:

• You might change CRMs someday.
• If you sell your business, the new owner may want their own system.
• When job cost data lives only in your CRM, you lose your history when you switch platforms.

That’s a nightmare for any owner or buyer.

Share the Numbers

Owners are often reluctant to share financial data with their teams. They’re worried their people will see how much the company makes.

But if your team doesn’t know the targets, how can they hit them?

If your reconstruction department isn’t profitable but your recon managers don’t know their gross profit targets, they can’t improve them. If your mitigation team doesn’t know what their labor allocation should be, they’ll miss it every time.

When people understand what’s expected and are incentivized to hit it, they step up.

The Big Picture

These are real-world issues I see every day.
You can’t grow and you definitely can’t build a sellable business (at least not one that will command top dollar) if your financials aren’t clear, consistent, and trusted.

Ready to clean up your books? Ready to get more profitable? I’ve been where you are . . . let’s fix it together.