The reports look fine. Revenue is up, jobs are getting done, and on paper the business looks healthy. Then month-end closes, or a bank asks for a WIP report, or someone finally reconciles a big job, and the number that comes back doesn’t match the number everyone believed a few weeks earlier.
This isn’t usually one bad job or one bad decision. It’s a handful of small leaks that are individually easy to shrug off and collectively expensive. Here’s where the money tends to disappear, and a way to check your own business against it.
Change orders that never get billed, or get billed late
Extra work happens in the field constantly. A tech finds a bigger problem than the estimate accounted for. A client asks for something added mid-job. The work gets done because saying no isn’t good for the relationship, and the paperwork gets promised for later.
Later is the problem. Across specialty trade contractors, more than half report it takes 8 to 14 days to turn a signed time-and-materials tag into a priced change order, and another 30% say it takes 15 to 30 days. Every extra day stretches cash flow and means the business is effectively financing that labor and material out of pocket. It gets worse from there: 60% of firms say they write down or write off change order revenue at least occasionally, most often because the backup documentation is missing, there’s a communication gap, or the pricing gets disputed after the fact. Teams are also spending real hours on this, commonly 6 to 10 hours a week just pricing and submitting change orders, plus more chasing approvals.
That’s not a documentation nuisance. That’s earned revenue the business never collects.
Delayed billing
Similar story, different symptom. If invoices go out in a weekly or monthly batch rather than within a day or two of work being complete, cash sits in the field longer than it needs to. For a growing business juggling payroll, materials, and equipment costs, that lag adds up to real strain on working capital, even when the underlying work was profitable.
Manual processes eating the margin one small task at a time
Spreadsheets, paper timesheets, and disconnected systems don’t just slow things down; they create the conditions for costs to go entirely uncaptured. When materials, labor, and change orders live in separate places and get reconciled by hand, someone has to catch every gap manually. Most growing trades businesses don’t have someone whose full-time job is catching gaps. So gaps get missed.
Callbacks and rework
Rework typically runs 5 to 8% of total project cost, and it’s rarely a craftsmanship problem. In roofing specifically, callbacks are much more often traced back to a communication failure in the field than to bad work itself; a crew missed a detail because the instructions weren’t clear, or a scope change didn’t make it back to whoever was doing the work. Businesses with consistent quality and communication processes keep rework under 5% of budget and are meaningfully more likely to hit healthy profit margins.
The field-to-office gap underneath all of it
Every leak above traces back to the same root cause. Work happens in the field. Decisions, documentation, and billing happen in the office. When those two sides of the business run on different systems and different timelines, information arrives late, or doesn’t arrive at all. Trades businesses feel this acutely because they carry thinner margins and fewer people to absorb the waste than larger commercial contractors do, which means a gap that a bigger firm shrugs off can be the difference between a good year and a break-even one for a growing plumbing, HVAC, electrical, or roofing business.
The Margin Leak Scorecard
If you’re wondering whether these issues are affecting your business, here’s a simple way to assess where margin may be leaking.
Score your business honestly against each of these. You don’t need exact numbers, just a gut sense of which side you fall on.
Billing timeliness
Mostly current: invoices go out within a day or two of job completion.
Mostly behind: invoices get batched weekly, monthly, or “whenever someone gets to it.”
Change order discipline
Mostly current: extra work gets documented and priced within a day or two, and it’s rare to write one off.
Mostly behind: change orders get remembered later, written down occasionally, or lumped into the base job.
Labor capture accuracy
Mostly current: techs log time to specific jobs as they work.
Mostly behind: timesheets get filled in from memory at the end of the day or week.
Material tracking
Mostly current: materials get tied to a specific job at the point of use or purchase.
Mostly behind: material costs show up after the job has closed, if they show up at all.
Callbacks and rework
Mostly current: callbacks are tracked and clearly traced back to a cause.
Mostly behind: callbacks happen and get absorbed without much analysis of why.
Field-to-office data flow
Mostly current: the office knows what happened on a job the same day it happened.
Mostly behind: the office finds out what happened days or weeks later, if it finds out at all.
If most of your answers landed on “mostly behind,” that’s not a reflection on your team. It’s a sign the systems underneath the team haven’t kept pace with how much the business has grown. Each of those gaps is small on its own. Together, they’re usually the difference between a business that looks profitable and one that actually is.
See Where Your Margin Is Really Going
If a few of these leaks sound familiar, we’re glad to walk through where they’re likely showing up in your business and help determine the right next step. Depending on what we find, that may mean improving existing processes, better integrating your current systems, or evaluating an ERP platform like Acumatica.
