Bookkeeper for Restoration Companies

How does the money actually flow in a restoration business?

A restoration company gets paid by the insurance company, in the case of the homeowner, and that changes everything about how cash moves through the business.

When you take on a job, you write an estimate using a tool like Xactimate. That estimate becomes your contract. But you don't get paid in full at the end of the job. The insurance company pays after a series of approvals, and that cycle can take weeks or months. If you find extra damage, you submit a supplement, which is another estimate, and that adds even more time to the payment cycle.

So the bookkeeping for a restoration company has to track two things separately: revenue you've actually earned and recorded, and invoices you're waiting on from each insurance claim. A job can look profitable on paper while your bank account stays flat because the check has not landed yet.

You also have direct-pay work, such as a homeowner paying for a dryout themselves. Those jobs pay faster and give you breathing room while the insurance checks drag. Your books need to keep those two streams apart, so you can see which part of the business covers the bills.

Which costs matter most in a restoration business?

Labor, equipment, and materials are your three biggest cost buckets, and they behave differently.

Labor is your largest single outlay, whether your own crews or subcontractors each month. Equipment is the second hidden one. The dehumidifiers, air movers, and other drying gear are expensive to buy, run, and replace. That cost belongs on the jobs that actually use it, not in a general bucket, because it can make up a huge part of the job's true cost.

Materials are direct job costs for reconstruction, like drywall, lumber, paint, and trim. They need to be coded to each job, not put into a shared overhead account.

Overhead itself, like insurance premiums, shop rent, office staff, and licensing fees, should be tracked separately but not hidden in the job. If you add overhead to a job instead of allocating it on its own, you'll never know what a job really cost you to run.

What mistakes do restoration owners make with their books?

The biggest one we see is treating the insurance estimate as the final price without checking the real cost behind it.

Estimating software like Ximeta comes loaded with standard prices, which are, in part, influenced by thousands of insurance companies feeding their data into the same algorithm. If you bill every job at the standard rate, you are pricing your work as an average, not as a business that actually has to pay electricians, plumbers, and carpenters in your specific city. To get paid what you deserve, you have to upload your own labor and material rates back into that system. That's a job, and it's part of what we do for you.

A second common mistake is is treating all revenue as the same. One project can have a high-margin mitigation phase and a low-margin rebuild phase. If you mix them in one line, you miss which half of your business actually feeds you.

• Failing to supplement the claim when the job shows more damage than the original estimate.
• Not charging for overhead or depreciation on the equipment.
• Recording revenue when you send the estimate, not when you actually earn it or get paid.
• Not reconciling each job payment against the job's total, so you miss the that final check on a supplement.
• Mixing cash from a direct-pay job with insurance claim cash, which makes it hard to forecast.

How should I track each job and its phases?

Treat each job as a separate profit center and split it into the phases that have different margins.

A typical flood job has at least two phases: water mitigation, which is the emergency pumpout and drying, and then the reconstruction, which might demo the sheetrock and rebuild it. Those two phases have different costs and different rates, so they have to show up separately in your profit and loss report. If you combine them, you cannot see which is making you money.

We set up job cost codes for each phase. Each job gets its own code, and within that job the mitigation part and the rebuild part each get their own subcategory. That way you see a gross margin number for each phase independently.

Those numbers are a range you should not take as gospel, but they tell you how your own job mix is affecting your entire income. If you have a month of very little water then a month of full rebuild, you will see a big drop in margin even if your promotion says everything is fine.

You also need to assign equipment usage to each job. When you put the same dehumidifiers on three different jobs, you need a sensible way to split the depreciation and the wear. We do that allocation for you, so the margin at the very bottom is real, not an illusion from not counting your own gear.

What reports should I look at every month?

The reports that actually help you make decisions are a job cost report, an aged receivables list, a cash flow projection, and a profit and loss by service type.

• Job cost report: revenue, direct costs, and profit for each project and each phase. It tells you which job you are actually making or losing money on.
• Aged accounts receivable: how long insurance payouts are sitting in the queue. This is the one that catches clients over 90 days old.
• Cash flow forecast: the expected insurance payments along with your upcoming payroll and equipment costs. If you don't have this, you will not know if you can cover next month's payroll.
• Profit and loss by service type (mitigation, rebuild, direct pay): a quick one-page view of your margins by the different work streams.

A job cost report will tell you if the tenant's bathroom rebuild actually cost you $8,000 more than the estimate. An aged receivables tells you if the same carrier has been sitting on a check for three months and calls them. Those are the numbers that lead to a decisions you can act on.

What decisions can the books support?

The books should tell you where your profit is coming from, which crews work best, and which jobs you should turn down or price better.

If the job cost report shows your mitigation jobs bring a 70% level margin, you might want to put more energy into marketing to insurance adjusters for water jobs. If reconstruction is thinner, you might not scale that part, or you need to charge a different rate.

You can also use the books to decide about hiring. If one crew consistently produces more revenue per dollar of labor than the other, you might hire more people like them. And when equipment starts to break down, the depreciation line on the report tells you it's time to save for a replacement.

Pricing is another decision that only works if you have accurate job costs. If your actual labor and material costs tell you the job is 15% over the standard estimate, you have to adjust how you estimate and not just swallow the difference. The books are the only way you know to trust a new price per job.

We set up your books so those questions have clear answers, every single month, even if the insurance company is still taking its time.