THE FINANCIAL STATEMENTS EVERY SUB NEEDS.
A commercial subcontractor needs four reports, not one: the profit and loss statement for whether the work made money, the balance sheet for whether the business is sound, the cash flow forecast for whether you can make payroll, and the WIP schedule for whether your jobs are on track. Most subs read only the P&L, which is why they get surprised.
Most subcontractors look at one report, the profit and loss statement, and treat it as the whole financial picture. It is not. A subcontractor business runs on four reports, each answering a different question, and the gaps between them are where owners get blindsided. The P&L says the work made money. The balance sheet says whether the business can be trusted with more. The cash flow forecast says whether you survive the next quarter. The WIP schedule, the one most subs never produce, says whether the jobs in progress are tracking to plan. This page explains what each report answers, how they connect, and why all four matter.
WHAT EACH ONE ANSWERS.
Did the work make money over this period?
The P&L summarizes revenue, direct cost, gross profit, overhead, and net profit over a month, quarter, or year. It answers whether the business made money during that span. Its limit is that it averages every job together, so it cannot tell you which jobs made the money. Read it with job costing underneath.
Is the business sound right now?
The balance sheet is a snapshot of assets, liabilities, and equity at a single point in time. Bonding companies and lenders read it first, focusing on working capital, retention receivable, and billing position, to decide how much risk to extend. It is the report that sets how big your jobs can get.
Can you make payroll over the next quarter?
A 13-week cash flow forecast maps expected cash in against cash out, week by week, built on when money actually arrives rather than when it is earned. It is the report that catches the gap between profitable work and an empty bank account, the gap a P&L cannot show.
Are the jobs in progress on track?
The work-in-progress schedule shows each open job’s contract value, cost incurred, percent complete, billings, and projected profit. It reveals over and underbillings and a fading margin before closeout. It is the report most subcontractors never produce, and the one that catches profit fade in time to act.
FOUR VIEWS OF ONE BUSINESS.
These reports are not independent. The WIP schedule feeds the P&L, because how your open jobs are performing becomes this period’s revenue and cost. The P&L flows into the balance sheet, because net profit becomes equity. The balance sheet sets your working capital, which drives the cash flow forecast and your bonding capacity.
Read together, they form one coherent picture: which jobs are working, whether the period made money, whether the business is sound, and whether you survive the next quarter. Read in isolation, each one tells a partial story that is easy to misread.
THE WIP SCHEDULE IS NOT OPTIONAL.
Most subcontractors produce a P&L because their bookkeeper or CPA does. Far fewer produce a WIP schedule, because it requires job costing and a monthly cost-to-complete that generic accounting does not provide. That is the gap. Without the WIP schedule, profit fade hides until closeout and over or underbillings go unmanaged.
A subcontractor that produces all four reports monthly is running a financial system. One that produces only the P&L is reading the past and hoping about the future.
RUN ON FOUR, NOT ONE.
Whether the work made money, whether the business is sound, whether you can make payroll, and whether the jobs are on track. Four questions, four reports, one business. Missing any of them leaves a blind spot a single good month cannot cover.
The Construction CFO builds and maintains all four as part of CFOS, with the WIP schedule and 13-week forecast that most subcontractors have never had, for businesses doing $1M to $12M.
FREQUENTLY ASKED.
