CASH OR ACCRUAL, AND WHY IT DECIDES EVERYTHING.
Cash basis records the deposit. Accrual basis records the work. That one difference decides whether your books contain accounts receivable and accounts payable at all, and without those two accounts a P&L can't tell you what a month earned, only what it collected. Most subcontractors can't say which basis they're on, usually because a bookkeeper set it during software setup years ago and because the tax return may be filed on a different basis than the reports the owner reads. It's worth finding out before you make another decision from a report, since on cash basis a strong month and a good collection month are the same event, and a WIP schedule can't exist at all. Which basis your return is filed on, and every rule attached to that, is your CPA's work.
The cost of not knowing is that every conclusion drawn from the report inherits the error. An owner reading a cash basis P&L in a month when two general contractors paid late sees a loss on work that earned money, cuts something, and never learns that the report was describing the mail rather than the business. Then the same owner reads a strong month that was really three collections stacking, and prices the next bid off it. The reports were internally consistent both times. They were answering a different question than the one being asked.
WHAT IT MEANS.
Accounting basis is the rule that decides when a transaction enters your books: cash basis records revenue when the deposit clears and cost when the payment leaves, while accrual basis records revenue when the work is earned and cost when it's incurred, whether or not any money has moved.
The basis and the revenue recognition method are two separate choices and they get confused constantly. The basis decides whether receivables and payables exist in the books. The method, meaning percentage of completion or completed contract, decides how a long contract's revenue gets spread across the periods it runs through. You need accrual before the second question is even askable, which is why the basis is the first thing to settle and the last thing anybody checks.
Nothing here is a recommendation about your tax filing. Businesses commonly keep management books that support job costing and a WIP schedule while their return is filed on whatever basis their CPA determines applies to them. Those two facts live together fine. What doesn't work is running the business off whichever set of numbers somebody printed most recently.
WHAT THE BASIS DOES TO THE REPORT.
Nobody in the business can say which basis the books are on
It gets set once during software setup and never revisited, and the person who set it's often gone. The tell is on the balance sheet rather than the P&L: if there are no accounts receivable and no accounts payable balances, or if they only appear once a year at the CPA's adjustment, the operating books are running on cash. That's a five minute check nobody runs, on the item that governs every other number in the file.
A cash basis P&L reports collections and calls it profit
On cash basis a month where two general contractors paid on time looks profitable and a month where both paid late looks like a loss, and the crews did the same work in both. Worse, the report improves if you stop paying vendors, because unpaid bills are invisible until the check goes out. A number that can be improved by doing something harmful isn't a management report, whatever else it's useful for.
Job costing and WIP can't be built on it
A WIP schedule compares cost incurred to date against revenue earned to date, and cash basis records neither of those. Job costing has the same problem: a material invoice received in March and paid in May puts the cost in the wrong month and on a job that may already be closed. So the two tools that tell a subcontractor whether the work is earning are unavailable, and the reason is the basis rather than the software.
WHAT IT LOOKS LIKE IN DOLLARS.
Take one month where the crews bill $400,000 of completed work and collect $180,000 of older invoices. Cost incurred that month is $310,000, of which $250,000 got paid. On cash basis the month reports $180,000 of revenue against $250,000 of cost, which is a $70,000 loss. On accrual it reports $400,000 against $310,000, which is $90,000 of profit. Same crews, same jobs, same month, and the two reports are $160,000 apart.
Take that same month and hold $60,000 of vendor payments until the first week of the following month. Cash basis cost falls to $190,000 and the reported loss becomes a $10,000 loss, an improvement of $60,000 with no change to a single job, a single hour, or a single price. Accrual doesn't move at all, because the cost was incurred either way. That's the whole argument for accrual as the management basis in one paragraph.
WHAT WE SETTLE IN THE FIRST MONTH.
The first read of the books answers it: whether receivables and payables carry balances every month or appear once at year end, whether vendor invoices are entered when received or when paid, and whether the reports the owner reads agree with the return that got filed. Most owners have never been told the answer in a sentence. It goes in writing so the next conversation starts from a fact.
Job costing, the WIP schedule, the cost to complete, and the CEO report all require cost recorded when incurred and revenue recorded when earned, so the management books are built that way. What basis your return is filed on is your CPA's determination and it doesn't change what your operating reports need. Where the two differ, the difference is documented rather than argued about every spring.
Accrual only works if invoices go in when they're sent and vendor bills go in when they're received, every month, inside the close. Reconstructing a year of receivables and payables in one sitting produces a balance sheet that ties and a set of monthly reports that were never usable. The habit is the deliverable here, and the close date is what holds it.
The bridge between what your operating reports say and what the filed return says gets documented once and updated, so nobody spends March arguing about which number is real. Your CPA gets a clean accrual file to work from rather than a shoebox, which is usually the part they care about most. It also means the questions that come back in the spring are about the return and not about the bookkeeping.
THE OUTPUTS, NAMED.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
