Accounting for Plumbing Businesses: The CFO Playbook for Clarity, Pricing, and Cash

If you run a plumbing shop, you already manage phones, trucks, techs, quotes, and emergencies. The piece that quietly determines whether all of that turns into profit is your accounting system. Done right, accounting for plumbing businesses, it’s an operating system for pricing, scheduling, cash, and growth.

This playbook builds that system step by step, in the order that keeps data clean and decisions easy.

1) Set your operating baseline: break-even and burden

Daily break-even that actually guides the day.
Add up fixed monthly overhead (rent, admin wages, software, insurance, phones, vehicle payments, marketing retainers, debt service). Divide by 25 working days. That number is what the shop must produce today just to stand still. Miss it today? The shortfall rolls to tomorrow. It’s a simple way to keep pricing, scheduling, and urgency aligned with reality.

Price on fully burdened labor, not base wage.
A $30/hr tech rarely costs $30/hr. Build a burden rate that includes employer taxes, workers’ comp, health benefits, paid time off, training, uniforms, vehicle cost allocation (insurance, maintenance, tires, depreciation), plus field supervision share. If the true cost is $48–$52/hr and you price off $30/hr, margin leaks every time the truck rolls.

Why start here?
Because every decision downstream, quotes, premiums, hiring, even marketing ROI—depends on these two anchors. If they’re off, everything else is noisy.

2) Map your financials to how you sell work

Your chart of accounts should mirror the service lines in your CRM so estimate-vs-actual makes sense at a glance.

Revenue lines (examples):

• Service/repair labor

• Install/projects (water heater/softeners/bathrooms)

• Materials/parts

• After-hours/emergency premium

• Add-ons (water treatment, fixtures)

COGS (only if it exists because the job happened):

• Tech wages + labor burden

• Subcontractors (e.g., electrician, concrete, asbestos)

• Materials pulled/used

• Equipment rental/permits

• Warranty/claims (net of recoveries)

Everything else, rent, office payroll, software, general insurance, lives in operating expenses. This split keeps gross margin honest and comparable by service line.

3) Quote and price like an operator (not a parts store)

Value pricing for project work.
When you deliver a finished bathroom (and coordinate trades), you’re selling an outcome and time saved, not a parts list with a small markup. Price the project. Own the hassle; own the margin.

Protect emergency capacity.
Block limited same-day/next-day slots and price them at a premium (e.g., +20–40%). Distress customers pay for speed. Competitors often can’t. Your premium capacity should be deliberate, not accidental.

Speed and clarity win quotes.
Offer online intake (photos + preferred times), send options the same day for straightforward jobs, and track quote aging. Every missed quote is preventable if your system nudges follow-ups at 24/72 hours.

4) Job costing: close the loop daily

Profit is won or lost one ticket at a time. Lock in a same-day closeout:

• Close the work order in the CRM: actual labor time, materials used, notes, photos.

• Post payments; apply deposits; record COD balances.

• Approve time by job; flag overtime before payroll runs.

• Record materials pulled/returned.

• Log warranty/claims immediately with photos.

This is the single habit that makes month-end fast and accurate. Skip it, and you’ll be rebuilding the month from memory.

5) Automate the data flow (and reduce keystrokes)

• CRM → Accounting (QBO/Xero): Map items to revenue accounts (service, install, emergency, materials). Push invoices/receipts automatically.

• Banks/cards → Accounting: Daily bank feeds with rules (fuel → Fuel-COGS, supplier X → Materials-COGS) handle 70–80% of categorization.

• Payroll → Accounting: Export job-coded hours; post a standard burden allocation into COGS monthly.

• Documents → Job record: Bills, photos, permits, and claim files live with the work order.

Automation keeps numbers current and frees hours each week.

6) Cash discipline: AR, AP, and minimum reserves

Accounts receivable.

• Take deposits on booking for installs; apply at completion.

• COD for service; if you invoice, use a set cadence: Day 3 reminder → Day 7 statement → Day 14 call → Day 21 escalation → Day 30 hold service/late fee per policy.

• Track DSO and AR > 30 days as % of AR. Treat them as leading indicators of cash stress.

Accounts payable.

• Two scheduled pay runs per month (e.g., 10th, 25th).

• AP packet: unpaid bills, cash forecast, exceptions vs. last month.

• Approval thresholds and ACH/card controls—avoid ad-hoc one-offs.

Reserve policy.
Keep 1–2 months of fixed costs in cash. It smooths seasonality and protects against claim spikes or a slow collection month.

7) Controls that protect margin (without slowing work)

• Fuel: Card per vehicle, require odometer or job ID, and audit outliers.

• Materials: Bin locations, job issue slips, cycle counts on high-use SKUs, returns tracked.

• Tools/downtime: Keep backups for high-failure items (the $200 spare often saves $1,000+ in lost billable time).

• Subcontractors: Signed rate sheets, COI on file, job-level PO, reconciliation before payment.

• System permissions: Least-privilege in CRM/accounting; approval thresholds; audit logs.

• Claims: Document with photos, book a reserve when incurred, track recoveries.

These prevent the “silent losses” that never show up as a single big error—just thinner margins.

8) Operating cadence that keeps everyone aligned

Daily (ops + finance touchpoints)

• All jobs closed out.

• Deposits/COD applied.

• Next-day materials staged.

Weekly (30–45 minutes)

• Cash and 2-week forecast.

• WIP review: jobs over budget; quotes aging; AR exceptions.

• Labor signals: revenue per crew hour, overtime %, unapplied time.

Month-end (60 minutes, same agenda every time)

• Cash & collections: cash balance, Operating Cash Flow vs. Net Income, DSO.

• P&L by service line: margins vs. targets; pricing or crew mix notes.

• Labor: direct labor % of revenue, OT %, unapplied time.

• Claims: rate, root causes, corrective actions.

• Variable costs: fuel/materials trends; supplier issues.

• Close with actions → owners → deadlines; update KPI dashboard.

Consistency beats complexity. Same rhythm, every month.

9) KPIs to track (and why they matter)

Profitability

• Gross margin—Service/repair: 55–65%

• Gross margin—Install/projects: 40–55%

• Warranty/claims: ≤0.5–1.0% of revenue

Labor & efficiency

• Direct labor (with burden) % of revenue

• Overtime % of labor

• Revenue per crew hour

• Unapplied time %

Cost control

• Materials % of revenue (watch shrink/mis-issues)

• Fuel % of revenue or cost per mile

• Subcontractor % on project jobs

Cash & collections

• Operating Cash Flow (should generally exceed Net Income)

• DSO

• AR > 30 days as % of AR

• Deposit coverage (deposits ÷ scheduled installs next 14 days)

Trend them. The absolute number matters less than the direction and the variance to your target.

10) ROI: move budget to what actually pays

Review channel ROI quarterly with real math: media spend plus internal time. Attribute revenue (simple first-touch is fine to start), compare $ in to $ out and payback time. Keep what compounds (e.g., SEO/maps), use paid to fill premium capacity or seasonality, and retire what drags.

11) A simple, concrete service-call P&L

• Revenue: 2.0 billable hours @ $165 = $330; materials $42; after-hours premium $85 → $457

• COGS: tech ($30 + $18 burden) × 2.0 = $96; materials $42; fuel/consumables burden $8 → $146

• Gross profit: $457 − $146 = $311 (68% GM)

Five of these a day per truck, and your monthly picture (and cash) changes fast—if daily closeouts and collections are tight.

12) Taxes and who does what

• Use a competent CPA for payroll filings, sales tax, and year-end returns.

• Consider a second set of eyes yearly, missed credits and mapping errors are common.

• Don’t under-report purely to “save taxes”; it weakens lending power when you need trucks, equipment, or a building.

Own internally: pricing model, KPI targets, daily closeout quality, month-end decisions.
Outsource: bookkeeping, payroll, sales tax filings, annual returns.
A fractional CFO can set up the financial model, dashboards, KPI thresholds, pricing guardrails, and cash forecasts—then run a tight monthly review with your team.

The takeaway

Accounting for plumbing businesses is the operating system for profit. Start with a daily break-even and true labor burden, map your financials to how you sell, close out jobs the same day, automate the data flow, enforce cash discipline, run a simple operating cadence, and track a small set of KPIs every month. Do that and it'll help you to make clear decisions, on pricing, staffing, capacity, and growth.

Schedule a free consultation to see how better accounting can transform your plumbing business.