Construction bookkeeping: the monthly checklist every contractor needs.

Most construction companies do not have a bookkeeping problem. They have a monthly discipline problem. Here is the exact monthly close checklist we run for contractor clients, what a healthy chart of accounts looks like, and the five signals that your books have outgrown do-it-yourself.

Why construction bookkeeping is different.

A retail store has one profit center. A contractor has one per job, each with its own budget, costs, billings, retainage, and timeline, all moving simultaneously. Standard bookkeeping tracks whether the company made money. Construction bookkeeping must also answer which jobs made money, and the gap between those two questions is where contractors lose margin without noticing.

Three structural differences drive everything: costs must be coded to jobs (and to cost codes within jobs), revenue must be measured against work performed rather than invoices sent (see our guide to the percentage of completion method), and cash moves on a different rhythm than earnings because of retainage and pay cycles.

The monthly close checklist for contractors.

Run this every month, in this order, ideally finished by the 10th of the following month:

1. Reconcile every bank and credit card account. Not just the operating account. Unreconciled accounts hide duplicate payments and missed job costs.
2. Post all job costs to jobs. Every material invoice, subcontractor bill, equipment charge, and labor hour coded to a job and cost code. Uncoded costs go to a suspense account that must be emptied before close.
3. Update cost-to-complete with project managers. Fifteen minutes per active job. This single habit keeps your WIP schedule honest.
4. Bill per the schedule of values, by the 25th. Progress billings that match owner payment cycles protect cash flow (see why profitable contractors run out of money).
5. Build or update the WIP schedule and tie it to the general ledger. Earned revenue per the WIP must equal revenue on the P&L. If it does not, one of them is wrong. Use our WIP guide and free template.
6. Split retainage into its own accounts. Retainage receivable is not regular AR; retainage payable to subs is not regular AP. Sureties read them separately.
7. Review AP aging against lien waivers. No subcontractor payment without a matching waiver. This is a bookkeeping control, not just a legal one.
8. Reconcile payroll, including burden. Labor burden (taxes, insurance, benefits) belongs in job costs. If prevailing wage or certified payroll applies, verify reports match the GL.
9. Review job profitability versus estimate. Original gross profit versus current projected gross profit, job by job. Investigate any fade before the surety asks about it.
10. Update the 13-week cash forecast. Built from the WIP and agings, not the P&L.

A contractor chart of accounts, in brief.

You do not need 400 accounts. You need the right structure: direct job costs separated into labor, materials, subcontractors, equipment, and other; indirect costs (small tools, fuel, shop, supervision) pooled for allocation; overhead kept strictly out of job costs; and balance sheet accounts for underbillings, overbillings, retainage receivable, and retainage payable. Every dollar of cost should answer two questions instantly: which job, and what kind.

5 signals your books have outgrown DIY.

• You find out whether a job made money after it closes, not while you can still fix it.
• Your WIP schedule is built once a year, by your tax preparer, for the tax return.
• A surety or bank asked for reviewed financial statements and your bookkeeper went quiet.
• Retainage lives inside regular AR and nobody knows the true collectible balance.
• You crossed roughly $1M in revenue and month-end close still takes more than two weeks, or does not happen at all.

None of these mean your bookkeeper failed. They mean the business grew into requirements that generic bookkeeping was never designed to meet. That is normally the moment contractors move to a construction CPA relationship, where the monthly close, WIP, and tax strategy run as one system instead of three.