How to Handle Customer Deposits in Water Restoration Accounting (Without Messing Up Your Revenue)
If you're collecting deposits before the work starts but counting them as income, your financials are lying to you.
At Kiwi Cash Flow, we see this mistake all the time when onboarding restoration companies: cash hits the bank and it’s booked as revenue—even though no work has been completed. The result? Inflated revenue, distorted profitability, and forecasts that fall apart by month-end.
Here’s why it matters—and how to fix it.
What’s the Real Problem with Deposits?
Customer deposits are not income—they’re a liability. You’re holding someone else’s money until you deliver the work.
When restoration companies record deposits as revenue too early, they get hit with problems like:
Overstated profitability — your P&L shows revenue with no expenses yet
Broken forecasts — revenue shows up in the wrong period
Cash flow confusion — you “made” money this month… until the materials and labor bills roll in next month
Tax issues — you pay tax on income you haven’t technically earned
In short, you're creating a financial picture that doesn’t reflect the real health of your business.
The Right Way to Handle Deposits
Here’s how we structure this at Kiwi Cash Flow for our clients:
When a Deposit Is Collected:
Debit: Bank
Credit: Unearned Revenue (a liability on your balance sheet)
When Work Is Completed or Invoiced:
Debit: Unearned Revenue
Credit: Revenue (now it hits your P&L)
This approach matches revenue to work performed—not just money received—giving you clearer financials, better forecasting, and a much more honest view of your cash position.
Why This Matters for CFO-Level Decisions
When we step in as your CFO, we’re not just organizing your books—we’re building a system that supports smart decisions.
Proper deposit handling:
Gives you more accurate margins by job and by month
Aligns revenue recognition with your budget and forecasts
Improves cash flow planning, especially when deposits are high but jobs are delayed
Strengthens financial reporting for lenders or investors
Prevents financial surprises during busy seasons
If your deposits are getting booked as income too early, it’s likely the rest of your forecasting isn’t reliable either.
You Need More Than a Bookkeeper
Most bookkeepers don’t know how to track Unearned Revenue. We do.
Kiwi Cash Flow gives you monthly reports, forecasts, and action items based on clean data. That includes tracking unearned revenue, WIP, and deferred income—so your financials actually reflect where your business stands.
📅 Ready to see what your numbers really say? Schedule a call and let’s take a look at your revenue timing together.
What Is WIP in Water Restoration—and Why It Can Make or Break Your Financials
In water restoration accounting, Work in Progress (WIP) is often misunderstood—and frequently ignored. But if your team is actively working jobs that aren’t yet invoiced, WIP can drastically skew your profitability and cash flow if not handled correctly.
Here’s what you need to know.
What Is WIP in Water Restoration?
Work in Progress (WIP) refers to revenue you've earned but haven’t yet billed. In the restoration industry, this happens when:
A mitigation job is underway but not yet completed
A reconstruction project is staged across multiple phases
Xactimate estimates are being finalized before billing
An adjuster hasn’t approved a scope, but the work is already performed
In accrual accounting, WIP captures that “in-between” stage—when expenses have hit your books, but the matching revenue hasn’t.
How WIP Impacts Your Financial Statements
Here’s how failing to track WIP correctly can distort your financials:
1. Profitability Looks Worse Than It Is
Let’s say you spent $20,000 on materials and labor this month, but the jobs aren’t billed yet. If you don’t book WIP revenue, your P&L shows a loss—even if the job will net you $40,000 next month.
2. Cash Flow Forecasting Becomes Unreliable
If you don’t know how much unbilled work is in the pipeline, it’s hard to predict incoming cash—especially with carriers delaying payment.
3. Job Costing Gets Disconnected from Actuals
If you only recognize revenue when an invoice goes out, your financials will not align with when the work was done. That makes job-level profitability reports unreliable.
How to Book WIP in Your Accounting System
If you're using accrual-based accounting (which you should be for accurate job costing), here’s a simple example of the journal entry:
When Work Is Performed (But Not Billed Yet):
Debit: WIP Asset (Balance Sheet)
Credit: Revenue (P&L)
When the Invoice Is Sent:
Debit: Accounts Receivable
Credit: WIP Asset
This keeps your books accurate by showing revenue when the work is done—not just when the invoice goes out.
Note: You’ll need strong job costing systems (like Xactimate and QuickBooks Projects) and periodic WIP schedules to calculate these entries accurately.
Why Restoration Businesses Need WIP Visibility
For water restoration contractors juggling dozens of open jobs, WIP is the difference between feeling broke and realizing you’re actually profitable—just not yet paid.
Tracking WIP lets you:
See true monthly profitability
Improve forecast accuracy
Catch scope creep and job delays early
Align labor and materials with revenue timing
Provide better financials to lenders or investors
Get Help Setting Up WIP the Right Way
Most bookkeepers don’t handle WIP correctly—especially in industries like restoration, where progress-based billing and insurance delays are the norm.
At Ledger Management, we specialize in water restoration financials. We can help you:
Track WIP accurately
Improve job costing
Clean up your P&L and balance sheet
Build forecasts you can actually trust
📅 Ready to stop guessing and start planning? Schedule a call today to get your financials aligned.
A Comprehensive Chart of Accounts for Water Restoration Businesses
Managing a water restoration business is no easy feat. From addressing emergency call-outs to overseeing complex restoration projects, the operational challenges are manifold. However, a foundational element that often gets overshadowed but is paramount to a water restoration company's financial success is maintaining a well-structured chart of accounts.
A chart of accounts is, essentially, a listing of all the accounts found in the general ledger, categorized for simplicity. It's the backbone of your accounting system. In this post, we'll delve deep into the unique components that a water restoration business should consider for its chart of accounts.
1. Income Accounts for Water Restoration Contractors:
Water Damage Services: Income derived from services related to water damage repair.
Mold Remediation: Income from mold removal and prevention services.
Fire Damage Restoration: Despite the primary focus being water, many restoration companies also address fire-related damages.
Equipment Rental: If you rent out specialized equipment like dehumidifiers or air movers to customers or other businesses.
2. Expense Accounts Specific to Water Restoration:
Labor Costs: Salaries, wages, and other compensation for your technicians and staff.
Material and Supplies: Expenses related to purchasing equipment and supplies such as fans, dehumidifiers, disinfectants, and safety gear.
Training and Certification: Many states and organizations require restoration specialists to undergo specific training and obtain certifications.
Vehicle Expenses: Costs related to company vehicles, including maintenance, fuel, and repairs.
Insurance Claims Processing: Expenses associated with processing insurance claims, which might include software or specialized personnel.
Marketing and Advertising: Spending on promoting your services, whether online, print, or other media.
3. Asset Accounts Tailored for the Industry:
Equipment: Value of the owned equipment, such as water extractors, air scrubbers, and moisture meters.
Properties and Facilities: If you own the property or storage facilities where you operate.
Accounts Receivable: Money that is owed to your business from customers or insurance companies.
Inventory: Any products you might have in stock, like cleaning agents or replacement parts.
4. Liability Accounts:
Accounts Payable: Money you owe to suppliers or other creditors.
Loans: If you've taken out business loans to fund expansion or equipment purchase.
Customer Deposits: Money received from customers in advance before completing a job.
Warranties: Liabilities associated with guarantees on your work.
5. Equity Accounts:
Owner’s Equity: This is the owner's claim to business assets. It can include initial investment and subsequent contributions.
Retained Earnings: Profits that the company retains for reinvestment rather than distributing as dividends.
Draw: Money taken out of the business for personal use.
6. Regularly Review and Update Your Chart of Accounts:
The financial needs and structure of a business can evolve over time. It's essential to periodically review your chart of accounts to ensure it reflects your current operations, making modifications as necessary. For instance, if you've expanded into new service areas like carpet cleaning or air duct services, you'll need to add corresponding income accounts.
7. Software Solutions for Modern Bookkeeping:
While a basic chart of accounts can be maintained manually or in spreadsheet software, utilizing dedicated accounting software can streamline the process. Tools like QuickBooks or Xero allow you to customize your chart of accounts, integrate with CRM systems, and offer real-time financial insights.
Conclusion:
A well-maintained and comprehensive chart of accounts is not just an accounting formality; it's the blueprint of your water restoration business's financial health. By accurately capturing every financial transaction, from every mold remediation job to every dehumidifier purchase, you pave the way for better financial decision-making and growth.
Kiwi Cash Flow understands the nuanced financial landscape of the water restoration industry. Whether you’re operating in residential flood damage repair, commercial water damage restoration, or any related field, we're equipped to support you. If your goal is to fortify cash flow with expert CFO services, we’re just a click away. Discover how Kiwi Cash Flow can enhance your financial clarity and success by visiting https://www.kiwicashflow.com. Let's partner to make your financial records as resilient as the properties you restore.
Water Restoration Financials: What Every Restoration Owner Needs to Know
When it comes to running a water damage restoration company, most owners focus on marketing, equipment, and staffing—but the businesses that grow profitably and sustainably are the ones who understand their financials.
If you don’t have a clear handle on your water restoration financials, you're flying blind. In this post, we’ll walk through the key financial metrics, reports, and systems that every restoration owner should track—so you can stop guessing and start making decisions based on real numbers.
What Do “Water Restoration Financials” Actually Include?
The term water restoration financials refers to the core financial data that reveals how your business is performing. That includes:
Profit & Loss (P&L) Statements
Job Costing Reports
Balance Sheets
Cash Flow Statements
Accounts Receivable Aging
Key Performance Indicators (KPIs)
These reports tell you whether your jobs are profitable, your overhead is under control, and your growth is financially sustainable.
1. Start with a Clean Chart of Accounts
Many restoration companies use generic bookkeeping setups. That’s a mistake. Your chart of accounts should be tailored to your industry.
Examples of categories specific to water restoration financials:
Mitigation Labor (COGS)
Reconstruction Labor (COGS)
Subcontractors
Drying Equipment Rental or Maintenance
Insurance Program Fees
Emergency Services Revenue
Pack-out and Contents Cleaning Revenue
When your books are structured correctly, you can see what’s driving profit—and what’s dragging it down.
2. Track Gross Profit by Job Type
Restoration isn’t one-size-fits-all. A water extraction job and a full rebuild don’t carry the same margins.
Track gross profit margins by job type:
Job TypeTypical Gross MarginWater Mitigation55–70%Mold Remediation50–65%Fire & Smoke Restoration45–60%Contents & Pack-outs35–50%Reconstruction20–35%
If your water damage jobs aren’t hitting at least 55% gross margin, it’s time to review your estimating process, labor costs, and billing timelines.
3. Understand the Cash Flow Cycle
Water restoration companies often face delayed cash flow, especially when insurance billing is involved.
To stay cash flow positive:
Monitor A/R aging and follow up weekly
Forecast incoming payments and upcoming expenses
Build cash reserves to cover payroll and materials during payout delays
A healthy restoration business knows its cash burn rate and how long it can operate without new payments coming in.
4. Use KPIs to Monitor Financial Health
Tracking restoration-specific KPIs monthly can help you catch red flags early:
Average Job Size
Labor % of Revenue
Gross Margin %
Overhead %
Net Profit %
Days Sales Outstanding (DSO)
Jobs per Technician
These metrics give you insight into efficiency, pricing, overhead drag, and team productivity.
5. Forecast, Don’t Just Look Back
Your P&L tells you where you’ve been—but a forecast tells you where you're headed. Use a 12-month forecast to:
Predict slow seasons and prepare early
Plan hiring and equipment purchases responsibly
Avoid cash flow gaps from job timing issues
Good water restoration financials don’t just report—they help you plan.
Final Thoughts
Understanding your water restoration financials isn’t optional—it’s the foundation of a strong business. Whether you're a solo operator or managing a large team, the companies that succeed long-term are the ones that build financial visibility into their operations.
Want better visibility into your restoration company’s financials?
We help restoration contractors structure their books, track the right KPIs, and make confident financial decisions.
👉 Schedule a financial clarity call with Kiwi Cash Flow
Thinking of Starting a Restoration Business? Here’s What You Need to Know—Financially
The restoration industry can be highly profitable—but only if your financial plan is as strong as your equipment. Whether you're looking to launch a water mitigation company or offer full-service restoration, it’s easy to underestimate the startup costs, cash flow pressures, and overhead risks involved.
Here’s a financial breakdown of what you should keep in mind before starting a restoration business—and how to position yourself for long-term success.
1. Startup Costs: Restoration Isn’t a Low-Cost Business
Even if you start small, restoration requires capital investment. You’ll need vehicles, drying equipment, software, training, and insurance before your first job ever hits the schedule.
Sample Restoration Startup Budget:
Category Estimated Cost
--------------------------------------------------------
Truck or Van $20,000 – $50,000
Air Movers & Dehumidifiers $10,000 – $30,000
Business & Liability Insurance $3,000 – $8,000 (annual)
Software (Xactimate, CRM, QBO) $200 – $500/month
Licensing & Certification $1,000 – $3,000
Branding & Website $1,500 – $4,000
Tools, PPE, and Supplies $2,000 – $5,000
--------------------------------------------------------
Estimated Total Startup Range $37,700 – $100,500+
Pro tip: Don’t spend everything upfront. Focus on acquiring what you need to profitably complete the first 3–5 jobs. Reinvest as cash flow allows.
2. Cash Flow Timing: Restoration Work Pays Late
Most jobs, especially those involving insurance, pay 30–90 days after work is completed. That means you’ll be covering payroll, equipment usage, and materials long before any money hits your account.
Financial risks include:
Waiting for adjuster approvals
Delayed customer payments
Financing job costs out-of-pocket
Solutions:
Open a line of credit before you need it
Forecast cash needs 30–60 days ahead
Monitor accounts receivable weekly
Require deposits for self-pay jobs
Without cash flow forecasting, even profitable businesses run out of money.
3. Job Costing: Your P&L Doesn’t Tell the Whole Story
Many startup owners focus on total revenue—but fail to calculate actual profit per job. Estimating errors, labor inefficiency, and missed line items can turn a $7,000 job into a $400 profit—or worse.
Track these job costs:
Labor (including taxes, insurance, and benefits)
Materials and consumables
Equipment use and maintenance
Subcontractors
Project management time
Allocated overhead
Use job costing to find out which services and job types are actually profitable—and which ones are dragging you down.
4. Know Your Overhead Before You Hire or Expand
Adding trucks, staff, or office space without understanding your break-even point is a common mistake. Restoration business overhead includes:
Admin wages
Office rent and utilities
Vehicle payments and fuel
Software and insurance
Marketing and sales costs
Financial tip:
Keep overhead below 25% of revenue if possible. Don’t hire for growth—hire to maintain profit after you’ve confirmed demand.
5. Budget and Forecast from the Start
A restoration business is not something you can run off a bank balance. You need:
A monthly budget with categories for COGS, labor, overhead, and owner draws
A 12-month forecast that anticipates cash gaps and seasonal slowdowns
A method for comparing budget vs actuals to stay on track
Use tools like QuickBooks Online + a financial dashboard (or a service like Kiwi Cash Flow) to visualize your numbers and make informed decisions.
6. Separate Owner Pay from Profit
Taking draws or swiping the business card for personal expenses without a clear plan leads to a blurred financial picture.
Establish:
Guaranteed payments or payroll for yourself
A separate account for profit distributions
A rule for retained earnings so you’re not cash-strapped every time tax season hits
Final Thoughts
Starting a restoration company can absolutely be a profitable, scalable venture—but only with a disciplined financial plan. Before you chase leads or buy more equipment, make sure you understand how money moves in and out of the business. Restoration is high-revenue—but only becomes high-profit with strong financial controls in place.
Ready to build your restoration startup on solid financial ground?
We help new restoration owners create budgets, set up job costing, and stay cash flow positive.
👉 Schedule a planning call with Kiwi Cash Flow
Thinking of Starting a Restoration Business?
Here Are Some Things to Keep in Mind
If you’re thinking about starting a restoration business, you’re entering a high-demand industry with real potential for profit—if you plan it right. Water, fire, and mold damage aren't going away anytime soon, but getting started requires more than a few dehumidifiers and a truck.
Whether you’re coming from construction, property management, or just looking to be your own boss, here are key things to keep in mind as you launch your restoration company.
1. Restoration Is a 24/7 Business
Unlike remodeling or other home services, restoration work is emergency-driven. Homeowners and property managers expect immediate response, day or night.
What to consider:
Will you be available after hours or hire techs to rotate on-call duty?
How will you handle emergency calls when you’re on another job?
Can you scale your crew to cover surge events like storms or floods?
Being "on call" is part of the business model—build your systems around it from day one.
2. Licensing, Insurance, and Certifications Matter
Depending on your state and service type (e.g. mold remediation or asbestos abatement), you may need special licensing.
Essentials to have:
General contractor license (in most states)
General liability and workers comp insurance
IICRC certifications for water, fire, and mold restoration
Business license and registration
Check state-specific rules before offering services, especially for mold or biohazard cleanup, which may carry extra regulations.
3. Startup Costs Add Up Fast
Starting a water restoration business isn't cheap—but you don’t have to buy everything at once. Here’s a general idea of what to expect:
CategoryEstimated CostTruck or van$20,000–$50,000Drying equipment (fans, dehus)$10,000–$30,000Insurance and bonding$3,000–$8,000 annuallySoftware (CRM, estimating)$200–$500/monthIICRC training & certs$1,000–$3,000 per personMarketing setup$2,000–$5,000
You don’t need to start big—but you do need a plan to grow smart.
4. You Need a Strong Estimating and Billing Process
Xactimate is the industry standard for insurance work—but it’s not plug-and-play. Learning how to build accurate estimates, justify supplements, and document properly is essential if you want to get paid in full.
Many new restoration owners lose money simply because their estimates are missing key line items—or invoices aren’t submitted properly.
5. Cash Flow Will Make or Break You
Restoration jobs are often paid after the fact—once the adjuster signs off or the customer finishes insurance claims. That delay can put pressure on your bank account.
Plan ahead by:
Tracking accounts receivable weekly
Keeping a business credit line for float
Building a budget and forecast (not just a P&L)
Restoration businesses don’t fail because there’s no work—they fail because they run out of cash while waiting to get paid.
6. Your Reputation Is Everything
Restoration is a trust-based business. You're walking into people’s homes at a stressful time. Your online reviews, personal referrals, and communication will either make or break your growth.
Get 5-star reviews early and often
Stay in contact with past clients—they refer more than you think
Answer the phone. Always.
Final Thoughts
Starting a restoration business is a serious opportunity—but only if you treat it like one. With a strong plan, smart financial controls, and a commitment to quality service, you can build a company that thrives in any market.
Need help planning the financial side of your restoration startup?
We’ll help you budget, forecast, and track your numbers the right way from day one.
👉 Schedule a call with Kiwi Cash Flow
Proven Strategies to Grow Your Restoration Business
The restoration industry is fast-paced, competitive, and full of opportunity—but growing your restoration business takes more than just more jobs. If you’re stuck at the same revenue level year after year, or struggling to scale without sacrificing profit, it’s time to implement proven growth strategies that go beyond simply working harder.
In this article, we’ll break down what actually works when it comes to growing a successful, profitable restoration company—from marketing and estimating to staffing and financial strategy.
1. Nail Your Job Costing Before You Scale
Before you chase more work, make sure your current jobs are actually profitable.
Track job-level gross profit and net margin
Use a labor burden calculator to price work accurately
Analyze your top 10 jobs last quarter—how many made the profit you expected?
Growth without profit is just more work. Know your numbers before you expand.
2. Diversify Your Referral Sources
Relying too heavily on one TPA (Third-Party Administrator) or adjuster relationship can stall growth or put your business at risk. Instead:
Build relationships with plumbers, property managers, and realtors
Offer lunch-and-learns to local agents or commercial accounts
Create a follow-up system for happy customers to refer friends
Restoration business growth happens faster when you’re not dependent on a single lead source.
3. Invest in Local SEO and Google Reviews
If your business can’t be found online, you’re missing major opportunities.
Here's what works:
Optimize your Google Business Profile with photos, services, and hours
Collect Google reviews from satisfied customers after every job
Target local keywords like “emergency water damage [your city]” on your website
Even a handful of new organic leads each month can fuel sustainable growth.
4. Standardize Estimating and Invoicing
As you grow, inconsistency in estimating and billing can kill cash flow.
Use Xactimate templates to streamline estimates
Create internal standards for O&P usage, documentation, and supplement requests
Invoice within 24–48 hours of job completion to speed up collections
Fast, consistent estimating and billing helps you grow without growing A/R headaches.
5. Build a Scalable Team Structure
Growth will outpace you quickly if you’re wearing all the hats. Focus on:
Defining roles: estimator, project manager, admin, techs
Creating SOPs (Standard Operating Procedures) for core workflows
Hiring based on process fit, not just experience
You can’t grow your restoration company by yourself—build a team that runs with or without you.
6. Use KPIs to Drive Smarter Decisions
Growth needs to be measured. Start tracking:
Average job size
Labor %
Gross profit %
Overhead %
Net profit
Jobs per tech
These KPIs show where your restoration business is thriving—and where you’re losing money as you grow.
Final Thoughts
There’s no single silver bullet for scaling a restoration business—but the right mix of job profitability, marketing, process control, and data will get you there. Growth doesn’t just mean more jobs—it means more profit, more predictability, and more freedom as an owner.
Want a customized growth forecast for your restoration business?
We’ll help you analyze your numbers and create a plan based on what’s already working.
👉 Schedule your call with Kiwi Cash Flow
Using Xactimate Profitably: Tips for Restoration Business Owners
If you’re in the restoration industry, chances are you’re already using Xactimate—or you’re required to. But while most restoration contractors rely on it to write estimates, few are using Xactimate strategically to protect their profit margins.
In this guide, we’ll show you how to use Xactimate for contractors in a way that improves accuracy, justifies pricing, and helps you stay profitable. Whether you’re dealing with insurance carriers, supplements, or direct-to-consumer jobs, these Xactimate tips will help you stop leaving money on the table.
Why Restoration Estimating Isn’t Just About Line Items
Xactimate is more than a pricing tool—it’s a negotiation tool, a documentation tool, and a business survival tool. The problem? Many estimators rush through it or rely too heavily on default settings.
Here’s what that costs you:
Missed line items = missed revenue
Incorrect quantities = underbilling
No justification = denied supplements
No O&P = eroded margins
To be profitable, restoration estimating needs to reflect the true scope and cost of the job.
Xactimate Tips for Higher Profit and Faster Approvals
1. Start with Solid Job Documentation
Your Xactimate estimate is only as strong as your documentation.
Take clear, time-stamped photos
Sketch detailed diagrams with moisture readings
Note cause of loss and affected areas in real time
Create daily job notes that support line items and labor time
Insurance adjusters aren’t on site—you have to paint the picture.
2. Customize Pricing When Needed
Xactimate’s default pricing database may not reflect current material or labor rates in your region.
Regularly update your local price lists
Manually adjust line item pricing when actual costs are higher
Justify all pricing changes with receipts or market comparisons
This ensures you don’t undercharge on high-inflation items like drywall, insulation, or skilled trades.
3. Don’t Skip O&P (Overhead and Profit)
Many contractors are afraid to add O&P in fear of a claim delay. But if the job involves multiple trades, you’re entitled to it.
Use the 20/10 split (20% overhead, 10% profit) when justified
Reference carrier guidelines when possible
Document multi-trade scope in the estimate narrative
Skipping O&P is one of the fastest ways to lose 30% of your margin on complex jobs.
4. Include All Legitimate Line Items
Missing items add up fast. Be sure to include:
Protective coverings
Travel time or mileage
Equipment set-up/take-down
Containment barriers
Debris removal, haul-off fees, and cleaning supplies
Even if a line item seems minor, if it costs you money or time, it should be in the estimate.
5. Track Estimate vs Actual Costs
Xactimate gives you the estimate—job costing tells you whether it was accurate.
Compare each job’s actual labor, material, and subcontractor costs to the Xactimate total. This will help you:
Refine future estimates
Spot trends in underpricing
Improve team training
Why Profitability in Xactimate Depends on Discipline
Using Xactimate profitably isn’t about inflating numbers—it’s about using the software as it was designed: to reflect the full, fair, and documented cost of restoration work. With the right processes in place, you can improve cash flow, reduce supplement disputes, and grow your bottom line.
Final Thoughts
Xactimate can either be a tool that erodes your margins—or one that protects them. It depends on how you use it. These Xactimate tips for restoration business owners are just the start of building estimates that hold up under scrutiny and support a profitable business.
Want to improve your restoration estimating process?
We help contractors use Xactimate data alongside financial reports to track real job profitability.
👉 Schedule a call with Kiwi Cash Flow
Estimating vs Reality: Why You’re Losing Money on Every Restoration Job
Are your jobs busy, your trucks full, and your calendar booked—but your profits still aren’t there?
You're not alone. Many restoration contractors are losing money one job at a time—and the culprit is often hidden in plain sight: estimating errors. Whether it’s a missed line item in Xactimate or underestimating labor hours, the difference between what you think a job will cost and what it actually costs is often wider than you realize.
Let’s break down why so many restoration businesses lose money—even when the estimates look good—and what to do about it.
The Hidden Problem: Estimating Errors in Restoration
Restoration work is fast-paced and unpredictable. When the estimate doesn’t fully account for reality, profit disappears quickly. Common restoration estimating errors include:
Missing line items in Xactimate
Using generic pricing that doesn’t match actual labor or material costs
Underestimating time and labor for complex drying or demo
Not accounting for overhead or labor burden
Forgetting change orders or failing to track scope creep
Xactimate is a powerful tool—but only if it’s used precisely. Even small gaps can cost thousands over time.
Xactimate Accuracy: The Estimate Is Only Step One
Restoration owners often assume that if the estimate is “approved,” the job must be profitable. But Xactimate accuracy depends on:
Selecting the right line items (not just “close enough”)
Adjusting pricing to match your region and current material/labor rates
Documenting everything to support scope and supplements
Including overhead & profit (O&P) appropriately
If your team rushes through estimating—or you rely too heavily on program pricing—you’re probably undercharging.
The Real Test: Job Costing
Here’s the fix: Compare your estimate to your actual costs—every single job.
Job costing is how you find out whether a job actually made money. It requires tracking:
Revenue billed and collected
Labor hours (including payroll taxes & benefits)
Materials and subcontractors
Equipment usage and maintenance
Overhead allocations (rent, fuel, admin)
When you compare actual job costs to the original Xactimate estimate, the truth about your profitability becomes clear.
How to Close the Gap Between Estimating and Reality
To improve accuracy and protect your bottom line:
Implement Job Costing Reports: Use software or spreadsheets to track every job’s revenue vs actual expenses.
Audit Past Jobs: Look back at 3–5 recent projects. How did actual costs compare to the estimate?
Train Your Estimators: Focus on line item accuracy, correct O&P usage, and supplement documentation.
Use a Labor Burden Calculator: Don’t estimate labor without accounting for taxes, workers comp, and PTO.
Update Pricing Frequently: Regional and seasonal shifts in labor and materials should be reflected in your pricing.
What It Looks Like in Practice
Imagine you estimated a water mitigation job at $5000. On paper, it looks great. But after job costing:
$1,700 in labor (including taxes and benefits)
$400 in materials and consumables
$300 in equipment maintenance and fuel
$2000 in overhead allocation
Your actual profit? Only $500, not including delays, call-backs, or unpaid line items. Multiply that by 10–20 jobs a month, and the margin erosion adds up fast.
Final Thoughts
If you’re consistently asking, “Where did the money go?”—you need to stop trusting estimates alone and start tracking job costing restoration data. Estimating is the first draft of profitability. Reality is the final version—and it’s often very different.
Want to see how your estimates stack up against reality?
We help restoration contractors implement job costing systems and identify profit leaks.
👉 Book a call with Kiwi Cash Flow
Restoration Overhead: How Much Is Too Much?
Overhead can quietly eat away at your profits—especially in the restoration industry. Trucks, tools, office rent, software subscriptions, insurance… it adds up fast. But how much overhead is too much for a restoration business? And what can you do if it’s already too high?
In this article, we break down typical restoration overhead costs, what percentage of your revenue it should represent, and how to start trimming the fat without cutting essential operations.
What Counts as Overhead in a Restoration Business?
Overhead includes all the indirect costs of running your business—expenses that don’t directly tie to a single job but are necessary to keep your company operating. Examples include:
Office rent and utilities
Admin and management salaries
Marketing and advertising
Insurance (general liability, auto, etc.)
Software (CRM, estimating, accounting)
Vehicle leases and fuel not billed to a job
Equipment maintenance
Training, certifications, and licensing
These are not COGS (Cost of Goods Sold) like labor and materials—these are ongoing expenses that happen whether or not you're working a job.
What’s a Healthy Overhead Percentage in Restoration?
Every business is different, and it greatly depends on how you are tracking your labor, but here’s a general benchmark:
20–29% of Revenue: Lean operation with strong cost controls
30–39% of Revenue: Watch this carefully—profit may be squeezed
40%+ Overhead: Too high for most restoration businesses, especially if net profits are below 20%
If you’re grossing $100,000/month and spending $30,000+ in overhead before you even pay your techs or buy materials, your net profit margins are likely at risk.
Why Overhead Bloats in Restoration Companies
Restoration business owners often ramp up overhead as revenue grows, expecting future jobs to “catch up.” But without strict budget planning, costs can spiral.
Common issues include:
Hiring admin staff too early or too fast
Buying vehicles or equipment on credit without tracking ROI
Paying for unused software or overlapping subscriptions
Marketing spending without tracking conversion rates
Carrying unproductive employees due to weak performance tracking
Restoration Budget Planning: Keep Overhead in Check
To manage restoration overhead costs, you need to budget intentionally—not just react to expenses as they hit the bank account.
Here’s how to start:
Create an Overhead Budget: List all fixed costs and track them against monthly revenue
Use a Percentage-Based Rule of Thumb: Set a target (e.g., keep overhead below 20% of revenue)
Review Contracts & Subscriptions Quarterly: Eliminate tools that aren’t used
Outsource Where It Makes Sense: Use fractional services for bookkeeping, marketing, etc.
Watch Payroll Closely: Ensure admin and management wages stay proportional to revenue
What If My Overhead Is Already Too High?
If you’re already at or above 30% overhead:
Start with your P&L: Break out each overhead category and rank them by dollars spent
Calculate ROI: Is each cost helping you earn more—or just adding comfort?
Cut or renegotiate fixed costs (leases, insurance, software) where possible
Hold off on new hires unless revenue supports the added burden
Even a 5% drop in overhead can mean tens of thousands in profit over a year.
Final Thoughts
Overhead isn’t bad—it’s essential. But uncontrolled overhead kills profit in restoration companies that are otherwise doing solid work. Regular reviews, strategic budget planning, and job-cost awareness are the tools that will keep your business healthy and profitable.
Want help identifying where your overhead is leaking?
We’ll help you break down your financials and create a sustainable restoration budget.
👉 Schedule a call with Kiwi Cash Flow
Top 5 Financial Mistakes Restoration Owners Make (And How to Avoid Them)
Running a water restoration business requires more than trucks, techs, and tools—you need a solid financial strategy to stay profitable. Unfortunately, many restoration contractors unknowingly make decisions that drain cash flow, inflate overhead, or leave them wondering, “Why am I not making more money?”
In this article, we’ll uncover the top 5 financial mistakes restoration business owners make—and how to avoid them with smart financial planning.
1. Not Knowing Job-Level Profitability
Many restoration owners track revenue but not profit by job. That’s a mistake.
Why It Matters:
You might be generating $100K/month in revenue but losing money on half your jobs. Without accurate job costing, you can’t fix what’s broken.
How to Avoid It:
Use job costing tools or set up tracking inside your accounting system
Calculate gross profit per job: revenue minus materials, labor, and subcontractors
Review your average job size and gross margin monthly
Financial planning for restoration companies starts at the job level—not the bank balance.
2. Misclassifying Labor and Overhead Costs
Throwing all labor into a single account blurs the line between direct job costs and business overhead. This leads to inflated profit margins on paper—and confusion about real profitability.
How to Avoid It:
Separate field labor (COGS) from admin labor (overhead) in your Chart of Accounts
Allocate burdened labor properly: include taxes, insurance, and benefits
Regularly update labor burden rates to reflect wage increases and insurance costs
3. Letting A/R Get Out of Control
Restoration businesses are notorious for slow collections. Whether it’s waiting on adjusters or losing track of invoices, letting receivables pile up kills cash flow fast.
How to Avoid It:
Monitor A/R aging reports weekly
Set follow-up reminders for adjuster approvals and customer payments
Offer easy payment options and escalate overdue accounts quickly
A strong A/R process is one of the most overlooked solutions to restoration cash flow problems.
4. Ignoring the Budget Until Tax Time
Too many restoration companies only look at their numbers at year-end—and by then, it’s too late to change anything. If you don’t plan your spending, the business will do it for you.
How to Avoid It:
Create an annual budget and monthly forecast
Compare budget vs actuals regularly to catch issues early
Use forecasting to plan for seasonality, staffing, and equipment upgrades
5. Failing to Separate Owner Draws from Profit
Taking money out of the business doesn’t mean you’re profitable. Many owners confuse cash flow with net income, leading to shortfalls when tax season hits or emergencies arise.
How to Avoid It:
Set your pay through guaranteed payments or payroll
Track owner draws in a separate equity account
Work with a financial pro to understand what the business can really afford
Final Thoughts
Even the best-run restoration companies can fall into financial traps—but each mistake is fixable with better visibility and planning. By identifying these restoration business mistakes early, you can shift from reactive to strategic—and finally see the profits match the workload.
Ready to fix the financial blind spots in your business?
We help restoration contractors clean up their books, track profit by job, and plan for growth.
👉 Book a financial review with Kiwi Cash Flow
How Much Do Restoration Companies Really Make?
A Breakdown by Job Type
If you’ve ever asked, “How profitable is a restoration company?”—you’re not alone. Whether you’re already in the industry or considering launching a water damage restoration business, understanding what different restoration job types actually bring in is critical to forecasting revenue and long-term success.
The truth is: not all jobs are created equal. Some types of work come with high margins and quick payouts. Others tie up your crew for weeks and deliver slimmer profits. In this post, we’ll break down how much restoration companies really make, job by job.
Average Income for a Restoration Business
Restoration company profits can vary based on size, service mix, and geography, but here's a general guide:
Solo operator or small team: $250K–$1M in annual revenue
Mid-sized company (5–10 techs): $1M–$5M/year
Larger firms (10+ techs & admin): $5M–$15M+/year
But topline revenue doesn’t tell the whole story. Net profit margins typically range from 10–20%, depending on job efficiency, overhead, and how well the company prices and manages each service.
Restoration Job Types and Their Profitability
Here’s a breakdown of common job types and how they contribute to restoration business income:
1. Emergency Water Mitigation
Typical Gross Profit: 55–70%
Payout Time: 15–60 days
Pros: Fast jobs, quick cash flow, program work availability
Cons: Night/weekend hours, heavy competition, billing caps with some carriers
2. Structural Drying & Mold Remediation
Typical Gross Profit: 50–65%
Payout Time: 30–90 days
Pros: Higher per-job revenue, opportunity for markup on equipment and materials
Cons: Licensing requirements in some states, regulatory documentation
3. Fire and Smoke Restoration
Typical Gross Profit: 45–60%
Payout Time: 30–120 days
Pros: Larger ticket sizes
Cons: Longer job duration, more complex project management, slower collections
4. Pack-Outs and Contents Cleaning
Typical Gross Profit: 35–50%
Payout Time: 60–120+ days
Pros: Adds value to fire or water jobs
Cons: High labor, storage logistics, easily underbid
5. Rebuild/Construction Services
Typical Gross Profit: 20–35%
Payout Time: 60–180 days
Pros: Big revenue driver, extends customer relationship
Cons: Low margin, scheduling delays, permits and inspections slow down cash flow
Pro tip: Some of the highest revenue jobs have the lowest margins. Track profitability by job type, not just total sales.
What Impacts Restoration Company Profits?
Several key factors influence how much a restoration company can make:
Labor efficiency and cost control
Job mix (mitigation-heavy vs. rebuild-heavy)
Use of software like Xactimate for estimates
Timely collections and low A/R aging
Overhead control: trucks, equipment, marketing, admin costs
How to Maximize Your Restoration Business Income
Want to grow your revenue and profit? Here are 3 key strategies:
Focus on Mitigation-Heavy Jobs
These are quicker to complete and usually offer better margins than reconstruction.Track KPIs Monthly
Keep tabs on labor %, gross margin, overhead %, and average job size to spot trends early.Benchmark Against Industry Standards
Don’t guess—compare your numbers to what top-performing restoration companies are doing.
Final Thoughts
Restoration companies can absolutely be profitable—but only if you understand what types of work drive income and how to manage costs job by job. If your revenue looks healthy but your bank account doesn’t, it’s time to start digging deeper into the numbers.
Need help analyzing your profit by job type?
We can help you break it down and rebuild your pricing strategy.
👉 Schedule a review with Kiwi Cash Flow
Water Restoration Profit Margins: What’s Normal and What’s Not?
If you’re running a water restoration company, knowing your profit margin isn’t just a nice-to-have—it’s the foundation for long-term sustainability. Yet many restoration contractors don’t know whether their numbers are normal, underperforming, or top-tier. So what are typical water restoration profit margins—and how do you know if your business is on track?
In this article, we break down average profit margins in the restoration industry, how to benchmark your performance, and what to do if your margins are lower than they should be.
What’s a “Healthy” Profit Margin for a Water Restoration Business?
Typical net profit margins in the restoration industry range from 10% to 20%, depending on company size, job mix (emergency services vs rebuild), overhead structure, and efficiency. Here’s a rough benchmark:
Under 10% Net Profit: Common, but usually a sign of trouble—this may mean your labor, materials, or overhead are eating too much of your revenue.
10–15% Net Profit: Average for many established water damage restoration companies.
15–20%+ Net Profit: High-performing businesses that have tight job costing, strong estimating practices, and disciplined financial controls.
Important: Many restoration companies that look “busy” are actually running on razor-thin margins. If you're bringing in $100K/month but only keeping $5K, it's time to investigate where the profit is leaking.
Gross Margin vs Net Profit: Know the Difference
Gross Margin = Revenue – COGS (Cost of Goods Sold)
This tells you how much is left after materials and subcontractor costs.Net Profit Margin = What’s left after everything (COGS + Labor + Overhead + Admin) is paid.
For water restoration:
Gross Margins typically fall between 50–65%, depending on business structure
Net Margins usually land between 10–20%
If your gross margin is strong but your net is low, the problem is likely in overhead - not in your pricing.
What Affects Water Restoration Profit Margins?
Understanding where margins get squeezed can help you fix the problem fast. Common margin killers include:
Underbidding or inaccurate Xactimate estimates
Overreliance on program work with capped pricing
High labor inefficiencies or lack of job costing
Untracked material waste or subcontractor markup issues
Too much overhead (e.g. trucks, rent, unused software)
Delayed collections affecting cash flow and forcing discounts
How to Improve Profit Margins in Restoration
Improving profit margin doesn’t mean cutting corners. It means operating smarter. Here’s how to start:
Track Gross Margin by Job: Know exactly how much each job makes before overhead.
Use a Labor Burden Calculator: Make sure you’re pricing labor profitably.
Review Your Chart of Accounts: Are your overhead expenses too high for your revenue?
Analyze COGS Trends Monthly: Don’t wait until year-end to spot red flags.
Benchmark Against Industry Averages: Compare your margins to other water restoration contractors.
Need help figuring out where your profits are going? Our Kiwi Cash Flow reports make it easy to see what’s working—and what’s not—in your financials.
Final Thoughts
Water restoration profit margins aren’t just about billing more - they’re about controlling costs, forecasting accurately, and reviewing your financials monthly. Whether you're at 8% or 18%, your margins should tell a story, and you should know how to read it.
Want to know if your margins are normal?
Schedule a call with us to review your numbers:
👉 Book a time on our calendar
The Ultimate Chart of Accounts for Water Restoration Businesses
We tailor this list for each client specifically, but if you need a starting point, this list includes Balance Sheet accounts (Assets, Liabilities, Equity), Income, COGS, and Expenses, tailored for restoration industry needs. Use subaccounts where appropriate to maintain clarity without cluttering your reports.
💰 ASSETS
Bank Accounts
1000 - Checking Account
1001 - Savings Account
1005 - Petty Cash
Accounts Receivable
1100 - Accounts Receivable
Other Current Assets
1200 - Undeposited Funds
1210 - Prepaid Expenses
1220 - Employee Advances
1230 - Inventory (if tracked)
Fixed Assets
1500 - Vehicles
1510 - Equipment
1520 - Accumulated Depreciation - Vehicles
1530 - Accumulated Depreciation - Equipment
Other Assets
1600 - Security Deposits
1610 - Long-Term Investments (if applicable)
📉 LIABILITIES
Current Liabilities
2000 - Accounts Payable
2010 - Credit Card Payable
2020 - Payroll Liabilities
2030 - Sales Tax Payable
2040 - Line of Credit
Long-Term Liabilities
2100 - Vehicle Loans
2110 - Equipment Loans
2120 - SBA / EIDL / Other Long-Term Loans
📊 EQUITY
3000 - Owner's Equity
3100 - Owner Contributions
3200 - Owner Distributions / Draws
3300 - Retained Earnings
3400 - Net Income
📈 INCOME ACCOUNTS
4000 - Water Mitigation Revenue
4010 - Mold Remediation Revenue
4020 - Fire or Smoke Cleanup Revenue
4030 - Contents Cleaning Revenue
4040 - Rebuild / Reconstruction Revenue
4050 - Consulting / Subcontracted Labor Revenue
📦 COST OF GOODS SOLD (COGS)
5000 - Subcontractor Payments
5010 - Materials and Supplies - Job Specific
5020 - Equipment Rental - Jobs
5030 - Dump Fees / Disposal
5040 - Job-Related Fuel or Mileage
5050 - Consumables
5060 - Equipment Maintenance - Job Related
5070 - Third-Party Testing (asbestos, mold, etc.)
Labor (COGS - Direct Field Labor)
5100 - Field Wages
5110 - Field Payroll Taxes
5120 - Workers’ Comp - Field Staff
5130 - Benefits / PTO - Field Staff
🧾 OPERATING EXPENSES (OVERHEAD)
Administrative & Office
6000 - Office Wages
6010 - Admin Payroll Taxes
6020 - Workers’ Comp - Office/Admin
6030 - Office Supplies
6040 - Software Subscriptions
6050 - Marketing & Advertising
6060 - Meals & Client Entertainment
Facilities & Equipment
6100 - Rent
6110 - Utilities
6120 - Office Internet & Phones
6130 - Equipment Repairs & Maintenance
6140 - General Liability Insurance
6150 - Auto Insurance
6160 - Equipment Depreciation
Vehicle Expenses
6200 - Fuel
6210 - Auto Repairs & Maintenance
6220 - Vehicle Registration
Professional & Financial
6300 - Bank & Merchant Fees
6310 - Interest - Credit Cards
6320 - Interest - Loans
6330 - Accounting / CPA Services
6340 - Legal Fees
6350 - Licensing & Certifications
📎 OTHER INCOME & OTHER EXPENSES
Other Income
7000 - Miscellaneous Income
7010 - Credit Card Rewards / Rebates
Other Expenses
8000 - Owner Health Insurance (if not through payroll)
8010 - Owner Draws (non-wage)
8020 - Non-Operating Expenses
✅ Tips for Setup & Use
Keep job costs in COGS, not overhead, to get clean gross profit data.
Separate field labor from office/admin wages so job costing is clear.
Use Projects or Classes in your accounting software (e.g., QuickBooks Online) to track profitability per job.
Regularly reconcile bank, credit card, and loan accounts to keep the Balance Sheet accurate.
Need Help Implementing This?
At Kiwi Cash Flow, we help restoration businesses set up accurate, customized financial systems so you can track profit, cash flow, and job performance from day one.
👉 Schedule a call here to build a bookkeeping system that supports real growth.
Why Xactimate Alone Isn’t Enough to Manage Your Water Restoration Financials
Estimating software is essential—but it’s not a complete financial system.
If you run a water restoration business, you’re likely using Xactimate. It’s the go-to tool for writing estimates that insurance carriers recognize and approve. And it’s a vital part of the job. But many restoration contractors make the mistake of assuming that because a job is written and invoiced in Xactimate, the financial side is covered.
In reality, Xactimate is just one part of your financial toolkit. Here’s what it does well—and where you need to supplement it with better systems and insights.
1. Xactimate Helps You Get Paid—but Doesn’t Show Profitability
Xactimate outlines what you’re allowed to bill based on standard pricing. It’s designed to ensure consistency and acceptance across carriers.
What’s missing: It doesn’t calculate your actual cost to complete the job. That includes burdened labor, equipment wear, administrative overhead, and any non-billable time.
Why it matters: You can complete a job with a $5,000 Xactimate scope and still only net $500 if your internal costs aren’t tracked.
2. It’s a Billing Tool, Not a Job Costing System
Xactimate scopes don’t reflect actual expenses. It won’t tell you if you used more labor than estimated, rented extra equipment, or paid a subcontractor to help finish the job.
What to do: Pair your scopes with internal job costing—either through software or a custom spreadsheet. That’s the only way to know if each job is actually profitable.
3. It Doesn’t Track Cash Flow Timing
A completed Xactimate estimate doesn’t mean the cash is in your account. Restoration contractors often face 30- to 90-day delays in payment, especially with insurance claims.
Key takeaway: Use your accounting system—not Xactimate—to track when payments are received and to forecast available cash for payroll, equipment, and overhead.
4. Supplements and Changes Require a Separate Process
Xactimate isn’t dynamic once a scope is submitted. If more damage is discovered or additional work is required, it needs to be documented, estimated again, and often negotiated.
Why this matters: If supplements aren’t tracked closely, jobs can end up underbilled—hurting your margin.
5. It Doesn’t Replace Monthly Financial Reviews
Xactimate won’t tell you:
If your labor percentage is trending too high
If your overhead is exceeding benchmarks
If you’re meeting your profit goals each month
That’s where financial reporting and KPI tracking come in.
Xactimate Is a Powerful Tool—But It’s Not Your Financial System
It’s essential for working with insurance companies. But to manage your restoration business, you need job costing, cash flow forecasting, overhead tracking, and profit analysis—none of which Xactimate provides.
Need Help Bridging the Gap?
At Kiwi Cash Flow, we help restoration contractors build a financial system around their Xactimate process. We track the metrics that matter—so you know what’s profitable, what’s not, and what to adjust.
👉 Schedule a call here and get financial clarity alongside your scopes.
Water Restoration Financials: What Every Owner Needs to Track
Because staying busy isn't the same as being profitable.
In the water restoration industry, jobs come fast, costs add up quickly, and cash flow can get tight before you even realize there’s a problem. If you're not regularly reviewing your financials, you're running your business blind—and that can cost you thousands each month.
Let’s walk through what you need to know about managing your water restoration financials, and how to stay in control of your company’s performance.
1. Understand the Flow of Money In and Out
Water restoration financials are unique:
You often do the work first
Invoice later after completion
And wait 30–90 days for payment
This lag creates a cash flow squeeze if you don’t plan for it.
Key report to review: Cash Flow Statement
Tip: Watch “Accounts Receivable” trends—especially overdue invoices from insurance jobs.
2. Track Job-Level Profitability
You should know exactly how much profit you made (or lost) on each job.
Materials
Subcontractors
Equipment usage
Labor (including burden: taxes, PTO, insurance)
If these costs aren’t tied to each job, your P&L won’t show the full story.
Key report to review: Job Costing Report
Tip: Include labor burden in your hourly labor rate so margins aren’t overstated.
3. Know Your Break-Even Point
What’s the minimum revenue you need each month just to cover your labor, rent, trucks, software, insurance, and marketing?
Fixed costs: Overhead
Variable costs: COGS and labor
Key metric: Break-Even Revenue
If you don’t know your break-even, you’re flying without a financial safety net.
4. Watch Your Labor Percentage
Labor is usually your second-biggest expense (after materials and subs). High labor percentages can quietly kill your profit—even if revenue looks strong.
Target: Keep labor under 25% of revenue
Include: Burdened wages (payroll taxes, PTO, workers' comp)
5. Review Your Financials Monthly—Not Annually
Too many owners only look at financials at tax time. By then, it’s too late to fix what’s already gone wrong. Monthly financial reviews help you:
Catch over-budget categories
Adjust pricing
Improve collections
Prevent cash shortfalls
Better Financials = Better Decisions
Tracking your water restoration financials isn’t about bookkeeping—it’s about visibility. When you understand your numbers, you can price confidently, plan ahead, and grow your business on purpose—not by accident.
Want Help Setting It All Up?
At Kiwi Cash Flow, we help restoration businesses clean up their books, track profitability, forecast cash flow, and make smarter financial decisions.
👉 Schedule a call here and we’ll walk through your financials together—job by job, dollar by dollar.
How Profitable Is a Restoration Business?
The truth: margins are strong—but only if you know your numbers.
Water and disaster restoration is one of the few industries where small teams can generate high revenue in a short amount of time. With emergency-driven work, insurance-backed payments, and relatively low marketing costs, it has the potential to be very profitable.
But potential doesn’t equal guaranteed. Let’s look at what actually drives profitability—and what gets in the way.
Average Profit Margins in Restoration
Well-run restoration companies typically see net profit margins of 15% to 25%. That’s after accounting for labor, equipment, overhead, insurance, and other expenses.
To put that into perspective:
If your company earns $100,000 in monthly revenue:
- At 15% profit, you keep $15,000
- At 25% profit, you keep $25,000
This is significantly higher than many other trades—but only when costs are actively managed and tracked.
What Makes a Restoration Business Profitable?
1. Tight Job Costing
You must track exactly what each job costs in materials, labor, and equipment. Otherwise, you’re guessing at margins.
2. Understanding Labor Burden
Wages are just the beginning. Taxes, PTO, and workers' comp add 20–40% to your labor cost. Ignoring this is one of the biggest reasons profits disappear.
3. Fast and Accurate Invoicing
Delays in invoicing or incomplete documentation lead to slow payments and write-offs. Restoration work often depends on Xactimate billing and meeting insurance carrier standards.
4. Low Equipment Rental Dependence
Owning key drying and demo equipment pays off fast. Renting everything drains profit—even when you're busy.
5. Overhead Control
Truck payments, software, rent, and insurance all matter. Profitable companies keep overhead under 20% of revenue.
Profitability Pitfalls to Avoid
Underpricing to win jobs
Not billing for all work performed
Poor documentation = insurance denials
Overstaffing during slow months
Growing too fast without cash reserves
These issues don’t just lower profits—they can wipe them out completely.
Want to Know Your Profit Potential?
At Kiwi Cash Flow, we help restoration companies dig into their real margins—job by job and month by month. Whether you’re just starting out or trying to turn busy months into bankable profit, we’ll help you track, plan, and grow with clarity.
👉 Schedule a call here to find out what’s possible—and what’s holding you back.
How Much Money Do Restoration Companies Make?
Let’s break down the revenue, margins, and real potential in this industry.
If you’re thinking about starting a restoration business—or already own one—you’ve probably asked: How much can this business really make? The short answer is: a well-run restoration company can generate high revenue and strong profits—but only if you manage your numbers carefully.
Let’s dig into the details.
Average Revenue for Restoration Companies
Revenue varies depending on service mix, location, team size, and referral sources. Here’s a rough breakdown:
Business Type | Annual Revenue Range
----------------------------|--------------------------
Solo Owner-Operator | $150,000 – $500,000
Small Crew (3–5 techs) | $500,000 – $1.5 million
Mid-Size Company | $1.5 million – $5 million
Larger Regional Operation | $5 million – $10+ million
Many successful companies in our Kiwi Cash Flow network report consistent $3M–$7M annual revenue—especially those who perform mitigation and rebuild work.
What About Profit?
Revenue is one thing—but profit tells the real story. Restoration companies typically aim for a net profit margin of 15%–25%, depending on how tightly they manage labor, COGS, and overhead.
Here’s what that looks like in practice:
Example: $100,000 in Revenue
Category | % of Revenue | Amount
----------------------------|--------------|---------
COGS (materials, subs) | 35% | $35,000
Labor (wages, taxes, PTO) | 25% | $25,000
Overhead (rent, trucks, etc)| 20% | $20,000
Net Profit | 20% | $20,000
This example reflects a company that has their job costing dialed in, keeps labor lean, and watches overhead closely.
What Impacts Profitability?
Several factors separate the most profitable companies from the ones just breaking even:
Efficient job costing
Realistic pricing based on labor burden
Tight A/R management and collections
Low equipment rental dependence
Strong referral relationships
Minimized callbacks and scope creep
Companies that don’t track these often find themselves busy—but broke.
Restoration Work Can Be Lucrative—If You Treat It Like a Business
The potential is there. Restoration businesses deal with urgent problems, get high-ticket jobs, and work in a space with relatively low competition. But the most successful owners watch their numbers like a hawk.
That’s where we come in.
Want to See How Much Your Company Could Be Making?
At Kiwi Cash Flow, we help restoration companies optimize financials, track profitability per job, and forecast with confidence.
👉 Schedule a call here and we’ll show you what top-performing companies are doing—and how close you are to joining them.
8 Tips for Starting a Water Restoration Company
Lay the right foundation for long-term profitability.
Water restoration is one of the most resilient trades in the home services industry. When disaster strikes—whether it’s a broken pipe or major flood—homeowners and insurance companies need fast, professional help. If you're considering launching a restoration company, here are eight essential tips to get started on the right foot.
1. Understand the Business Model
Restoration isn’t just about cleanup—it’s about rapid response, technical accuracy, and navigating insurance billing. It’s also capital-intensive, with delayed payments and high expectations.
Tip: Learn how insurance billing, job documentation, and Xactimate estimating work before you launch.
2. Get Certified and Stay Compliant
IICRC certification is considered the industry standard for water damage, mold, and fire restoration. You may also need contractor licenses, lead-safe training, and environmental certifications depending on your state. Make sure you learn the law concerning asbestos testing.
Tip: Check local licensing requirements and get certified before marketing your services.
3. Invest in Core Equipment First
You don’t need to own everything upfront. Prioritize dehumidifiers, air movers, moisture meters, and a reliable truck or van. Rent larger or less-used gear until your volume justifies the investment.
Tip: Buy slow, rent smart, and reinvest as you grow.
4. Build a Local Referral Network
Your first jobs won’t come from Google—they’ll come from plumbers, property managers, real estate agents, and insurance adjusters.
Tip: Start building relationships with these referral partners before you even open your doors.
5. Set Up Your Financial Systems From Day One
Many new owners skip this—and regret it later. Track revenue, expenses, job costs, and cash flow from the beginning.
Tip: Use QuickBooks Online or similar software, and consider hiring a bookkeeper familiar with restoration work.
6. Know Your Numbers (Before You Price Anything)
Underpricing is the #1 mistake new restoration companies make. You must account for labor burden, equipment wear, insurance, overhead, and delayed payments.
Tip: Learn job costing and use your real numbers to set profitable pricing.
7. Expect to Work Nights and Weekends (At First)
This is a 24/7 industry. Until you have crews to rotate in, you’ll likely be taking calls and running jobs at odd hours.
Tip: Have a system for emergency calls—and a plan for scaling yourself out over time.
8. Plan for Slow Pay Cycles
You may wait 30–90 days for insurance payouts, even after the job is complete. That creates a cash flow gap you must prepare for.
Tip: Keep at least two months of operating costs on hand—or access to a line of credit.
Launch Smarter, Grow Faster
At Kiwi Cash Flow, we help new and growing restoration companies set up the financial and operational systems they need to stay profitable. From startup planning to job costing and forecasting, we’re here to help.
👉 Schedule a call here and start your business with confidence.
The First Key Financial Numbers to Know When Starting a Disaster Restoration Company
Because profit doesn’t happen by accident.
If you’re starting a disaster restoration company, chances are you’re focusing on tools, trucks, and leads—and those are all critical. But there’s one area that new owners often overlook: the financial side. Without clear financial benchmarks and tracking, it’s easy to stay busy but not profitable.
Here are the first financial numbers you must understand and track from the beginning:
1. Labor Burden Rate
You might be paying a tech $25/hour—but your true cost could be $35+ after taxes, workers’ comp, and PTO.
Why it matters: This is the baseline you need to price jobs properly and calculate profit per hour.
How to calculate it: Add payroll taxes, insurance, benefits, and time-off costs to the hourly wage.
2. Average Revenue Per Job
Knowing what your typical water loss or mold remediation job brings in is crucial for forecasting.
Industry range: $5,000–$9,000 per mitigation job is common.
Tip: Start tracking this on day one. It’ll help you identify underperforming jobs and opportunities for upsell.
3. Cost of Goods Sold (COGS) as % of Revenue
This includes materials, subcontractors, and equipment costs used directly on jobs.
Target benchmark: Keep this under 35% of revenue.
Watch out for: Equipment rentals and subcontractor invoices that don’t get tied back to specific jobs.
4. Overhead (Fixed Monthly Costs)
Your business has to bring in enough just to cover rent, insurance, fuel, software, phones, and admin—even before paying labor.
Set a target: Know your monthly overhead total and aim to keep it under 35% of monthly revenue.
5. Break-Even Revenue
How much revenue do you need each month to pay all expenses—before you make a profit?
How to calculate: Add up all fixed and variable costs, and determine the revenue required to cover them.
6. Cash Flow Buffer
Restoration is a slow-pay industry. Insurance payments often come 45–60+ days after work is done.
Best practice: Start with at least 2–3 months of cash or access to credit to cover payroll, equipment, and marketing.
Pro tip: Don’t mistake “jobs booked” for “cash collected.”
7. Net Profit Margin
This is what’s left after all expenses—including overhead—are paid.
Target: Long-term, aim for 15%–25% of revenue as net profit.
Early stage: Track your numbers even if you’re reinvesting everything. You’ll learn faster.
Want Help Getting These Numbers Set Up?
At Kiwi Cash Flow, we help startup and growing restoration businesses set up financial tracking that’s simple, strategic, and scalable. If you’re serious about building a profitable business from day one, don’t skip this step.
👉 Schedule a call here and let’s make sure your pricing, forecasting, and job costing are set up for real profit.