What Bookkeepers Need to Watch For: 14 Common Cash Flow Leaks in Restoration Businesses
Cash flow problems are one of the top reasons restoration businesses struggle—even when their jobs are profitable. And while owners may feel the pain in their bank balance, it’s often the bookkeeper who sees the red flags first.
If you're doing bookkeeping for a restoration company, your job goes beyond coding transactions and reconciling bank accounts. You're the first line of defense when it comes to cash flow management.
Here are 14 cash flow leaks that every bookkeeper should watch for—and how better bookkeeping can help prevent them.
Cash Flow Leaks a Bookkeeper Can Catch Early
These show up in daily bookkeeping tasks, and catching them can make or break cash stability:
1. Invoicing Delays
Are you seeing completed jobs with no invoice issued? Flag this for the owner. Every day that billing is delayed is a delay in cash flow.
2. Change Orders or Supplements Not Invoiced
You may see additional expenses or labor logged without matching revenue. That’s a clue that change orders weren’t billed.
3. Jobs Not Closed Out Promptly
If jobs stay “open” too long, AR never gets created. Ask whether the project is finished and ready to invoice.
4. Accrual Revenue With No Matching Payment Timeline
In accrual-based books, revenue might be showing up months before the cash hits. Track AR aging to highlight which income hasn’t turned into cash yet.
5. T&M Jobs with Incomplete Field Logs
Missing timesheets or receipts? That’s lost billable revenue. A bookkeeper can spot this before the billing cycle ends.
6. Deposits Not Recorded When Checks Are Collected
If money is in hand but not showing in the books, it’s either unbanked or miscategorized. This throws off all cash flow reports.
7. Seasonality or Cycles Not Reflected in Reports
Monthly reporting should show patterns. If revenue or collections dip seasonally, that needs to be visible to plan ahead.
Cash Flow Leaks Hidden in Financial Reports
These issues don’t always show up on a P&L but can surface when reconciling accounts or preparing reports:
8. Vendor Payments Made Without POs or Receipts
If bills are paid without documentation, duplicate payments or overcharges can go unnoticed. Bookkeepers should enforce PO matching.
9. Bad Debt Still on the Books
When AR is old and clearly uncollectible, it should be written off. Otherwise, it overstates expected cash.
10. Refunds Issued But Not Matched Properly
If a refund check goes out, but the original invoice stays open, cash is reduced without lowering AR. Always match the refund to the correct customer record.
11. Subcontractor Payments Made Too Early
If you’re booking payments before milestones or retainage are met, that’s cash out the door without the work completed.
12. Retainage Not Tracked Separately
This money isn’t collectible until later, and if it’s not broken out in AR, it may be wrongly included in expected cash.
13. Equipment Financed Off-Books
Bookkeepers need to track lease or credit purchases properly. Otherwise, cash drops without showing on the expense report.
14. Bank or Liability Adjustments Misclassified
Watch for strange entries in “Adjustments to reconcile Net Income to Net Cash.” These often include unexplained movements in AR or loan accounts.
How Bookkeepers Can Help Prevent Cash Flow Problems
Strong bookkeeping practices make cash flow more predictable:
🔹 Keep AR up to date and follow up on aging
🔹 Reconcile cash accounts regularly—not just monthly
🔹 Track deposits and payments daily to spot timing issues
🔹 Flag revenue that’s been earned but not yet invoiced
🔹 Educate owners on how cash and profit differ
At Kiwi Cash Flow, we specialize in restoration accounting and financial strategy. Whether you're doing in-house books or working with an outsourced bookkeeper, our CFO subscription services help ensure your cash flow picture is accurate—and actionable.