What Your Balance Sheet Says About the Health of Your Restoration Business
What Is a Balance Sheet?
Unlike the P&L, which tells you how much you earned and spent during a time period, the balance sheet gives you a snapshot of what your business owns and owes at a single point in time—usually month-end.
It’s split into three parts:
Assets – What your business owns
Liabilities – What your business owes
Equity – What’s left for the owner(s)
It always balances:
Assets = Liabilities + Equity
What Restoration Owners Should Watch
1. Accounts Receivable
If your A/R is climbing faster than your cash balance, you’re doing work and not getting paid. This is common in TPA or program-heavy work, but dangerous for cash flow. Anything over 60 days needs to be tracked aggressively.
2. Accounts Payable
Vendors and subs aren’t always shy about late payments. This number helps you track what you owe. If it’s piling up, your cash flow is under pressure—or you’re not entering bills properly.
3. Deferred Revenue
This is money you’ve received but haven’t earned yet (e.g., deposits or advance checks from carriers). It's a liability until the job is complete.
4. Fixed Assets & Depreciation
Your vehicles and equipment go here. Depreciation is a bookkeeping method to spread the cost over time. Make sure your bookkeeper updates this regularly.
5. Equity
This is the value of the business to you. It includes retained earnings from prior years and net income from the current year. If this number is negative or flat over time, it’s a red flag—even if your P&L shows profit.
What a Strong Balance Sheet Looks Like
Cash and receivables cover your short-term liabilities
Equipment is paid down steadily (not ballooning)
A/R is actively collected and aged properly
Liabilities are not higher than assets
Owner’s equity grows year over year
Want to Know What Your Balance Sheet Is Telling You?
At Kiwi Cash Flow, we work with restoration business owners who want more than just data—they want insight. If your balance sheet looks confusing, inconsistent, or just wrong, we’ll help you fix it and use it.