Fractional CFO and Controller Services for Plumbing Contractors

New construction plumbing bills in phases: rough-in after the slab or framing inspection, top-out after the second inspection, and trim after the fixtures are set and the final passes. Each draw is a fixed price per lot set in the builder contract, and the margin on the lot only exists if the labor and material for all three phases land under that fixed number. Most plumbing shops know their total margin on a subdivision at the end. Few know it per phase while the subdivision is active.

We cost each lot by phase, with labor coded from the field to the lot and phase, material issued from the warehouse to the lot, and the draw billed against the inspection date rather than the end of the month. The report that results shows margin by subdivision, by phase, and by crew, and it shows it while lots are still open. When rough-in labor on one subdivision is running 20 percent over the per-lot standard, the answer is usually a plan change, a soil condition, or a crew, and each has a different fix.

Back charges from the builder for damaged fixtures, missed inspections, or warranty work get posted to the lot they came from. That is how you find out which crew is costing you the most money per lot, and it is rarely the one the superintendent complains about. The same lot-level data is what settles a back charge dispute quickly, because you can show what was installed, when, and by whom.

A production builder that represents 40 percent of your revenue is a customer, a lender, and a risk in one relationship. The per-lot price was negotiated when copper and PEX were cheaper and your plumbers made less. The contract renews annually if you are lucky, and the builder's purchasing department reads your price increase letter with the same enthusiasm it reads everyone's. Meanwhile the builder pays on its own schedule, typically 30 to 60 days after the draw is approved, and disputes hold entire draws.

The finance function tracks margin by builder and by community, models the effect of each contract renewal before it is signed, and produces the cost data that supports a price adjustment request: labor rate changes, material cost movement, and the per-lot cost history. Receivables are managed builder by builder, with a named contact in each accounts payable department and a weekly call about anything over 45 days. Concentration is measured and reported to the owner monthly, along with what it would take to move the number.

A builder relationship is worth protecting. It is also worth pricing. The two are not in conflict, though the purchasing agent may suggest otherwise. The finance function's contribution is to make sure that when the renewal conversation happens, you know the margin on every community, the cost movement since the last contract, and the number below which the work is no longer worth doing.

Service and repair is the higher-margin, faster-cash business, and it is also the one that gets under-managed because construction is louder. ServiceTitan tells you the average ticket, the booking rate, and which technician sells water heaters. The general ledger should tell you whether the service department made money after its share of the shop, the trucks, the dispatcher, and the marketing. Usually it does not, because service revenue and cost are mixed with construction and reported as a total.

We build a service department P&L: revenue by job type, technician labor burdened and coded to service, truck stock consumption, warranty and callback labor, marketing spend by channel, and membership revenue deferred and recognized as visits occur. ServiceTitan gets mapped to the ledger and reconciled monthly, so the dispatch board and the P&L agree on what happened. Drain cleaning, water heater replacement, repipe, and repair each get a margin, because each behaves differently.

The service department often turns out to be funding the construction department's cash gaps. Once the owner can see that, the pricing conversation with the builder gets easier. So does the marketing budget conversation, because service leads cost money, and the report shows which channels produce technician-days of billable work and which produce phone calls that never become appointments.

A plumbing company owns a surprising amount of inventory: warehouse stock for construction lots, truck stock on every service van, water heaters staged for replacement calls, and fixture packages the builder selected six months ago. Almost none of it is counted, and the cost of goods sold on the P&L is whatever the supplier billed that month. When a truck gets restocked three times in a week, the parts went somewhere, and the P&L does not know where.

We put inventory on the balance sheet where it belongs, set up truck stock lists with periodic counts, issue material to lots and jobs from the warehouse rather than expensing it on receipt, and reconcile water heater units purchased to units sold. The result is a gross margin that reflects what was used, a shrink number that the owner can act on, and a purchasing function that orders against demand instead of against fear of running out.

Fleet cost is tracked per vehicle and allocated to the department that drives it. The service van that costs $1,900 a month in payments, fuel, insurance, and repairs is part of the technician's burden rate, and the technician's pricing should reflect it. A fleet of 20 vans is a seven-figure asset with a replacement schedule, and the forecast should know which trucks are due before the transmission does.

If cost of goods sold equals whatever the supplier invoiced this month, the P&L is measuring purchasing, not production.

On construction lots the builder's one-year warranty becomes your warranty for plumbing defects, and the calls arrive after the lot has been closed out and the margin has been reported. On the service side a callback is a repeat visit for the same problem, unbilled, on a truck that could have been generating revenue. Both are costs of the original work, and in most plumbing companies both are buried in the current month's service labor, where they make the service department look worse and the construction department look better than reality.

We track warranty and callback labor and material by original job, lot, and technician, and we accrue a warranty reserve on construction work so the margin reported at draw is net of what the lot is going to cost you next spring. The report that results identifies which subdivisions, which fixture brands, and which crews generate the most rework. Owners are often surprised by which ones.

This is not about blame. It is about pricing the next contract with the real cost in it. A subdivision that carries a 3 percent warranty cost should be bid differently from one that carries 1 percent, and a fixture brand that generates twice the callbacks should be priced or replaced. Without the tracking, every lot looks the same until the calls start.

Whether the audience is a bank underwriting a fleet line, a bonding agent on a commercial job, or a private equity group building a plumbing platform, the questions are consistent: gross margin by line of business, customer concentration, recurring service revenue and membership base, receivable aging by builder, inventory stated at cost, warranty exposure, and a management team that can produce the numbers monthly without the owner doing it at midnight.

We produce a monthly close by the 10th business day with department P&Ls, a builder receivables report, a lot-level margin summary, a service KPI page from reconciled ServiceTitan data, and a 13-week cash forecast. The same package, with a year of history, is the data room. For owners not selling, it is the basis of a larger credit line and a management team that runs on numbers.

Every report is documented and every process has an owner, so the finance function survives the engagement. Fix it, run it, document it, hand it off. The lot costing, the builder collections rhythm, and the ServiceTitan reconciliation are the kind of processes that quietly stop when the person who ran them leaves, which is why we write them down as we build them.