CFO Services for Plumbing Companies
A fractional CFO for a plumbing company splits the service book from the construction book, then fixes the three numbers underneath: dispatch cost per call, truck stock, and how long commercial money takes to land.
Built for plumbing owners between $3M and $15M who run service and repair, new construction, or both, and keep their own bookkeeper and CPA.
Two books, one P&L. That is where plumbing margin goes missing.
Service and repair versus new construction.
These are two different companies sharing a bank account. Service and repair collects in days, prices per job, and lives on dispatch. New construction collects in months, prices per contract, and lives on the builder’s schedule.
Blended together on one P&L, the service book’s cash covers the construction book’s timing and nobody sees it happening. Split by department, the picture is obvious in a month.
What splitting the book shows.
- Which department actually earns the gross profit, and which one is renting the other one's cash.
- The real close rate and average ticket on service, separate from contract revenue that flatters it.
- Whether the construction book is funding growth or funding a receivable.
- Where the technicians are, against where the margin is.
Every section below reads differently depending on which book you are in.
EMERGENCY WORK
Emergency call economics and dispatch cost.
The after-hours call is the most expensive hour a plumbing company sells and the one most often priced as though it were a Tuesday morning.
The cost of being available.
On-call pay, the truck that sits loaded, the CSR who answers at 11pm and the overtime multiplier. All of it is cost incurred before a single call comes in.
The dispatch decision.
Which technician goes, how far, and what else got pushed. A call booked badly costs two jobs, not one, and that never shows on the invoice.
The price that has to carry it.
Emergency rates are built from the loaded cost of availability, not from the day rate plus a percentage that felt about right.
Dispatch is a financial function in a plumbing company. It just does not report to finance.
TRUCK STOCK
Truck stock and inventory shrink.
Every truck is a warehouse nobody counts. Parts go on, parts come off, and the difference is written off as cost of goods a quarter later with no name on it.
In a plumbing company at this size, truck stock is usually the second-largest asset after the trucks themselves, and the only one with no ledger behind it.
What a truck stock policy fixes
A counted opening balance per truck, once, so there is something to measure against.
Parts issued to a job, not to a van, so job costing carries the material it consumed.
A restock rule, so the technician stops buying at retail on the way to the call.
A quarterly count, so shrink has a number and a name instead of a shrug.
COMMERCIAL RECEIVABLES
Cash timing on commercial receivables.
Commercial work is good revenue on a slow clock. The job is done in a week and paid in sixty days, and the payroll for it went out on Friday.
- Commercial accounts get their own line in the forecast, at their real payment behaviour, not their terms
- Retainage on contract work is tracked as a separate receivable, because it is not late, it is held
- Progress billing goes out on the schedule, not when someone remembers
- Ageing is reviewed weekly by customer name, not monthly as a total
A plumbing company that grows its commercial book without a forecast grows its overdraft at the same rate.
THE FIRST 90 DAYS
What we change in the first 90 days with a plumbing company.
Boring but effective. Split the book first, then price what it costs to be available, then get the cash timing on the page.
Days 1 to 30: split the book.
Month-end close by the 10th. A chart of accounts that separates service, drain, and construction, so the two businesses stop hiding inside one gross profit line.
Days 31 to 60: price the availability.
Loaded cost per billable hour, on-call and overtime included. Emergency and after-hours rates rebuilt from that number. Truck stock counted once so there is a baseline.
Days 61 to 90: put cash on a calendar.
A 13-week forecast with commercial receivables at their real payment behaviour, retainage tracked separately, and weekly gross profit by department.
Method first. The results come after it, on purpose.
PROOF
What changed at an HVAC and plumbing operator that was down 40%.
The result below is a client of the practice. The five operators after it are Profit and Grit guests, quoted on the service book, dispatch and the revenue mix a buyer looks at first.
CLIENT RESULT
From down 40% to up 6%, in a year.
An HVAC and plumbing operator was down 40% year-over-year when we started. Same team, same trucks, no magic. We went line by line through every cost. We brought in marketing accountability so the spend had to earn its keep. We adjusted pricing against real cost data. We cleaned up payroll burden. And we built a weekly reporting rhythm where nothing sat for more than 45 days.
A year later they were up 6%, which in that market and that economy was a turnaround.
Reported by Tyler Martin, California-licensed CPA.
FROM THE PODCAST
What plumbing operators on Profit and Grit say about the same numbers.
Dustin Marx breaks his company’s revenue down by drain and by traditional plumbing, separately, and says everything else, dispatch, leadership, marketing, finance and operations, exists to support the field. That is a departmental P&L described by an owner who does not call it that.
John Wilson broke his company into three quadrants around the lead: how we get it, how we handle it, how we book and dispatch it. Bob Beall, who built a 40-truck business, will tell you that if he does not monitor his CSRs and dispatchers to the letter, booking drops. Both of them are describing dispatch as a margin control.
Brent Garrett runs about 95% residential service, and Dillon Caraway buys exactly that profile because the revenue is stable and recurring rather than project-based. The mix is the first thing a buyer looks at, which is a good reason to know yours before they do.
The Home Services Cash Flow Scorecard.
15 questions. 5 minutes. A real answer about where your business stands.
You answer 15 plain-English questions about how your business actually runs. You get a score, a one-page read on what's working, and the two or three places your cash is leaking that you probably already suspect.
Get your score
We'll send results straight to your inbox.
The Home Services Cash Flow Scorecard.
Find out in five minutes whether your numbers are helping you run the business or hiding the problems that are costing you cash
How You Close Your Books
How You Track Cash
How You Price Work
How You Read Your Numbers
Analyzing financial indicators...
Your Priority Fixes
WHO THIS IS FOR
Built for plumbing owners between $3M and $15M.
Below $3M the owner is still on the truck and still sees every invoice, and a bookkeeper who closes on time will do more than a CFO will. Above $15M the dispatch board and the construction schedule need a finance lead in the building every day. In between is where a service book and a construction book start pulling in opposite directions.
Sound familiar?
- You run service and construction, and one gross profit number covers both.
- Your emergency rate has never been rebuilt from what being available actually costs.
- Truck stock has never been counted, and shrink shows up as cost of goods with no name on it.
- Commercial work is growing and so is the overdraft.
THE COST FRAME
A monthly retainer, sized against the two books you run.
Not hours, not a deck. On the first call we size the band against revenue and against how much of it is construction, because a construction book carries retainage, progress billing and a slower clock, and that is more work than a pure service book. You leave the call knowing the number either way.
WHAT GOOD LOOKS LIKE IN PLUMBING
A real gross margin target, from an operator who publishes his.
We do not ask you to take a margin target on faith. Mark Paup runs Golden Rule Plumbing, Heating, Cooling and Electrical in Des Moines, a $30 million company he started from a shop he bought at 24 out of a newspaper ad, and on his episode he names the gross profit he runs each department to.
Residential plumbing at 58 to 59 percent gross profit is a target you can hold your own P&L against this afternoon, once the service and construction books are separated. If your blended number looks close to it but your service book is carrying construction, the blend is hiding the gap. The benchmark report is where we publish the wider set.
GROSS PROFIT TARGET, RESIDENTIAL PLUMBING
58-59%
“Residential plumbing, we want to be around 58, 59%. HVAC service, we want to be around 50. And then we run about 50% on HVAC replacements. But as a company, my goal is 52%, as they combined every blend.”
Mark Paup, Golden Rule, on The Big Five Numbers Every Trades Owner Should Track. Gross profit after direct labour and material.
PLUMBING CFO QUESTIONS
What plumbing owners ask before the first call.
Short answers, in the terms a plumbing company actually uses.
What does a fractional CFO do for a plumbing company?
A fractional CFO for a plumbing company separates the service and repair book from the new construction book, prices emergency and after-hours work on what availability actually costs, puts truck stock on a ledger, and builds a 13-week cash forecast that carries commercial receivables at their real payment behaviour. It is a part-time financial executive, working a couple of days a month alongside your existing bookkeeper and CPA.
What gross margin should a plumbing company run at?
Mark Paup, who runs a $30M plumbing, HVAC and electrical company in Des Moines, targets 58 to 59 percent gross profit on residential plumbing and a 52 percent blended company target, stated on the Profit and Grit podcast. Gross profit there is after direct labour and material. A company blending service and new construction into one number cannot compare itself to that figure until the two books are split.
Why does my plumbing company make a profit but have no cash?
Usually because the service book collects in days and the construction book collects in months, and the service cash is quietly financing construction timing. Retainage on contract work adds to it, because it is held rather than late, so nobody chases it. Splitting the departments and forecasting commercial receivables separately makes the gap visible in about a month.
How should emergency and after-hours plumbing calls be priced?
From the loaded cost of being available, not from the day rate plus a percentage. On-call pay, the truck sitting loaded, the CSR answering at 11pm and the overtime multiplier are all incurred before the phone rings. Once that cost is known, the emergency rate is arithmetic.
Do I need a CFO if I already have a bookkeeper and a CPA?
They do different jobs. The bookkeeper records what happened and the CPA files it. Neither one is paid to tell you whether your dispatch cost is too high, whether the construction book is worth keeping, or what to charge. A fractional CFO reads what they produce and turns it into the next decision, and both of them keep their jobs.
What size plumbing company is this built for?
Between $3 million and $15 million in annual revenue. Below that a bookkeeper who closes on time is the better hire. Above it, the reporting has to be daily and in-house.
GET STARTED
Want to know which of your two books is carrying the other?
Two ways to start. Pick whichever fits.
No pressure either way. Let’s chat!
