Glossary

Contractor bookkeeping terms, in plain English.

Every term here is one a contractor actually meets — on an insurance audit, in a lender's request, or in a conversation with an accountant who assumed you already knew. No circular definitions.

The Two-Day Guarantee— Your first month back in two days, or the next month is free.

Bank reconciliationreconcilingA bank reconciliation proves that the cash balance in your accounting file matches the bank statement for the same date, with every difference explained.
Certificate of insuranceCOIA certificate of insurance is a document from a subcontractor’s insurer confirming they carry cover, for what limits, and for what dates.
Cost of goods soldCOGSCost of goods sold is everything you spent that only exists because a specific job happened — materials, field labour, subcontractors and equipment for that job.
Days sales outstandingDSODays sales outstanding is how many days of revenue you are carrying unpaid at any moment — outstanding receivables divided by average daily revenue.
Experience modification rateEMRThe experience modification rate is a multiplier applied to your workers compensation premium based on your claims history compared with other businesses in your classification.
Gross margingross profit marginGross margin is the share of each sales dollar left after the direct cost of doing that work — measured against the price, not against the cost.
Labor burdenburden rateLabor burden is everything an employee costs you on top of their wage — payroll taxes, workers compensation, unemployment insurance and benefits.
Overheadfixed costsOverhead is the cost of existing — everything you would still pay next month if no work came in at all.
RetainageretentionRetainage is a percentage of each payment withheld by the customer until the job is complete and accepted, as security that you will finish the work.
Trust fund taxespayroll trust fundTrust fund taxes are the amounts withheld from employee wages — income tax and the employee share of FICA — that the business holds on the government’s behalf rather than owning.
Work in progressWIPWork in progress is the value of jobs you have started and not finished — work performed that has not yet been billed, or billed that has not yet been performed.
Working capitalnet working capitalWorking capital is current assets minus current liabilities — what you could convert to cash within a year against what falls due within a year.

Knowing the words is not the same as having the numbers.

We do your most recent month in full, free, reviewed by a US CPA and back within two days.

Start my free month