What I Found When I Dug Into an Electrician’s Material Expenses

A while back, I was digging through the books for a small electrical contractor. Good owner, solid crew, plenty of work on the board. But every time we looked at the numbers, the profit felt thinner than it should have been. He was busy, customers were paying, and jobs seemed to be going well. Still, the reports made it look like he was working incredibly hard for a pretty modest return.

That kind of thing always makes me slow down. I do not assume the business is doing poorly just because the profit and loss statement says so. With service businesses, especially electrical contractors, a few coding habits can make a healthy company look a lot worse than it really is. The books tell a story, but only if the transactions are being put in the right places.

In this case, I started with materials. The contractor had a lot of supply-house activity, as you would expect: wire, breakers, conduit, panels, fittings, and the random last-minute items that somehow always come up on a job. But one recurring material expense had been categorized in a way that made it difficult to connect to the jobs it supported. It was sitting in the wrong expense bucket, separate from the direct job costs where it belonged.

On its own, that may not sound like a huge deal. But it was distorting his job margins. Some jobs looked less profitable because the material costs were not landing consistently. Other jobs looked better than they actually were because part of their material spend was living somewhere else on the profit and loss. He was trying to make decisions from reports that were technically accurate in total, but not useful at the job level.

Then we found the second issue: duplicated supply subscriptions and recurring charges. A few vendor tools had been signed up for at different times, often when someone needed something quickly in the field or the office was trying a new ordering option. There was some overlap, a couple of old accounts, and recurring charges that nobody had noticed because each one was small enough to slip through the cracks.

When we added them up, those duplicate or unnecessary subscriptions were quietly costing about $1,800 a month. That is $21,600 a year. For a business with a small team, that is real money. It can cover a vehicle payment, help fund a new apprentice, buy breathing room during a slower stretch, or simply stay in the owner’s pocket instead of disappearing into software and supply accounts nobody is actively using.

The best part was not just canceling the extra charges. Once we cleaned up the material coding and made the recurring expenses visible, the owner could finally see his true job margins. A few jobs he had been worried about were actually performing well. He had been more profitable than he thought; the bookkeeping was just hiding it from him. That is a much better conversation to have than telling someone they need to chase more work to solve a problem that is really sitting in the books.

I see this fairly often at Blackfin. Electrical contractors are moving fast, solving problems for customers, managing crews, handling change orders, and trying to get paid. Nobody wakes up excited to review every vendor charge or decide whether a purchase belongs in materials, tools, overhead, or a specific job. I get it. But those details matter when you are trying to price confidently and understand which work is actually worth taking on.

I am not saying every set of books needs to be perfect down to the penny before it can be helpful. I am saying your numbers should make sense to you. You should be able to look at a job, understand what it cost, see what you made, and trust that a surprise $1,800 monthly drain is not sitting unnoticed in the background. If you run a service business and your reports feel confusing or a little off, reach out to me and the team at Blackfin Accounting. We would be happy to chat.