The Silent Killer of Builder Profits (And How to Fix It)

You’re running jobs. Clients are paying their invoices. Your pipeline looks solid.

But somehow, there’s never as much cash in the bank as you expect.

You’re covering supplier bills out of your own pocket. Payroll is stressful. And when tax season rolls around, you get slammed with a massive tax bill—on profits you haven’t even seen yet.

Sound familiar?

This isn’t bad luck. It isn’t the economy.

It’s a financial blind spot that’s sinking countless building companies: a failure to track financials regularly and properly calculate the Work in Progress Accounting Adjustment^© (WIPAA).

If you don’t understand WIPAA^©, you don’t know your real profit.

And that’s a dangerous place to be.

The Numbers Prove It: Builders Who Track Their Financials Make More Money

The 2025 State of Residential Construction Industry (SORCI) Report reveals that builders who stay on top of their financials are consistently more profitable than those who don’t.

• Builders who produce monthly financial reports average a 6% net profit, compared to just 4% for those who don’t.
• Builders who include their salary as a fixed expense are less likely to experience cash flow problems—only 10% report negative working capital, compared to 25% of those who don’t.
• Only 11.4% of builders actually know how to calculate WIPAA—meaning most are unknowingly overpaying taxes or making decisions based on misleading profit numbers.

Ignoring financial reports isn’t just risky—it’s a direct hit to your bottom line.

What Is WIPAA (And Why Does It Matter)?

WIPAA is a calculation that ensures you’re only recognising real profit on your financial reports.

Here’s why it’s critical:

1. Jobs in Progress Create an Illusion of Profit. If you’ve billed a client but haven’t yet incurred all the costs, your books might show a profit that doesn’t actually exist.
2. Taxes Can Wipe You Out. Builders who don’t adjust for WIPAA often end up paying tax on unearned profits, creating major cash flow problems.
3. It Prevents “Profit Rollercoaster” Syndrome. Without WIPAA, one month looks wildly profitable while the next shows a huge loss—making it impossible to plan ahead.

Here’s the scary part: 88.6% of builders don’t know how to calculate WIPAA correctly.

That means most builders are flying blind—guessing at their profitability and putting themselves at risk.

Why Most Builders Avoid Their Numbers

If tracking financials is this important, why do so many builders neglect it?

• “I’m too busy.” You’re running jobs, managing trades, and handling client demands—financial reports feel like extra work.
• “My accountant handles it.” Maybe, but most accountants focus on taxes—not the real-time financial health of your business.
• “I don’t understand the numbers.” That’s exactly why you need to start. Because what you don’t know is already costing you.

The reality? Builders who track their numbers win. Those who don’t struggle.

What Smart Builders Do Differently

The most successful builders always know their true financial position—no guessing. They can see cash flow problems before they happen and fix them in advance. Their tax bill is predictable—no surprises. And most importantly, they make decisions based on real numbers, not gut feel.

Want to be better? Take these actions:

• Start Producing Monthly Financial Reports. If you’re not reviewing financials at least once a month, you’re already behind.
• Learn How to Calculate WIPAA. Work with a construction financial coach who understands this calculation.
• Track Cash Flow Like a Project Timeline. Know your upcoming expenses and income—just like you’d manage a job schedule.
• Stop Paying Taxes on Fake Profits. If your accountant isn’t adjusting for WIPAA, you’re likely paying too much tax.
• Make Data-Driven Decisions. Once you know your numbers, you can confidently price jobs, manage overhead, and plan for growth.

The Cost of Ignoring Your Financials

You can keep hoping there’s enough money at the end of the month.

Or… you can take control.

Because at the end of the day, the most successful builders aren’t just great at building homes—they’re great at managing their money.

Which one will you be?

If you’re serious about running a profitable, scalable building company, it starts with knowing your numbers. Let’s talk about how you can take control of your financials—before they take control of you.