Construction Business QuickBooks CleanupDraws are not the same as profit

A draw feels like a win because the bank balance jumps. On a construction file that jump is usually spoken for. Subs and suppliers have already done the work the draw is paying for. If the deposit is typed as income and the bills wait for another month, the month lies.

We post the draw and the costs it has to cover together. What is left can be profit. What is spoken for stays spoken for. You should be able to point at the deposit and say which bills it was meant to retire.

Most contracts hold back a slice of each draw until the work is accepted. The percent lives in the agreement you signed, and it is not the same number on every job. On your books that amount is still waiting. If you are the contractor, it may be money you expect and do not have. If you are the owner, it may be money you are holding back.

Either way it is not free cash and it is not finished profit. We show it as the waiting amount it is, and the month can still close while a punch list is open. The work looks done. The money is not in hand. We treat that feeling as a line on the balance sheet, not as a story you have to retell in April.

Where one state writes its own percent, and names how long the reserve lasts, those figures are on the state page. A national cleanup does not pretend that percent is universal. We post the number the contract already states, and we do not invent a second one.

A draw that includes a change needs the change written down. Otherwise the budget and the field are describing two different buildings. We will not type a change we cannot see. The question stays parked, in the open, until you have the paper.

If the last draw and the bills under it are already in different months, say so on the form. That split is the whole problem more often than a missing account name.