HVAC contractors
Bookkeeping for HVAC contractors
You sold the maintenance agreements in March and collected the money up front. You deliver the work in August. Your books need to know the difference.
Money collected in spring is not money earned in spring
Maintenance agreements are the best thing in HVAC. Recurring revenue, a reason to be in the house twice a year, and first call when the unit dies. They are also what quietly wrecks an HVAC P&L.
March looks like a very good month. It wasn’t one.
A customer pays twelve months up front in March and your books record income in March. Then you run the spring tune-up, and in August the second visit, and both cost you a technician and a truck against revenue you recognised five months ago. August looks like a bad month. Neither month is telling you the truth.
That is deferred revenue whether or not your books call it that
The money is a liability until the work is delivered. Booked as income the day it clears, it flatters your spring, starves your summer, and leaves you with no idea whether the agreements make money at all.
Install and service do not share a margin
A changeout is equipment-heavy. Big ticket, thin percentage, and the cost moves with whatever your distributor is doing this quarter. Service is labour-heavy and the percentage is far better on a far smaller number. Pooled together you get one gross margin that describes neither. Sell more installs and it drops while the business is growing. Sell more service and it rises while revenue falls.
Florida seasonality is brutal and it is predictable
The cash that carries a slow February is cash you earned in July. Seasonality is not the problem. Seasonality without a forecast is, and books that never separated agreement money from earned money cannot produce one. The cash on hand includes work you still owe people. The rest of what construction books have to carry is on the subcontractor bookkeeping page.
What changes in your file
Maintenance agreements set up as deferred revenue
Payment lands in a liability account and releases into income as each visit is delivered. Your spring stops being fictional and your August stops looking like a loss.
A count of what you owe
How many agreements are live, how many visits are outstanding, and what that obligation is worth. It belongs on your balance sheet and it is the first number a buyer asks for.
Install and service separated
Two classes, two P&Ls, with equipment, labour and subcontracted work coded to the right side.
Job costing on installs
Equipment, materials, permits, lift, labour hours and the callback. A changeout that needed two return visits did not make what the invoice says it made.
Equipment stock handled as stock
Units bought ahead of the season cost the job they go into, not the month you bought them.
New construction billed as contract work
Progress billing against the schedule of values, retainage tracked separately, and a WIP schedule on the jobs that need one.
A cash forecast that survives the season
Books closed on schedule with the deferred balance visible, so you can see February coming from July. That is what monthly bookkeeping produces here: the deferred balance and the job-costed P&L, every month.
1099-NEC tracking and workers’ comp class codes
Install helpers and subcontracted duct work classified as you pay them and coded through the year, so the comp audit does not reallocate your payroll at a rate you never budgeted.
Questions I get asked
My maintenance agreement money is already recorded as income. Can that be fixed?
Yes, and it is one of the more common cleanups in this trade. The agreements get identified, the unearned portion moves to a liability account, and income releases against the visits you have delivered. How far back it is worth restating depends on your tax position, which is a conversation for your CPA.
Why not keep one gross margin for the whole company?
Because it misleads you in both directions. A good install month drops the blended margin and a slow one raises it, so the number moves for reasons that have nothing to do with how you are running. Split install from service and each tells you something you can act on.
How do I plan cash for a Florida summer and the February after it?
Start by knowing which of the cash is actually yours. Once agreement money sits as a liability until it is earned, the cash position on your balance sheet is real, and a rolling forecast off last season’s actual months is worth something.
Find out what your agreements are really worth
Send me your QuickBooks file. I will tell you how the agreement money is currently recorded, what install and service look like separated, and what it would take to put both right.