Profitability

10 Ways Contractors Lose Money Every Week (And Don't Even Know It)

February 3, 2026 · 10 min read

TL;DR: If you're a contractor doing $500K-$2M in annual revenue, you're probably losing $50,000-$100,000 every year to invisible money leaks — forgotten expenses, time rounding, scope creep, and more. Here are the 10 biggest leaks and how to plug them.

If you're a contractor doing $500K-$2M in annual revenue, you're probably losing $50,000-$100,000 every year.

Not to theft. Not to bad jobs. To invisible money leaks you don't even notice.

I've talked to hundreds of contractors. The same problems come up again and again. Here are the 10 biggest — and how to plug them.

$67K+
average annual loss from money leaks
10
invisible leaks draining your profit

1. The "I'll Bill It Later" Problem

The Leak: Your foreman grabs extra materials. Picks up something from the supply house. Uses personal tools. Nobody writes it down because they're busy doing the actual work.

The Damage: $50-$500 per incident. Happens 2-3 times per week. That's $5,000-$75,000 per year.

💡 The Fix Make capturing expenses as easy as sending a text. If it takes more than 10 seconds, it won't happen. Voice notes > apps > paper.

2. The "Generous Rounding" Problem

The Leak: Your crew worked 8 hours and 20 minutes. They write down 8 hours. Not dishonesty — just the path of least resistance.

The Damage: 15-30 minutes per worker per day. For a 5-person crew working 250 days/year at $35/hour, that's $10,937-$21,875 gone.

💡 The Fix Time capture that doesn't require manual entry. GPS clock-in/clock-out. Or voice-to-log that timestamps automatically.

3. The "We Did That For Free?" Problem

The Leak: Client asked for something small. "While you're here, could you just..." Your team did it. Nobody logged it as extra work.

The Damage: Average scope creep = 10-15% of project value. On a $50K project, that's $5,000-$7,500 you never billed.

💡 The Fix Train your team to flag every request, no matter how small. Better yet, use AI that detects change orders in your daily logs automatically.

4. The Friday Night Memory Problem

The Leak: End of week, you're trying to remember what happened Monday. Your crew is trying to remember what they did three days ago. Nobody remembers the small stuff.

The Damage: Studies show we forget 50% of details within 24 hours. If 50% of your extras are worth $200 each and you forget 2 per week, that's $20,800/year.

💡 The Fix Capture everything the day it happens. Daily logs that take 60 seconds, not 15 minutes.

5. The "That's Not In Scope" Problem (But You Can't Prove It)

The Leak: You know the client asked for more than the contract. But you didn't document the original scope well enough. Now it's your word against theirs.

The Damage: Unprovable change orders average $2,000-$10,000 per project. Even if you only lose one dispute per quarter, that's $8,000-$40,000/year.

💡 The Fix Document everything. Photos with timestamps. Written confirmation of scope. Daily logs that prove what was asked and when.

6. The "Where Did My Crew Go?" Problem

The Leak: You're paying for 8 hours. But between supply runs, long lunches, early stops, and unclear start times, you're getting 6.5 hours of actual work.

The Damage: 1.5 hours per person per day at $40/hour fully loaded. 5 workers, 250 days = $75,000/year in lost productivity.

💡 The Fix Clear start/stop times with automatic logging. Not to spy on your crew — to protect your numbers.

7. The Material Markup Problem

The Leak: You buy $10,000 in materials. You should be charging $12,000-$13,000 with markup. But in the chaos of the job, some materials don't make it to the invoice.

The Damage: If 10% of materials slip through without markup, and you buy $200K in materials yearly, you're losing $2,000-$3,000/year minimum.

💡 The Fix Automatic material tracking. Receipt capture that syncs to invoices. Make it impossible to miss.

8. The Warranty Work Creep Problem

The Leak: Customer calls with a "warranty issue." Your crew goes to fix it. Turns out it's not warranty — it's user error or a new request. But you already did the work.

The Damage: Average non-warranty "warranty" visit = $200-$500 in labor. If this happens twice a month, that's $4,800-$12,000/year.

💡 The Fix Document original work with photos. Train crew to verify warranty before starting work. Have a clear process for billing non-warranty items.

9. The Change Order Paper Chase Problem

The Leak: Client approves a change verbally. Work gets done. Then there's a dispute about price, scope, or whether it was approved at all.

The Damage: Disputed change orders average $3,000. Even one per year is painful. Several per year is business-threatening.

💡 The Fix Written approval before work starts. Even a text message creates a paper trail. Email is better. Signed form is best.

10. The "We're Too Busy To Track" Problem

The Leak: You know you should be tracking better. But you're in the middle of three jobs, short a crew member, and dealing with permit issues. Tracking falls to the bottom of the list.

The Damage: All of the above, compounded. When you're too busy to track, you're too busy to bill, and the money disappears.

🚨 The Compound Effect Tracking systems that work without effort are the only ones that survive contact with a busy job site. If it takes your foreman more than 30 seconds at end of day, it won't happen.

The Math: What This Really Costs

💸 Annual Loss by Category (Conservative Estimates)

Forgotten expenses$5,000
Time rounding$10,000
Scope creep$5,000
Memory gaps$10,000
Unprovable extras$8,000
Lost productivity$20,000
Material markup misses$2,000
Warranty creep$4,800
Change order disputes$3,000
Total Annual Loss$67,800

That's a new truck. Or a year's salary for a helper. Or money in your retirement account instead of your customer's pocket.

What if capturing all this took 30 seconds?

ChargeHammer turns voice notes into time entries, flags unbilled materials, and catches scope creep before you invoice — all through WhatsApp.

See How It Works →

Frequently Asked Questions

How much money do contractors lose to billing mistakes?

The average small contractor doing $500K-$2M in annual revenue loses $50,000-$100,000 per year to invisible money leaks including forgotten expenses, time rounding, unbilled scope creep, memory gaps, and change order disputes.

What is the biggest revenue leak for contractors?

Lost productivity is often the biggest leak. Paying for 8 hours but getting 6.5 hours of actual work due to supply runs, unclear start times, and long lunches can cost a 5-person crew $75,000 per year.

How do contractors prevent scope creep?

Train your team to flag every client request no matter how small. Document the original scope thoroughly with photos and written confirmation. Use daily logs that prove what was asked and when. Average scope creep equals 10-15% of project value.