A home service business can show a healthy profit on paper and still run out of cash, and the most common reason is how loan payments are recorded. Interest on equipment or vehicle financing is a real expense that shows up on the profit and loss statement. The principal is not, even though the cash still leaves the bank account every month. That difference between paper profit and real cash can be large enough to swallow an owner's entire salary.
That's exactly what happened at a $1.3 million foundation repair and waterproofing company, a home service business we'll call Anchor Point Foundation & Waterproofing. The owner (we'll call him Jared) asked us to keep the details anonymous, but the numbers are real and drawn directly from Clear Results’ engagement record. Last year, Anchor Point did $1.319 million in revenue across 132 completed jobs, and Jared paid himself somewhere between $35,000 and $40,000 of it, less than some of his own crew.
Anchor Point is 3 years old, well past the stage where a thin owner salary could pass for an early growing pain. Pricing came up in the same conversation, and so did marketing spend, but the real constraint was that nobody at Anchor Point, Jared included, could see where the company's money went once it hit the bank account.
Jared's numbers, on their face, looked like a growth story. $620,000 in the back half of 2023. $1.08 million in 2024. $1.319 million last year. A goal of $2 million this year, which meant finding 50% more revenue than the year before.
Somewhere in that climb, Jared lost track of what the business kept.
"I paid myself probably $35,000 to $40,000," he told Stuart Trier, Clear Results' founder, "and I put a big chunk of the rest, close to $70,000 or $75,000, into the office."
A market-rate CEO salary for a business of Anchor Point's size runs around 5% of revenue, close to $70,000 on $1.3 million. Jared paid himself roughly half that and put the difference into a $49,000 office renovation and 2 new trucks. A lot of owners make exactly this trade when they can't see clean numbers well enough to know they're allowed to pay themselves properly. The renovation and the trucks felt like real progress; the salary was the line item he figured could wait.
The clearest example of the blind spot came up almost by accident, when Stuart was walking through Anchor Point's overhead.
"I've got probably $2,900 a month in truck payments," Jared said.
Clear Results CEO Stuart Trier stopped him. "That does not show up in your operating expense. Do you know that?"
"I did not."
Why Loan Payments Don't Show Up on Your P&L
A loan payment has 2 parts: interest and principal. Interest is a real expense, and it shows up on the profit and loss statement like any other cost. Principal is different. It pays down a debt you already owe rather than creating a new cost, so standard accounting never runs it through the P&L. The cash still leaves the bank account every month. The P&L just never mentions it.
That's how a business can report a healthy profit and still feel broke. $2,900 a month adds up to close to $35,000 a year draining out of the account on truck payments alone, invisible to anyone reading the income statement. Multiply that across every piece of financed equipment a company owns, and the paper profit and the real cash position can drift a long way apart.
Once Stuart named it, Jared could see the shape of his own year: real revenue, a real business, and a set of figures that had been quietly hiding how much of it he got to keep
The truck payment was one symptom of a wider pattern. Anchor Point's books got real attention exactly once a year, when the accountant closed them out.
"She looks at the books once a year. Once a year."
— Jared
For the other 364 days, decisions about pricing, hiring, and spending were made on instinct.
QuickBooks was already paid for and installed, but it was doing one job: sending invoices. "Literally all we used it for was sales software," Jared said. "Didn't use it for anything else." No bank feed, no expense tracking, no read on cash position between one accountant visit and the next.
Layered on top of that were an estimated $100,000 to $200,000 in cash jobs last year that never made it onto the books at all, good for avoiding a tax bill in the moment but devastating for anyone trying to calculate a real gross margin, since a six-figure swing changes almost every conclusion you'd draw about the business.
Stuart checked what Jared did have against the benchmarks for a healthy business Anchor Point's size: operating expenses around 30% of revenue, cost of goods around 50%, landing at a 15% to 20% net profit margin. "So this is saying you have 25% at $100,000 a month, which I suspect isn't accurate," Stuart told him, working through Jared's own cost estimates. "Something's missing from your cost basis." Even the rough math didn't hold together, because the inputs feeding it were incomplete.
The blind spot doesn't stop at bookkeeping. It follows Jared into every other decision he makes.
A marketing agency pitched Jared on $10,000 a month to generate 30 additional leads, a cost of $333 per lead. He pushed back on instinct, comparing it to the roughly $2,000 a month he spends with HomeAdvisor for what he suspected was similar volume, but he had no clean cost-per-lead figure of his own to argue from. Last year's real average, once Stuart calculated it, was $80 a lead. The instinct was right. Proving it meant Stuart doing math that Jared's own systems should already have handed him.
Pricing has the same problem underneath it. Sales and production don't always agree on what a job should have cost, and when jobs come in underpriced or outside Anchor Point's usual scope, the friction shows up as tension between crews rather than as a figure anyone can point to. Without job-level costing, nobody can prove "we lost money on that one" beyond a gut feeling.
The mechanism here has nothing to do with foundation repair specifically. Any trade financing equipment can hide the same phantom profit.
An HVAC company financing 3 service vans at $900 a month each owes almost $2,700 a month in principal payments that never touch its P&L, the same shape as Jared's truck loans, just with a different vehicle and a different trade name on the door. An electrical contractor leasing a bucket truck and a trailer of testing equipment can end up with an income statement and a bank account telling two different stories, for exactly the same accounting reason.
A weekly cash scorecard that tracks real bank position alongside the P&L catches the drift immediately, regardless of trade, whether the financed equipment is a foundation crew's trucks, an HVAC company's vans, or an electrician's testing gear.
If your P&L says one thing and your bank account says another, the reason is almost never a mystery once someone looks for it. Book a 30-minute call to find out what your own numbers are telling you.
Jared's revenue was solid, $1.319 million booked across 132 jobs. The part he couldn't see was where it went once it hit the bank: enough of it sitting in truck payments, cash jobs, and his own paycheck to make the business look nothing like what the P&L said it was.
Fixing it took no new sales, no new marketing, and no bigger crew. It took a monthly rhythm that showed Jared what his own business had been doing all along, and once he could see it, decisions that had felt impossible for a year became much easier to make.
The most common reason is loan principal payments. Interest on a loan counts as an expense and shows up on your P&L, but principal is a debt paydown, not an expense, so it never appears there even though the cash still leaves your account every month. Equipment loans, vehicle financing, and lines of credit all work this way. Read more in Why Your P&L Is Lying to You.
Monthly, at minimum, with a simple weekly scorecard in between. An annual review from an accountant is built for tax compliance, not for running a business. By the time it surfaces a problem, you've already made 11 months of decisions without knowing about it. Read more in The Weekly Scorecard.
Model it as a fixed cost, not a leftover. A market-rate CEO salary for a business this size runs around 5% of revenue. If you're paying yourself meaningfully less than that to keep the business afloat, you're not running a profitable company. You're subsidizing one with your own paycheck. Read more in The Revenue Lie.
It matters more than the tax exposure. Once $100,000 or more in real revenue is untracked, you can't calculate an accurate gross margin, know your true average job size, or tell whether the business is growing or just doing more unrecorded work. Read more in Job Costing for Contractors.
Yes. A tool that only sends invoices isn't a bookkeeping system, whatever it's called. Without your bank accounts, credit cards, and expenses flowing through it, you have no reliable read on your cash position between accountant visits. Read more in The Weekly Scorecard.
Stuart Trier is the Founder and CEO of Clear Results. Over the past 20 years, Stuart has built, bought, and sold 11 companies across the home service, healthcare, and marketing industries. He built his first company from startup to $8M in revenue in 3 years before a successful exit, then built a chain of 28 healthcare clinics and sold the business to a publicly traded company. Following that acquisition, Stuart spent 3 years working alongside the CEO, helping lead the organization through a take-private transaction before participating in a nine-figure exit to a Fortune 10 company. Today, he's the lead investor behind an electrical services platform operating across 3 U.S. states, and has worked directly with owners through 1,800+ strategic advisory sessions.
