Q3 Trends in Contractor Accounting
As the year progresses, we like to take a step back and review the previous quarter to identify trends within the contractor industry. Since Waterford specializes in the contract trades, we get a real-time view of those trends. We pride ourselves on understanding industry KPIs and ensuring that not only our clients, but also all plumbers, HVAC, and electrical businesses, have access to some of the most up-to-date information.
We have already released our blogs on Quarter 2 and Quarter 1 for 2025, so if you are curious how your business did in comparison, you can review those here:
HVAC: Summer Quarter
Jumping into Quarter 3, we’re going to look at HVAC first. Now, July is an extremely hot month, as it usually is, so we saw a lot of great sales in July.
However, this did not extend into the rest of the quarter. August was very stagnant. It wasn’t a particularly bad month, nor was it a particularly good one.
This trend carried over into September, as we had some clients who performed well and others who did not. There are obviously many regional factors that could be at play in September, especially. September could be considered a wild card, but overall, we are seeing better numbers than we did in 2024 for quarter 3. This is due to those great increases in July.
If your business saw minimal increases due to a pretty steady climate this summer, you are not alone. July’s peak, compared to most heatwaves in August, paired with a wildcard September, left HVAC businesses confused and not as well-prepared as they usually are for winter.
Plumbing & Electric: Slowly Climbing up
Considering both plumbing and electrical, there was a low revenue stream in July. This is partially because people were paying for their HVAC units. If you are a company with separate departments for HVAC, plumbing, or electrical, it is likely that the two will have opposite revenue patterns in high-revenue months. Although July did not have any remarkable sales, we did see some slow increases in August and September.
Luxury Trades: Year over Year Improvement
Now we also like to touch base on some more niche or what we call luxury trades. We consider these as luxury trades due to their fluctuation based on the amount of extra income people have. As for landscaping, pressure washing, exterior cleaning, and pest control, summer is always a more lucrative time.
Especially for landscaping, because grass is growing, people want to enjoy their outside space more, so they might be making more updates, and the weather’s cooperating. The same goes for exterior cleaning and house washing. Just because the weather is cooperating, many people will look to book those services.
Pest control is a bit more complex, simply because in certain regions, many things can be happening with specific types of bugs. Usually, Q2 is better for pest control, as you have all those bugs coming out for spring.
To put it simply, we’re seeing steady revenue streams for these luxury trades. We’re starting to see more increases than we’ve had year over year. It is nothing extreme, but it is a slow increase across the board.
For General Contractors, we’re seeing rising activity as more clients pursue renovations or new builds. The Federal Reserve’s interest rate drop has enabled more people to secure loans for these projects or to start building their dream homes.
Costs Across the Board
Labor costs are increasing across all industries, not just in HVAC, plumbing, and electrical fields. This trend relates to the extra payroll many experienced in Q3—the third payroll for biweekly or the fifth for weekly pay schedules.
Material costs are also rising in margin—not due to higher prices, but because lower sales amplify the impact of fixed material costs. This may be influenced by your accounting practices; companies that do not use accrual accounting lack month-to-month clarity. For example, paying a vendor in July for six months’ worth of materials will attribute all costs to July under the cash accounting method.
Looking to Q4, we anticipate higher revenue for general house cleaning and junk removal as holidays approach. Homeowners often prepare for gatherings by engaging in extensive cleaning, which boosts these sectors. Additionally, holiday lighting sees increased seasonal demand, with pressure washing or landscaping companies often diversifying into this area to offset seasonal slowdowns. Diversification helps capture new revenue streams beyond their traditional busy period.
We also expect minor spikes in electrical, HVAC, and plumbing as clients prepare to host. People may address deferred electrical repairs or HVAC adjustments to meet guests’ comfort needs as temperatures fluctuate.
We’ll return in early January with a Q4 report. As a reminder, now is the optimal time for tax planning. Assess your business’s financial status proactively to avoid last-minute stress and make informed tax-saving decisions.
Check out our YouTube video Q3 Contractor Trends in Accounting James for a first-hand recap.
If you’re unsure of your current financial standing, contact us at info@waterfordbusiness.com or 854-351-0852. We can assist with services ranging from bookkeeping to advisory meetings, ensuring you stay updated on KPIs.
