5 Ways Contractors Lose Money on Paperwork (and How to Stop It)

Ways Contractors Lose Money on Paperwork

Contractors lose profit to missing change orders, slow invoicing, compliance gaps, and sloppy documentation. Here are five fixes that pay back fast.

Paperwork doesn’t feel like “real work,” but it is directly tied to cash flow. In contracting, your margin can disappear in the gaps between field reality and office records.

Here are five common ways contractors lose money—quietly—through paperwork, and what to do instead.

1) Unapproved or undocumented change orders

What happens:
The client asks for “just one more thing.” The crew does it. Nobody writes it down. Or it’s written down, but not priced, not approved, and not tied to the schedule.

How you lose money:

• Labor and materials never billed

• Disputes later: “That was included”

• Project schedule drifts, overhead rises

Fix that works:

• Create a change order workflow:

  1. request logged (photo + description)

  2. costed within 24 to 48 hours

  3. sent for approval (e-sign)

  4. added to invoice + schedule

• Standardize language: “Work begins after written approval.”

• Train PMs and supers: no approval, no work (except safety/emergency).

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2) Slow invoicing and missing backup

What happens:
Invoices go out late, or they go out without the documentation the GC or owner needs to approve payment (timesheets, delivery tickets, daily logs, completion photos).

How you lose money:

• Payment approvals stall

• Cash flow gets tight, forcing expensive financing or slowing jobs

• Your team spends hours “rebuilding history”

Fix that works:

• Invoicing rule: bill on a schedule, not “when we get around to it.”

• Use a closeout checklist per billing period:

  • signed tickets

  • inspection signoffs

  • lien waivers status

  • progress photos

• Store proof in the same place every time (same folder structure per job).

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3) Missing lien waivers and compliance deadlines

What happens:
Waivers get requested after the fact. Sub waivers don’t match the amounts. Certificates, permits, or safety docs expire. Someone asks for a W-9 again. You scramble.

How you lose money:

• Pay apps get rejected

• Releases get delayed

• You lose leverage if disputes arise

• You burn admin hours

Fix that works:

• Make compliance proactive:

  • Track waiver status by job and vendor

  • Keep a compliance calendar (COIs, licenses, permits)

• Use a single intake packet for subs:

  • W-9, COI, contract, safety docs, banking info

• Don’t start subs without completed onboarding.

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4) Bad time tracking and job costing data

What happens:
Hours are entered late, coded wrong, or not tied to the right cost code. Material receipts live in trucks. Equipment time isn’t tracked. “We’ll sort it out later.”

How you lose money:

• Your job costing lies to you

• You underbid future work

• You can’t spot overruns early enough to stop them

Fix that works:

• Track daily, not weekly.

• Require:

  • time entries by cost code

  • photo of receipts same day

  • daily field report with blockers and progress

• Review job costs weekly with PM + field lead. Catch drift early.

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5) Scope confusion caused by messy document versions

What happens:
Field is building off Revision B. Office is pricing off Revision D. The client references an email from three months ago. Nobody knows which version is “the contract.”

How you lose money:

• Rework

• Delays

• Disputes and change order fights

Fix that works:

• Declare a single source of truth:

  • Final signed contract and exhibits

  • Latest approved drawings/specs

  • Approved change orders

• Lock naming conventions:

  • ProjectName_DocType_Rev#_YYYY-MM-DD

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• Stop emailing attachments as the primary method—use links to controlled storage.

Wrap-up: paperwork is profit protection

Contracting is already a thin-margin game. If your documentation is sloppy, you end up financing the project with your own profit.