P&L Review Process
Purpose
Defines how Josh reviews Spartan's Profit & Loss statement — the cadence, what to look for, and how P&L findings drive operational decisions. ## Who This Applies To
Josh (owner) and the Operations Manager (accounting). Other leadership on a need-to-know basis. ## P&L Review Cadence
| Review | When | Primary Reviewer |
|---|---|---|
| Monthly P&L | First week of each month | Josh + the Operations Manager |
| Quarterly P&L | End of each quarter | Josh |
| Annual P&L | January (prior year close) | Josh + accountant |
## Monthly P&L Review — What to Examine
### Revenue Section
- Total Revenue vs. prior month and prior year same period
- Revenue by Service Type (service calls, installs, drain, water treatment) — identify which lines are growing or declining
- Revenue Per Lead (RPL) — compare to $5,000 target; a drop here signals a pricing or conversion problem
- Lead volume — is revenue declining because we have fewer leads or because we are closing them at a lower average? ### Cost of Goods Sold (COGS)
- Materials cost — flag if materials are an unusually high percentage of revenue (target: watch for over-purchasing or wastage)
- Labor (direct field) — should track predictably to job volume
### Gross Profit
- Gross Margin % — target benchmark per Nexstar standards (Josh to confirm current target with accountant)
- If gross margin is declining: investigate either pricing discipline (are techs discounting? ) or material costs
### Operating Expenses
- Payroll — compare to Paylocity records; verify commissions paid match closed jobs
- Vehicle/fleet expenses — flag unusual fuel or maintenance spikes
- Technology (ServiceTitan, Paylocity, Tradeshift subscriptions) — review annually for unused licenses
- Insurance premiums — confirm aligned with current coverage schedule
### Net Profit
- Monthly net margin target: Josh to set with accountant
- If net is negative: identify whether it is a revenue problem, a cost problem, or a one-time extraordinary item
## Commission Reconciliation
Slack policy: Commission payouts are contingent on the client's payment status. Commission is only paid on fully collected jobs — including upsells. Any discrepancies between the P&L and Paylocity commission records are investigated by the Office Admin or Jessie. Slack insight: When a commission discrepancy is identified, the Operations Manager or Jessie investigates and corrects it, involving team members like Ali or Bryan to verify sales data or invoice details. ## Cash Price Policy
Spartan does not offer cash prices. From Slack: the policy exists because of tax implications and the inability to cover equipment costs at significantly reduced rates. Any customer requesting a "cash price" receives the standard price. No exceptions. ## Important Notes
- P&L data lives in the accounting system (The Operations Manager manages). Josh pulls from this, not from ServiceTitan alone — ServiceTitan shows revenue and COGS but not full operating expenses. - Do not make major hiring or capital decisions without checking the P&L first. - Home warranty jobs (e. g. , First Choice Home Warranty) may cap coverage — techs must break down parts vs. labor separately on reports to warranty companies to capture full reimbursement. ## Related SOPs
- Annual Budgeting Process — how the P&L is used for planning
- Cash Flow Management — liquidity beyond P&L
- Compensation Structure & Pay Bands — how payroll maps to P&L