The most important finance KPIs for your plumbing and heating business

If you don’t measure it, you can’t improve it. In your plumbing and heating business, your financial KPIs (key performance indicators) are the scoreboard. They tell you what’s working, what needs fixing, and where your money is slipping through the cracks.

In this blog, we’re diving into the most important financial and non-financial KPIs every P&H business owner should be tracking. These aren’t just numbers for your accountant to worry about. They’re your tools to make smarter decisions, boost profits, and build a business that runs smoothly with or without you.

Track these numbers if you want control

Gross profit percentage

This is your first big number. Your gross profit percentage tells you how much money you actually keep after covering your direct costs (materials and labour) before paying for overheads. If you don’t know this number, you’re flying blind.

• Formula: (Gross Profit / Revenue) x 100

• Tip: Identify any month where this percentage drops. Dig into the jobs that caused it and find out why. Poor estimating? Labour overspend? Wrong pricing?

Debtor days

Ideally, you shouldn’t have debtors at all. You’re a P&H business, not a bank. But if you do offer credit, make sure it’s under control. Long debtor days often signal cash flow issues on the horizon.

• Formula: (Average Debtors / Total Credit Sales) x 365

• Tip: Set a target and put proper credit control policies in place. If it’s blowing out, ask why. Who’s slipping through the net?

Net profit

You work hard. Your business should pay you back. Your net profit tells you what’s left after everything else. If you’ve set prices based on a break-even analysis and net profit target, this is your benchmark.

• Formula: (Net Profit / Revenue) x 100

• Tip: Set monthly, quarterly and yearly net profit targets. If you miss the mark, go back and investigate.

Material markups

You should know exactly how much markup you’re applying to materials. If you’ve set a target and your actual markup doesn’t match, something’s wrong.

• Formula: (Selling Price – Cost of Materials) / Cost of Materials x 100

• Tip: Stock issues, team errors, or even theft can cause slippage here. Don’t ignore it.

Savings target

VAT and corporation tax will come knocking. Will you be ready? Setting and hitting a regular savings target means you’re not caught short when the bills land.

• Tip: Automatically transfer a fixed percentage of revenue or profit into a separate savings account each month.

EBITDA margin

This strips away tax, interest, depreciation, and amortisation so you can see how your business is performing operationally.

• Formula: (EBITDA / Revenue) x 100

Current ratio

A quick snapshot of your ability to pay short-term liabilities.

• Formula: Current Assets / Current Liabilities

Quick ratio

Like the current ratio, but stricter. This excludes stock to give a clearer picture.

• Formula: (Current Assets – Stock) / Current Liabilities

It’s not just about the numbers

Invoice processing time

How long does it take your finance team to process invoices? If it’s dragging on, you’re risking late payments and strained supplier relationships.

• Formula: Total Invoice Processing Time / Number of Invoices

Error rates in financial reports

Financial reports should be accurate. If you’re seeing errors, it could cost you in poor decisions and non-compliance.

• Formula: (Number of Errors / Total Reports) x 100

The story your numbers tell

Every number in your accounts has a story behind it. Profit margins, markups, hourly rates, estimates ratios – they all form part of your KPI dashboard. But if what you’ve set in theory doesn’t match what’s happening in real life, that’s your red flag. Time to ask why.

• Are markups not being followed?

• Are team members setting their own rules?

• Are you leaking money through inefficiencies?

Think of your business like a bucket. Every missed KPI is a hole. You either plug it, or keep pouring water into a leaking system.

You don’t need to track every number under the sun. But the right KPIs, reviewed regularly, give you the insight to steer your business with confidence. Get your finance department tuned into these metrics and you’ll know exactly where your business stands, what needs fixing, and where the opportunities lie.

For help with pricing, quoting, systemising or simplifying your business, drop us a message at [email protected]. Whether it’s The Quote Handbook, The Systems Handbook, or our all-in-one toolkit Business in a Box, we’ve got the tools to help systemise your operations and move your business forward.