Hidden Costs, Sundries, and the Illusion of “Small Numbers”

Introduction - Illusion of “Small Numbers”

In construction and engineering businesses, attention is naturally drawn to big costs. Labour, materials, vehicles, and subcontractors dominate conversations and reports. Smaller costs, parking, tolls, travel expenses, minor tools, and sundries, are often ignored because they feel insignificant in isolation.

At Jones Financial Accounts (JFA), we regularly find these “small numbers” quietly eroding margin. Individually they do not look dangerous. Collectively, they can destroy profitability, particularly in £500k–£5m businesses where margins are already tight.

The problem is not that these costs exist. The problem is that they are rarely controlled, recovered, or priced in properly.

Parking, Travel, and Recovery Gaps

Parking charges, fuel top-ups, congestion fees, tolls, and minor travel expenses are part of everyday operations in engineering businesses. Because they are frequent and low-value, they are often treated casually.

When these costs are not tracked accurately or recovered from clients, they become margin leakage. One missed parking charge is irrelevant. Hundreds per month, across multiple engineers, becomes material.

The solution is visibility and recovery discipline. Clear rules around what is chargeable, how it is recorded, and when it is recovered create consistency. When recovery becomes standard rather than optional, margins quietly improve without increasing prices.

Small Costs Compounding Over Time

The danger of sundries is not their size, it is their repetition. A £5 cost repeated 20 times a day across a team quickly turns into thousands per year. Because these costs sit in “sundries” or “miscellaneous,” they are rarely challenged.

This creates a false sense of control. Leadership sees no single line item worth addressing, while margin quietly bleeds away across the business.

Regular review is the fix. Sundries should be reviewed monthly, questioned, and categorised properly. Patterns quickly emerge, allowing businesses to decide whether costs should be reduced, recovered, or built into pricing.

Sundries as Margin Protection

Many businesses treat sundries as unavoidable leakage. In reality, they can act as margin protection when managed correctly.

By understanding what sundries actually represent, travel, consumables, minor tools, site access costs, businesses can decide how they are handled. Some should be recovered directly. Others should be priced into job rates. What matters is that they are intentional rather than accidental.

When sundries are controlled, job margins become more predictable. Pricing becomes more accurate, and the business stops subsidising work without realising it.

For insight into how these costs distort performance reporting, see:👉 https://www.jonesfa.co.uk/blog/how-to-read-a-profit-and-loss-report-in-10-minutes

Internal Pricing Discipline

One of the most common mistakes we see is weak internal pricing discipline. Costs are incurred but not reflected in pricing decisions. Engineers absorb expenses without clarity on recovery, and management assumes they are “too small to worry about.”

Over time, this creates underpricing. Jobs appear profitable on paper but consistently underperform in reality.

Strong internal discipline starts with clarity. Engineers should know what expenses are recoverable. Managers should review recovery rates. Finance should ensure pricing models reflect real operating costs, not idealised ones.

Practical pricing and recovery templates are available here:👉 https://www.jonesfa.co.uk/resources

Practical Steps to Control Hidden Costs

Start by reviewing sundries monthly.

Break them down into meaningful categories.

Identify what should be recovered, what should be priced in, and what should be reduced.

Set clear rules for engineers and managers.

Make recovery consistent.

When leadership treats small costs seriously, behaviour changes quickly, and margins follow.

Key Takeaways

• Small costs matter because they repeat

• Sundries quietly erode margin when ignored

• Recovery discipline protects profitability

• Strong pricing relies on recognising real costs

If small costs are being ignored in your business, they are almost certainly costing you more than you think.

Wrapping up today's insights, tomorrow we simplify another accounting challenge.