What Does Code Refactoring Mean, and How Can It Solve Technical Debt?

Your legacy system is working. Sort of. It gets the job done, but every change takes longer than it should. Your developers dread touching certain parts of the code. And that nagging worry keeps surfacing: what happens when something breaks?

This is technical debt in action — and code refactoring is how you pay it down. 

Understanding Code Refactoring

Code refactoring is kind of like rewiring a building’s electrical system. When you’re done, you flick the switches, and just like before, the lights turn on. But behind the walls, you’ve replaced messy, unsafe wiring with clean, organized circuits that make future repairs and additions easier. 

In a nutshell, code refactoring is the process of restructuring existing code without changing what it does, so the software is easier to maintain and update. It’s often invisible work, but it can be very important! In fact, refactoring can improve dev speed by 27–43% in frequently changed code. 

But I’ve got an even more impressive number for you. 

In a recent project working on an advanced planning and scheduling (APS) system for a client, our team encountered a function that was grinding through five hours of processing time. After studying the business logic and understanding what the function needed to accomplish, we identified inefficient database queries and redundant processing steps. By optimizing how data was retrieved and streamlining the logic, we cut execution time to under two hours — a 60% improvement that meant faster results for end users and reduced server costs for our client.

Code Refactoring Examples

The need for refactoring hasn't changed fundamentally over the years, but how code gets messy continues to evolve — especially with the rise of AI coding assistants. So in this section, I’ll walk you through both. 

Problems Traditional Refactoring Solves

When we’re brought in on a code refactoring project, it’s usually because one of these things happened: 

Code Got Duplicated Across Multiple Functions or Classes

Picture this: your payment processing logic appears in three different places — the checkout function, the subscription renewal function, and the invoice generation function. That makes sense. But now, when you need to update how tax is calculated, you have to hunt down every instance. If you miss just one, you get inconsistent behavior across your system. 

Code refactoring can consolidate duplicated logic into a single, reusable function that every part of your application can call.

Long, Unwieldy Functions Are Doing Too Much 

When a single function handles multiple responsibilities, like validation, database queries, data processing, formatting, and notifications, it can become a tangled mess. 

These monolithic blocks are impossible to test in isolation, and when something breaks, developers waste hours tracing through the logic to find the problem. 

Code Got Confusing 

Imagine opening a spreadsheet where every column is labeled "Data1," "Data2," "Data3" instead of "Customer Name," "Order Total," "Ship Date." 

Well, that's what poorly named variables can look like in code. When the original developers use vague names like “temp_val” or “flag” instead of descriptive names like “pendingPaymentAmount” or “isEligibleForRefund,” anyone reading the code later has to mentally translate what everything means. 

Add in nested if-statements six levels deep and business logic buried in loops with cryptic comments like "This fixes the Tuesday bug," and you've got code that takes your senior developers 20 minutes just to understand. 

On refactoring projects, we’ll rename variables to reflect their actual purpose, extract complex conditionals into clearly-named functions, and document the "why" behind non-obvious logic — transforming code from a puzzle into something readable.

Problems Associated With AI-Generated Code

If your development team uses AI coding assistants like GitHub Copilot, ChatGPT, or similar tools, you're likely encountering a new category of technical debt. You’re not alone: 76% of developers said they have to refactor at least half of AI-generated code before it's production-ready.

The issues? AI tools excel at generating working code quickly, but that code often comes with problems: 

1. Studies show a fourfold increase in code cloning when developers use AI tools, creating maintenance nightmares down the line.
2. AI-generated code often features poor readability and non-standard patterns, making it tough to decipher. 
3. AI-generated code may technically run, but it may require substantial refinement to work correctly in your specific environment.

To be clear, this isn't an argument against using AI coding tools. They can significantly boost productivity. But it does mean that foundational knowledge is important, and refactoring has become more important than ever. Teams need processes in place to clean up AI-generated code before it accumulates into serious technical debt.

What Are Common Pitfalls To Avoid When Refactoring Code?

Even with the best intentions, refactoring can go wrong. Here are the mistakes we help clients avoid:

Creating New Bugs Without Test Coverage

Changing code without comprehensive tests is like performing surgery blindfolded. At Capmation, we’ll establish thorough test coverage to catch any unintended changes in behavior before any refactored code goes live. 

Refactoring Without Understanding the Business Logic

Code that looks unnecessarily complex often exists for a reason. 

It’s important to take time to understand why the code was written the way it was before making changes. Sometimes what appears to be bad code is actually solving a subtle business requirement.

Updating Dependencies Without Compatibility Checks

Library updates can break existing functionality in unexpected ways. Be sure to verify compatibility thoroughly before updating any dependencies, so your system continues working as expected.

Underestimating the Timeline 

Even with careful planning and accurate estimates, bugs and additional tasks often arise that weren't considered in the original timeline. This isn't a sign of poor planning — it's the nature of refactoring work. The code you're improving has often accumulated years of patches, workarounds, and undocumented decisions. You can't know what you'll find until you're in it.

Code Refactoring Best Practices

Whether you’re hoping to tackle code refactoring in-house or work with a partner, here are the practices that consistently deliver success:

Understand First, Change Second

Never refactor code you don't understand. Take time to map dependencies, identify business rules, and document current behavior before changing anything.

At Capmation, before we touch a single line of code, we map out what it's actually doing. We trace how data flows through functions, identify which parts of your business depend on specific behaviors, and document what we find. 

Capture Important Knowledge

Critical business knowledge often exists only in people's heads — the long-time employee who knows why certain logic exists, or the original architect who understood the system's quirks. 

At Capmation, here’s how we work to preserve this knowledge: 

• Recording sessions where experts can walk viewers through the entire system, including what the code does and why it’s set up like it is 
• Creating diagrams that document technical structure and business logic
• Scheduling interviews to verify our understanding and catch edge cases that might not be obvious from the code alone

Make Small Changes With Continuous Testing

We don't rewrite entire systems in one go. 

Instead, we make incremental changes — each one small enough to test thoroughly before moving to the next. After every modification, we run comprehensive tests to confirm nothing broke.

As we build test coverage, we're simultaneously creating living documentation that captures how the code behaves. These tests become the safety net that protects against regressions.

Document as You Go

Document not just what the code does, but why certain decisions were made. Future developers (including potentially yourself) will thank you. 

When It Makes Sense To Outsource Code Refactoring

If your development team is like most, they may have their hands full with feature requests, bug fixes, and keeping the lights on. Adding a major refactoring project to their plate often means something else gets deprioritized — usually the work that's bringing in revenue.

So when does it make sense to bring in outside expertise? Here’s my two cents. 

Handle refactoring in-house when: 

• Your team is deeply familiar with the code base and understands its quirks 
• Your team has refactoring expertise, as well as the patience required to approach it methodically
• Your timeline is flexible, and the project won’t disrupt other more important ones
• The scope of the project is fairly limited 

Bring in a software partner when: 

• Any failure could disrupt options or cost significant revenue 
• You need results faster than your team could provide 
• Your team doesn’t handle refactoring projects often, or they’re at capacity 
• You suspect that an outsider’s perspective will catch things that people too close to the code might miss 

Our Approach to Code Refactoring

When you partner with Capmation on code refactoring, you're not just getting cleaner code that will make it easier for your business to grow and evolve. That’s a given! 

Here’s how we help set up our clients for success during the project, and long after our work is done.

A True Partnership

When we work with a client, we don’t just take orders and check boxes. We think through how we would approach the project if it were for our own business. 

Refactoring isn't about showing off technical prowess. It's about making your business run better. That’s something we never lose sight of. 

Transparent Communication

You'll always know where the project stands, what we're working on, and what comes next. 

Comprehensive Testing 

Before we’re done, we make sure that the refactored code works exactly as intended, with no unpleasant surprises.

Complete Documentation 

We offer everything a developer would need so that future maintenance is straightforward — including technical manuals, flow diagrams, and architecture maps that preserve business knowledge.

Knowledge Transfer and Staff Training 

Refactoring is all about making it easier to make changes later! Training is an important part of that, so we provide in-house teams with everything they need to manage the refactored system long after we're gone.

Post-Delivery Support 

Every business’s needs are different. We’re happy to include flexible maintenance plans tailored to your needs, whether that's dedicated weekly hours or on-call support for critical issues.

One Final Word on Tackling Technical Debt

Technical debt doesn't disappear on its own. It accumulates, slowing development, increasing costs, and creating risk. Code refactoring is one way to take control — transforming brittle, confusing code into a maintainable asset that supports your business growth.

That said, refactoring isn’t a one-time fix. Every application, system, and codebase can be improved and should be revisited periodically. Libraries get updated. Business logic changes. New requirements emerge. What was clean code two years ago might now be holding you back.

The most successful organizations treat refactoring as regular maintenance, not emergency repair work. Just like you wouldn't wait until your car breaks down to change the oil, you shouldn't wait until your code is unmaintainable to improve it.

The question isn't whether you need to address technical debt. It's when and how. If you know your software is holding you back, contact us to schedule a free whiteboard session — a no-cost consultation where we can explore the best ways to help you meet your goals on time and on budget. Click the link below to get a clearer overview of how we approach software development!