Progress Billing for Construction Sample for Businesses that Drive Efficiency

Progress billing for construction sample for businesses

[Music] hey it's karen with 24 hour bookkeeper and i'm going to talk about progress invoicing today why is it important for progress invoicing to be a part of your construction company or your construction business is because it allows you to ask for money and to have a great way to keep track of that basically so if i'm gonna go ahead and build a house for four hundred thousand dollars it is unlikely that i'm going to ask the customer for that amount for the whole 400 000 i mean that's just not what the process is right so i need to come up with a way to work with my customer ahead of time and find out how i'm going to ask for money throughout the project if you don't use any type of progress in voicing i guess function or process and you just ask for money when you feel the time is right i'm not going to say that's the worst way but maybe it's not the best way so the first thing you should do is in your contract when you work with a client and you went ahead and did the estimate and they agreed it would be a great idea to implement a process of how you're going to ask them for money it's kind of nice to lay down the table ahead of time so i am going to say i'm going to bill you after these phases or i'm going to bill you every month or whatever the case may be that would be the first step in your progress invoicing you would also do that against the estimate so you can have a contract that states how you're going to ask for money but ultimately you're asking for a portion or a dollar amount against the original estimate or the bid on the job so once you've went ahead and asked for that or have identified i guess how you're going to ask for money there's the way to actually go in and ask for money so now you've started the project you've got the contract agreements and all that's good you started the project and now it's time to ask for the first portion there's the real life portion and then there's the software or accounting way of doing that so in real life i can just call i can send an email my project management software might be able to just send them a message that says hey something's been loaded in your portal it can look like an invoice it can be an bill it could be um a simple request it could be anything and that's fine and that doesn't matter for what i'm talking about today so once you've um identified that it's time to bill you could number one look at how you've asked for billing and then if you're using something like quickbooks you can go in and have that estimate already pre-loaded into your quickbooks file and then use the progress invoicing function we have another video on progress invoicing so make sure to check that out okay so now i've preloaded my estimate or in general i have a physical estimate it's time for me to bill i know what portion it's either a percentage or a dollar amount so now i'm going to create that against that estimate if i'm in quickbooks i literally am going to create an invoice from my estimate and then it's going to ask me for a percentage or a dollar amount it allows me to create an invoice that again could be used it could be a phone call or it could be a form um and then allows me to say okay out of my 400 000 estimate i have now asked for thirty thousand dollars that leaves me three hundred and seventy thousand dollars left to bill and when i get to the next milestone or the next piece i will be able to ask for the next step of that money if it is not predetermined and it occurs per the billing for example if you're on a cost plus structure you need to gather all of your bills again you have given them an estimate you they have a tentative idea of what this is going to run and then you can go ahead and progress invoice so that's what progress in invoicing means i'm taking chunks of cash and asking for it against my original estimate in bid how can you incorporate progress invoicing it's literally in my personal opinion working it out with the client and then making sure you have the right accounting system in place to do that if you're using project management software uh like a builder trend or a co-construct and implementing that with quickbooks you um there's you know two or three different ways to do that um and then again having the real life side of knowing kind of where you sit and how you're actually asking physically for that amount of money so for more tips i guess more information on related to financial management subscribe to our newsletter leave some comments check out our youtube channel and i will catch you next time [Music]