Discover a Progress Invoice Example for Customer Support that Streamlines Your Workflow

Progress invoice example for Customer Support

QuickBooks Online 2023 progress invoicing example one estimate projects classes and customer deposit get ready to earn the skills needed to boost your bank books on up with QuickBooks Online support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website Broken Out by category further Broken Out by course each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page we also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable so once again click the link below for a free month membership to our website and all the content on it it we are in our QuickBooks online test company file we started up in a prior presentation we also have open in a separate incognito window the free sample company file if you want the two open at the same time we suggest using incognito window which you can open if using Google Chrome selecting the three dots in the browser incognito window typing into the search engine QuickBooks online test drive selecting the option that has intuit.com in the URL into it being the owner of QuickBooks Online the sample company being useful to enter data and practice input that we don't want in our test company file and it can also be useful to toggle back and forth between the accounting view the view the test company file is in and the business view the one the sample company file is in you can toggle back and forth between those two views by going to the Cog up top up and switch the view on down below last time we turned on the progress invoicing which you could find in the Cog up top in the settings on the left sales tab on the left and then you've got your progress invoice and that needs to be turned on gonna close this out and run a couple different scenarios with the progress invoicing so we can see this issue of the invoicing getting paid versus the revenue recognition Concepts so in order to do this I would also like to turn on class tracking class tracking is something that will typically be available in the Pro Plus version and higher I believe and may not be available on the prior versions to that but you can do similar types of things with the tags so the tags is another option that you can basically use to do some of this functionality as we kind of track of the project 6 and then I'll also turn on the projects over here which are common to be used in a job cost type of system and the job cost systems are those where we have this Revenue recognition concept so I'm going to do some kind of double check in using multiple of these tools we'll get an idea of what these tools are are doing as well as the revenue recognition concept and how the progress billing can kind of fit in that as well so I'm going to turn on the class tracking by going to the Cog up top once again the account and settings and then I'm going to go down to this item for the categories and we have two things uh within here we've got the class tracking and uh the look track locations now these do similar kind of things when you think about these two options you want to be thinking basically the income statement but sometimes some of the balance sheet accounts as well but primarily we're thinking income statement accounts can be broken out point by class so so that's what we're looking into but the location tracking will typically assign one of these kind of uh tracking items which could be a location but you might use it for other things as well per transaction whereas the class tracking will allow you to do a class per line item within each transaction so if you have an invoice you might be able to put a class on each lined item within the invoice whereas the location tracking would force you to put the entire invoice into one category now with Revenue recognition on like a job cost system the class tracking for our purposes may be better because if we were to purchase something like materials it might be useful for us to have one expense form that can apply that purchase to be to multiple jobs in our case which we might use the classes for as opposed to having that whole purchase be assigned to one uh one location kind of field otherwise they're somewhat similar now note that if you have multiple things that you want to be breaking out and sorting by then it's nice to have both of these because then you can have location tracking for example and then also class tracking so that you can assign both of those to the same transaction because you can't normally assign multiple classes to one line item of one transaction but you can you can assign a location tracking to the whole thing and then a class tracking to it and then if you want further detail such as by by uh sales agent or something like that then you can also use the tags but I'm going to turn off the location tracking now just the class tracking and uh also I'll save that make sure that that is going to be saved and then also in the uh in the expenses area I want to turn on make sure the billing is turned on and I believe this is on by default now but I'm gonna say make expense items billable we'll use this later and then I'm actually going to use a markup of 30 we'll get into the detail on this later so if you don't save this now I'll probably touch on it again but we'll use that in the future which is quite common for these longer term kind of job situations now the other thing we're going to look at is this projects thing over here which is another one which may not be available it's available from QuickBooks Pro Plus which is what we're using here on up may not have as much function with this one if you go into prior version so so when you're thinking about your different uh tools that you're going to use you want to keep that in mind you again you could use tags to do a similar kind of concept that you do in projects but projects for a job cost system has for the most part A lot of times kind of taking over the concept of the jobs or sub customers although we could still use sub customers in alignment with projects because we could have signed the projects to the jobs but the Project's a little bit different than the the classes and the locations because the projects are going to be assigned to a particular customer as well so we're not just assigning every every transaction these are going to be tied to a customer or or that will have a project related to it which is often the case for like a construction or a job cost kind of system so for example if I set up a new project here I'm just going to say this is going to be a project number one notice it's required that I tie that project to a job so I'm going to tie the project to a job and then I'm going to say I'm going to put everything as of uh oh one uh let's let's make this let's actually make it in the middle of the 07 uh 01 I'm going to be working in the future 2025 and then I don't know the end date it's going to be in progress and then we can put notes on the project so we'll track it by projects as well and hopefully this will become more apparent why I want to do like multiple uh tracking with the projects and uh with the classes when we get into some of our our later kind of Concepts so now let's first do do a simple kind of idea in our billing structure we're going to say okay let's say we make an estimate the estimate's going to say that we're going to be having a 100 000 uh job and that that we're for whatever reason we're going to say that the billing structure is going to be this is our billing structure so let's say that we have our job that we've we've told the client we're going to bill you based on our billing structure no matter what actually happens with the project we're going to bill you this way but as the project takes place the project actually ends up running this way in terms of the of the cost so then you get into this Revenue recognition issue so first I'll I'll just run it as though we're gonna bill it we're gonna just bill it with our progress invoicing and we're not going to recognize we're not going to worry about the time frame with the revenue is recognized and then we'll kind of record our costs as they happen and then in the second project we'll try to we'll try to do something more closer to like a percentage of completion type of thing just to see what the difference is so let's say that we make an estimate now I'm going to say all right let's make an estimate so we'll go okay and let's go boom estimate it's going to be an estimate form and we'll say this is going to be for customer project one now so it's for the project and you might open that estimate from the projects field so I could go into my projects and here's my project number one and so nothing's nothing no income no cost note that these projects as well will be tracking basically income statement items but they give us a lot more detail in the in the transactions detail the time activity the projects and they give us a little bit more capacity to allocate costs and some more Integrations oftentimes with things like payroll when we're trying to allocate costs to the jobs uh so so projects could be quite useful all right so we're going to say we could say that our in here I'm not going to add a new project what I would like to do is hit the drop down and add an estimate I want an estimate all right so now it's going to project one by default and I'm going to say that this is going to be as of 0.70125 and then I'm just gonna basically make up my my products uh that I'm going to sell I'm going to pretend it's going to be a job cost kind of system so the three major buckets that all of our items would be falling into would typically be some kind of materials some kind of Labor and then overhead so I'm going to make just three items for those for those three items just generically but in practice of course we would have more specialized items that we would be purchasing which would fall into the general overarching categories materials labor and overhead generally all right so we're going to say add I'm going to add an item and I'm going to make it a non-inventory item because I'm not gonna I'm not gonna track the item in inventory with like lifo fifo or whatever this is going to be materials and materials so they they've got a nice check on my spelling there so hopefully I'll still mess it up but Okay so we've got the materials and I'm gonna say that's gonna go here and then the income account I'm gonna say is product sale of product I'll try to keep that as my normal income I'm also going to say on the purchases side when I when I have the materials when I expensed the materials I want to go into cost of goods sold so that allows me also to pull the materials into an invoice as an item uh uh and and it allows me to also expense them so so when I'm making when I'm paying for the materials gonna go to cost of goods sold and when I'm invoicing for the materials it's going to go to sales of product that double thing can be a little confusing at first but that's part of the process so let's say the materials are forty thousand I'm just putting a generic number here for 40 and then I'm going to put a class now I'm going to add a class and I'm going to say this is class one which is going to stand for project one project one right or job one right so I'm it's being redundant here because I already have it in Project one but I'm also going to class track it allowing me to break out the an income statement but also some balance sheet accounts uh by class okay and so then I'm gonna say the other's gonna be labor I think that's how you spell it labor and let's say a non-inventory same thing copy that put it here and then here this should be I'm gonna say sale of products the labor is going to be a sale of product because we're we're going to be building something is the idea and then we're going to sell it so then we're going to say cost of goods sold is the other side and let's say that's for 30. thousand and then I'm going to say one more which is overhead let's say non-inventory overhead we'll say boom copy selling and this is going to be this is going to be here same thing and here and cost to get sold so those are the major buckets that we would we would have our items into uh so let's say this let's say this was 45 000 I'm going to change it up a bit and then uh 30 and then 70 and then 25 000 to get to that nice 100 000. now these are all going to be going to class here now the the class and the project don't matter all that much from an income statement standpoint because the estimate isn't going to be recording uh anything to the income statement yet but if I pull over to an invoice from the estimate then the class should pull over as well as the project should pull over we can also add a tag if we want I'll do the same tag project project one here let's say let's say tag job well I'll keep it project one it looks a little redundant when we say that but just so we could see the different ways we can track that all right so then I'm going to say let's save and close it save and close it so nothing's happening uh in here in terms of the income and costs if I go to the sales Tab and I go to my uh my all sales item I can see my estimate down here so the estimate is pending I can send out the estimate and I can convert it to an invoice which will give me that option since I have the progress invoicing to break out the invoice I can also go to my customers and see I've got my estimate over here for for the customers if I clear that and I look at customer number one then we have our our estimates okay so now oftentimes the first thing we're going to want to do is get money before we buy the stuff so if it's a longer term project so in this case we're going to imagine we're gonna take ten percent down on on the project now from like I say from a from a revenue recognition standpoint uh we would have the situation where if I jump to my flowchart over here we're basically going to be receiving a payment before we did any work right so so you would think then normally we would have to say cash goes up and the other side would go into unearned revenue or customer deposit like a liability or account or something so I could actually use the receive payment form to do that but uh I sometimes I might want to actually use the invoice because the invoice is the easiest form to convert the payment so they actually pay me on it because they can have the easiest kind of payment functioning to get paid from it so we'll so for the first let's we're gonna first say let's not even think about the the revenue recognition and I'm just gonna do the easy thing which is which is to just get paid and I'm just gonna make basically my progress invoicing from the billing schedule that we already that we already set up so I'm gonna go okay I just want them to pay us so I'm gonna say I'm in let's go back to the projects so we do everything from Project one to make sure I have everything from there and I'm gonna say that we're gonna get paid now so when we when we uh get paid I can I could do it a couple different ways I can hit the drop down and say that well I'm going to request uh for us to get paid I can make an invoice here or I could go to the estimate itself and and convert it to an invoice so for example if I make the invoice here then it's going to be pulling customer one and I've got this estimate thing that pops up on the left hand side automatically uh the other way we might do that is to be looking at the sales tab over here I could go to the estimate here or in customer one and say I'm going to create an invoice from this estimate and if I create the invoice it gives me my pop-up this time before I go into the invoice so I kind of prefer seeing the invoice so I tend to say I would like to go into the projects and then go into project one to make sure I know where I'm at and then I'm going to make an invoice so there's the invoice and now it's asking for me to populate the invoice from the estimate so I'm going to say okay populate the invoice from the estimate there's our options I can pull in the total but I'm pulling in ing to my payment structure 30 down where did we go come up with the 30 the 10 I mean we just made it up I said I just want ten percent to start it for whatever reason we constructed our our billing process to be in this format most likely because that's what we think it's going to take for us to get the materials to get to get rolling on things but we're going to say that's going to be that boom I pull it in and it does this nice breakout giving me the materials the labor and the overhead and this nice breakout between them it pulls over the the related class that we pulled in for the class tracking it pulls in our project Tab and obviously it's being assigned to uh project one I'm going to keep the date at seven one and this is quite useful from a billing standpoint because if I email this this to them or if I had some kind of our easy payment set up from the invoice the in our our payment structure is set up through the invoicing they can pay me as easily as possible with the invoice that's that's the point of the invoice so I'm going to say save and close and so now we've got income being recognized now that isn't exactly right from a from a revenue recognition principle because we haven't really done the work yet that's where the problem comes in which we'll take a look at in future problems to kind of see what that looks like but if I go over to the I'm gonna I right clicked by the way and opened a new right click duplicate and now I'm going to open up a report on the left hand side reports and see this thing building our reports we want the balance sheet so I'm going to open up the balance sheet report and then I'm going to right click on it again and duplicate it again and so the balance I'm going to make from 0101 uh two five to twelve Thirty One two five run it and so there's the 10 000 in accounts receivable which is what we want because we want to get paid but the other side's going to income which I can see over here if I go from I'm going to make this from 0.70125 to 123125 and I'm going to try to see this on a month by month Breakout for the end of the year so I'm going to say well this is the balance sheet again let's go to reports I want the income statement profit and loss and then from 0.70125 123125 I'm going to break this out by months run it so so there we have our income statement the problem with the income statement is of course that we've got the income recognized win from a revenue recognition standpoint it really should be in a liability account so the two ways that we can remedy that is we we could have said instead of invoicing I'm just gonna do a receive payment meaning I can tell the client hey look based on the estimate we need you to pay us ten percent and not sent an invoice but just tell them to pay us ten percent that works but it's not as easy to connect the estimate to receive payment because the invoice often has the easy payment options if we're using those payment options to get to to make the collection as easy as possible it might not be a big problem but that's kind of uh one issue and if I hit the receive payment it'll make a negative accounts receivable account which is actually quite nice from a bookkeeping standpoint but but it's not exactly correct because you'd rather have you know a liability account that uh that is that is going to be input from the customer deposit but then then you can match out that receive that receive payment to an invoice that you make in the future that's one method that we could use and we'll talk more about that in the future another method we can use is to use the items on the invoices in a bit more complicated way so it so it doesn't record it to revenue when we create the invoice so those are our options we'll take a look at in a bit more detail in future presentations just so we can see with the job costing notice if I duplicate this I can also run this income statement report by uh by not by months but rather by classes so this allows me if I had multiple classes it'll give me multiple columns and it also gives me a nice total column to to break these transactions out by class which is quite nice now if you don't have the class tracking you could you could use tags to do a similar thing but the tags are a little bit more limited in in the functionality of the of the reports and the the the I'm sorry you can have the tags are and you can also use the some of the balance sheet accounts will also be broken out by the classes is two which we'll get into in future presentations and then of course with the projects they give you this nice little screen within the projects to sort your projects and so you've get you've get basically another kind of income statement functionality reports that you can run by project which are great for individual projects but I still think that this also assigning the classes out is useful because then you can see all the all the projects that you assigned in essence in an income statement column by column format so we'll continue with that uh in future presentations foreign