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Progress invoice example for Planning

hi one of the most misunderstood features of QuickBooks desktop is progress invoicing so when I show you sort of a quick introduction on how progress invoicing works and in what circumstances you will want to use it first of all we're working with QuickBooks desktop and it could be any version really it could be QuickBooks Pro premier accountant or Enterprise there will be one specific feature while I'm doing the progress invoicing example that must not work in QuickBooks Pro now make sure to point that out so the first thing we want to do is make sure that we have estimates enabled and we also have progress invoicing enabled so I'm going to go into the Edit menu preferences and then I'm going to click where it says job and estimates preferences and then where it says company preferences in here you're gonna see two options you're gonna see do you create estimates yes or no and if I turn that on you're gonna see that progress invoicing is completely blurred out you cannot do progress invoicing without the estimate the estimate is the heart of the progress invoicing so you gotta have the estimates turned on now notice that when I have progress invoice turned on I don't have a feature here that allows me to automatically close the estimates when invoices are created because by definition of progress invoice is whenever we have an estimate and we're basically creating multiple invoices little by little until we complete the job so there's one feature that if I turn off progress invoicing I can hit this check box and the estimate will automatically be closed when I create the invoice against that estimate however because I'm doing progress invoicing I don't want that estimate to close so we basically have to manually close it at the very last invoice that we create anyway so we have estimates turned on and we have progress invoicing turned on and we'll go ahead and click OK so let's start with the estimate first thing I'm gonna do is I'm gonna click on estimates quotes or estimates I can click on the homepage or I can go into the customers menu and click create estimates now one thing I suggest is that you work with jobs always work with jobs now a job would be a customer within a customer so for example let's say this customer Mike Bauman is asking me to do a different job that at home remodel maybe I'm gonna do the office right so when I create a job under Mark Bowman so all I'm gonna do is I'll put a colon so basically the two dots a Cullen and then I'll type the name of the job so I'm going to call it office and some people give a job numbers like one or five office or something like that depending on the type of industry you're in maybe you want to give your job your jobs numbers or maybe just descriptive names and then hit tab and quickly say hey wait a second what what is this one or five office on their customer jobs I'm gonna go to a quick ad and QuickBooks will automatically is a job and you're gonna see it in the drop-down with an indentation if I go to the customers menu and click on customer center I should be able to go to my by Marc Baumann customer and I should be able to see both jobs under the customer and it's possible you really have the job created from before and you don't have to create it on the fly on the invoice that's that's fine as well okay so there's my my customer job now the other thing I want to do is under items I want to have items are basically a mixture services non-inventory parts inventory points but all of the items I must keep track of their internal cost it's really really important that I keep track of the cost that at least I project to have upon that item okay so let's start creating the estimate okay so the first thing is I'm gonna select a service item so I'm gonna select for example this one here called concrete slab now really really important I must have enabled my internal cost and my markup in order for this whole thing to work and later on maybe we want to do a more in-depth video on construction accounting we'll discuss that but trust me you gotta have your internal cost and your markup turned on so to check that I'm gonna click on formatting customize data layout and then under columns I need to make sure that I have and then under columns I need to make sure I got my cost and my markup so I noticed my cost and my markup are turned on and I don't have to turn markup on to the public so I don't need to tell my customer how much money I make on on the deal so you can basically uncheck it on the print side just have it checked on the screen side to make sure that we can manipulate it so we have cost markup both those both those things have to be turned on and I'll click okay so let's say for example I'm gonna make my own internal calculation that concrete slab is gonna cost me let's say ten thousand dollars so on their cost I'm gonna put ten thousand dollars and then the sales price I wanna sell it for I can either work with markup so for example if I want to mark it up twenty percent I can just type to zero and the percent symbol I hit tab and QuickBooks will automatically add the two thousand dollars in there make it twelve thousand dollars or I can just not put a markup at all and then manually put whatever price I want to put up there in the total and they wanna hit tab QuickBooks will calculate my markup in terms of dollar amounts so I can either just put a whole dollar markup put the total and that could calculate the mark-up or put a percentage and work of percentage now the other thing I want to suggest so that's whenever we deal with a lump sum price let's say for example that I was buying services in pieces or in phases well in that case I want to use quantity so for example let's say installation let's say for example the installation and the entire project just to say a number it's a hundred hours at $35 an hour how much I have to pay but when I pay them I'm gonna pay them in in pieces I'm gonna pay them you know 20 hours here at 30 hours here 50 hours here so for that I recommend instead of just having one lump sum cost actually break it down we the units so for example will do there 100 hours times 35 and let's say for example I want to double that for the sales price so I'm going up with markup 100% and hit tab and then allow QuickBooks to put the sales price there now looking for freak out about this whole markup thing don't worry when I click on preview your customer is not going to see those those markups are only going to see the final sales price so that's really nothing for you to worry about about somebody potentially seeing that markup that's not gonna be a problem ok let's say one more thing let's say I'm gonna use an inventory part let me put an inventory part in here and then I'm gonna put quantity of 1 and let's say I think it's gonna cost me about 600 and I'll make $400 on that part and that would be $1,000 and just for the sake of it I'm gonna turn off sales tax just to kind of simplify this whole thing so down here before I save we're gonna see subtotal 14 100 that's my internal cost markup 6400 and in the sales price of 20 thousand five hundred that's my estimate for the project twenty thousand five hundred so that's how we start we always start again with an estimate and make a job always make a job or try to make a job as much as possible so I'm gonna go ahead and save this hit save and then we're gonna start talking about progress in voicing or invoicing in pieces so there's a couple of ways to progress in ways one is I can just click on create invoice while I'm looking at the estimate and then from there choose the progress or I'm gonna hit cancel here I'm gonna close the estimate and then I'm gonna go straight into the invoice screen and I can just go to customers create invoice or to the home page whatever then select my job then QuickBooks he's gonna prompt me should you want me to pull this information from an estimate and if I select that and I hit OK it's going to ask me the progress invoice question so I can either start from the estimate or just pull it in I prefer to start from the estimate I think it becomes the best thing so again I'm gonna start from the estimate pull up my estimate and and create invoice from here perfect so here's an ask me invoice 100% that basically wouldn't be a progress invoice that would just be an invoice from an estimate and then we can go from a percentage so I can just say flat out just do 20% 30% 40% whatever or I can do the third option which is my favorite which is the one actually allows you to go item by item and select how much of it you're gonna be invoicing so I'm gonna select the third one here okay and then on this screen is really really neat there's a lot of moving parts here so it becomes a little bit confusing to a lot of people and you can actually uncheck quantity and rate and percentage if you really want to simplify this and say well you know from the first line I want to do 5,000 from the second line I want to do let's say 5,000 as well if I'd the third one I'll leave a blank and then I hit okay so you can go this route and just put a lump sum amount and QuickBooks will calculate the quantities for you okay or I can hit clear here for a second and I'm gonna go back into the estimate and I'm gonna choose the other option just to show you that dynamic there so I'm gonna go into create invoice select the third option hit OK and then have show quantity and rate and then show percentage and we may have to move these around for this to make sense so all the ones that are grayed or kind of like blue there those are the ones we really can modify those are information only but these are white or neither color these are the ones that I can actually manipulate so for example under quantity I can say well I want to invoice that say 25% of this so I can literally just type point two five and it will do my calculation now in this case I don't have to do point two five I can actually go to the column that says current and then here choose whatever percentage I want so let's say I want to do 40% and move out of that and QuickBooks will make the whole calculation for me so I can either put a percentage and QuickBooks will calculate how the quantity to use which in this case is taking 40% of 1 which is the default quantity we put on that item or I can go by specific quantities so I can this screen is very dynamic okay I can either choose my quantity in portions I can do the amount work into the current and then QuickBooks will decide for me what I will do is if I put just iam out QuickBooks will calculate for me quantity and and percentage so I can pick whatever I want percentage amount or quantity and then QuickBooks will be calculation the real tricky part is inventory parts because normally when we do progress invoicing we're gonna invoice let's say 20% 40% and then 40% whatever happens to be we can't really invoice inventory parts in percentages because my inventory is gonna go all haywire so whenever you have inventory parts as part of your of your progress in voicing I strongly recommend that you put the inventory part with a sales price of zero and then have a separate item for the represents how much of that inventory you're selling in portion so let me hit cancel and show you what I mean by that so what I would do if I'm dealing with an inventory part so for example this one that says wood exterior I would actually put the cost of 600 because that is correct but in the mark-up I will put negative 100% and that's going to say zero basically that way I'm going to sell the inventory I'm not gonna make any money on it but then I'll make money on a second I'll have some profit on a second lying around so for example I'll create another item called it's a door or whatever and it's assuming that's the one that I'm gonna use and I'll put here door installed whatever I want to whatever writing I want to put in here okay so don't and then in here I'm gonna put a cost of zero and then a markup of 1,000 and then that way I'll be able to represent my door from the installation not from the inventory part and how and that would look sometimes they could look a little weird so it's really important that you remember you know who your customer is and how you're dealing with that customer because a confused customer doesn't pay their invoices in my experience so that's confusing to your customer then you may want to rethink that but this is going to make a lot of sense because when I invoice it I'm not gonna like really screw up my inventory you'll see someone are go ahead and hit close and then I thought yeah I worked out one more thing if I don't want to show two separate lines then what I can do is I can create a group and then I'll show you real quick I'll create a new group here add new and we'll click on group and we're gonna call this exterior door okay and then inside the group I'll select the two items that I want to sell so that would be my my wood door exterior and that same framing whatever item I was going to use and then we'll do let's say one of each and then I won't check print items in group I won't check that and then I'll copy the description over here so I could use a group and not print the items inside the group so I'll hit OK and we'll see the group got added here and then I can do the same type of work that they'll appear on the group so let me delete this two lines the line and the line so it's nice about having these groups with hidden items is that I can basically work these whatever way I want and this is especially true for probably same voicing and make all that inner working transparent for the client so again the product was 600 the mark-up was zero and then the frame labor was zero cost but a markup of 1000 okay let's see all the markup sorry the mark-up for the door was negative 600 or negative a hundred percent there you go so let's go ahead and see what this looks like and the print preview and then you see it just looks like one item for the client everything else is hidden and it allows you to do all these funky inner workings and it then be only information for yourself sending me writing hit the close and then I'm gonna hit save try this again now with these new components so let me do let me just delete these lines in between to make it a little bit easier to read when I do my progress invoicing now you can you can have the lines whenever you do this or I'm doing it just to make it easier so I'm gonna do create invoice and then I'm going to select the third option and then hit OK and then let's go with the same approach that we're doing here so we were gonna do by percentage we're gonna do 40% of the first item and then we're going to do 50% of the second item and then let's assume that on the first invoice I'm going to go ahead and consume the inventory part so notice that I have two items I got my inventory item and I got my my my labor or my service item that's gonna cover both but I'd say I'm not charging for that yet but I I am going to use the product itself on the job so I want to get it off my inventory so like a new simply it's just put quantity 1 here and that will consume the inventory part without adding additional value to the invoice but getting it off my inventory so then I'll hit OK and you see what what the English looks like so it looks like we are consuming our inventory which we're not selling anyway and then we're not doing any framing labor down here or which is basically the door that represents the door installed and then we got 50 units of that hundred unit installation and having a point four of that one lump sum of the concrete item that we put there so then we're gonna do a print preview to see what that looks like perfect it just looks like two items and the dollar amount and they'll hit close and then I'm gonna click Save and close and hit close no where are we with this whole thing we created an estimate within a progress invoicing and each of the items got a whole different treatment because that's you know based on how the contract was or that's I wanted to do it but then what reports that we monitor to figure out where we stand so that's really really good good thing to know so we're gonna go reports jobs time and mileage and then we're gonna see this one called job progress invoicing versus estimates and that's it there really isn't any other report that really gives you any of this progress invoicing information this is it say that's it for for the report so we're gonna click on job progress invoicing and estimates and then I'll click OK and then when you're gonna see here is you're gonna see all your jobs across the board including the one that I'm working on you're gonna see what the original estimate was which this is basically what we we're going to charge the original estimate and then we see on the progress invoicing what we have charged so far and then we see 41% ok and then if we double click on any of these it's going to take me to the estimate for me to kind of see what's going on now if I hit control H on the keyboard that's my history button I can see all of the invoices that are attached to this estimate ok if I actually also click on the side panel here on the right side on the show history and then I click on transaction I can see the related transaction all the invoices are linked to this estimate so as I create more invoices for progress on this estimate we're gonna see all that linkage so let's go ahead and do it let's do now an invoice let's say there's gonna be the two the second one out of three I'm gonna go ahead and click on the third option and then hit OK and it was awesome about this is that this actually keeps track of what's going on now I hate that this window is so small like everything has to be sort of moved around to see what's going on but this is what we have and we're gonna see here which is prior this is really important prior percentage lets you know where you stand on your progress so all the past invoices accumulated accumulates to 40% here and 50% here so let's say for example we're gonna grab them finish the concrete slab so i'm going to do current although 60% so that's basically going to complete that portion of the job and you're gonna see there where it says a total 100 that means I'm done with that let's say for example I'm gonna do another 25% of the installation so that's going to add up the 75% there for me and let's say I'm going to do half of that door framing item which is that door so I'm going to come in here and just put 50 okay and then we're gonna see that's my partial progress I'm gonna hit okay and now I'm gonna see completely separating boys which is that second part of the progress so we did like about 40% of the whole job at first and this is like another 40% and then we'll do a really small piece towards the end let's see what this looks like look pretty pretty real quick and then you see only the portions that are being invoiced we'll hit up close and then we're gonna hit save and close so going back into that report now we see that we have 80 9.0 2% of that job that has been invoiced so far so that kind of lets you know the progress now there's another report worth looking at here in the reports menu jobs time and mileage called jobs estimates versus actual summary or detail either one out of the detail real quick and then I'm gonna pull up that 105 job hit okay now this report can also give you a pretty good insight about this if you see estimated revenue versus actual revenue you can actually see the same amount of information but you don't get that percentage of the progress so far now I can click on customize report and enable percentages here on the revenue side and I'm gonna run disable the cost side don't wanna look at that for a second to the percent side and then hit OK and then I'll be able to see not what I have done for the job so far I'm gonna get now the opposite number I'm gonna get whatever I have left which in this case it says right here I have 11 percent left of the job so we have basically two reports that essentially give us very similar information but one shows me when I was left to complete and the one before that which was the job progress invoices estimate this is tell this tells me what has been done so far now staying on this report for a second you see that there's a whole bunch of jobs here and basically every single job that is quote-unquote in progress it still shows here however you see some of these have zero progress some of these have 150 percent progress it's really important that we use filters to remove some of the jobs that were still not monitoring or they're not still in progress so here is his customized report what you can do is you can use filters so for example under the filters tab there's a couple of things here like this look for estimate active right here and it says either yes or no so if I actually click on yes this is going to here okay this is only going to show me the estimates that are active now what what does that mean okay let's see what that means so for example if I go to this estimate there's a little check mark up here that says marked as inactive let's say for example you didn't win this job the client decided to say no this is not an active job I can just mark it inactive by clicking the little checkbox up there and saving it and then you're gonna see that that job is gonna go away from my report so you can play with reports in that matter there's other things you can do let me show you for example when I go into customers menu and customer center I'm gonna go to my one or five job double click on it and then go to job info and then I'm gonna say job status in progress okay and then I'm gonna hit OK and then I'm gonna hit escape and I'm gonna go into this report I'm gonna look at this one in the bottom I'm gonna double click on this way and then I don't want to check actually let me go into the Customer Center this is a second-story addition so let me go into the customer center and look for that one okay perfect this way I'm gonna edit it and then go to job info and I'm gonna change you from in progress - let's say Forks awarded okay and then I'm gonna hit okay now this is really really important because when I look at a job progress report and I see a whole bunch of jobs I think it's important for me me to know what the status is so I can go to a customized report go to filters and then I'm gonna search for status here somewhere there it is job status and then I can say you know what only show me that ones are in progress and then I hit okay what I can go to customize report filter and say hey only show me there ones are let's say pending here okay so that's really really neat that I can give the jobs a status on top of whatever their real circumstances are with the estimate and the invoice I can give it an actual status and then I can use it for reporting filtering purposes that way I can I can separate all of the different jobs based on I guess where where they are and you can also work with the other filter here I'm gonna search for started job began the job there's job type and then job type is a drop-down menu in which I can choose to label my jobs however I won so I can also run different reports based on different job types so that's that's the reporting aspect of progress invoicing so let me go back to my estimate here very clear estimates go back into my estimates there it is on the transaction I'm gonna be able to see that there are two invoices linked to that estimate that way I'm able to click on any of them and go to them if I need to I can click on a little button there and I'll take me to a report of linked transactions as I also if I wanted to print basically a report of all the transactions that are linked that estimate I can also click on a little button there by the way that's a very overlooked button that's there it's actually great to be able to print the linked invoice transaction report anyway the last thing is that's invoiced remaining amount so I'm gonna go to create invoice and I'm gonna select the third option and hit OK and actually let me hit cancel that's all I wanted to do let me go to create invoice let me select the first option which notice that now has the word remaining amount so it says create an invoice for the remaining amount so I can just click on remaining amount hit OK and then QuickBooks keeps track of whatever you have invoice so far and then this was going to finally going to invoice the very last pieces left and then I'm gonna hit save and close and that should be complete so when I run my report that I was looking at earlier my job progress invoice vs. estimate report I should now see that this job has been done 100% so at that point I could probably mark my estimate inactive if I wanted to or maybe going to my own to my job 105 double click on it and maybe click on job info and make this closed I give this a an end date whatever happens to be just so when I run my other reports of my other jobs are active I can start filtering these or if I'm monitoring like a job status report something like that I can see what the end dates are so this is a supposed to be a brief introduction to probably the same voice saying I think we went a little bit in depth but that would cover pretty much what you need to know there's one little tiny thing it is really really important and this is the one that I mentioned that this is not available in QuickBooks Pro so if I have QuickBooks accountant Edition Enterprise Edition or premier Edition and I have it on contractor edition mode so I'm going to show you how to do that real quick so if I'm in an accountant Edition I'm going to go to file and then click on toggle to another edition and switch it to contractor mode contractor now if you if I if you have QuickBooks premier that is going to ask you what Edition you want to and that's the one that's going to be permanently into the computer but if I'm working with accountant or enterprise I can actually switch those editions on the fly I use account a nation that's why I switch it on the fiber for most end users they'll just pick contractor edition when they first it and that will always be there but that's an important thing to mention because what I'm about to talk to you about it's only a contractor Edition or contractor mode only functionality so basically when I go into one of my estimates and I make a change to an existing estimate so I'm big any regular estimate I have here and I'm gonna make a change to an existing estimate so I'm going to change that say this twelve to fifteen and then go down here switch instead of the $60 per unit $90 per unit and then I click on save or save and close you're gonna see that QuickBooks for have this pop up called add change order now by the way I work with many construction companies and this is not what they mean by change order a QuickBooks calls a change order because they're basically documenting via text is all they're doing is it's documenting via text adding a note to the estimate letting people know that hey this was changed from the first time it was safe but this is not a change order change order should be a completely separate estimate just containing those items are being changed so this is what QuickBooks cause a change order but most of the times it's not anyway I'm gonna hit add to show you what that looks like and then basically all the way in the bottom you're gonna see where it says change order and it writes the word change order there and it just writes very much it just says hey this item changed is item went up this item went down and at the end the estimate change by this much again I don't recommend this being your strategy for change orders for change orders I recommend creating a completely separate estimate under the same job then you're going to be in voicing afterwards but this this one little featurette that's only on premiere accountant or Enterprise Edition and specifically if you have premiere you have to be on contractor edition when you it for this to work anyway that was the last thing I want to show you differences between Pro premiere on the progress invoicing hope that this video was useful if you want me to make more videos more in depth about this type of thing make sure your add comments below hit like subscribe to the channel and hope you learn something new