Invoicing for Contract (Fixed) Price Jobs Using QuickBooks
By Melanie Hodgdon

Importance of the QuickBooks Estimate
QuickBooks is accounting software, not estimating software, but it's still important to enter estimates into QuickBooks for three reasons

Some specific green choices that you could offer for any new construction or remodeling project include:

1. The estimate is the only place within QuickBooks that the user can enter what s/he thinks the job will cost. This information forms the basis of the "estimated costs" portion of the very important QuickBooks job cost reports "Estimates vs. Actuals Summary" (which shows totals only for all jobs for which there is an active estimate) and "Estimates vs. Actuals Detail" (which shows line item comparisons between estimated and actual costs and revenue for a single job).
   
   
2. Contract-price (fixed-price) jobs are typically invoiced according to a payment schedule. The payment schedule may be based on %'s of the total contract amount (10% at signing, 25% at start of job, etc.). If so, it is incredibly easy to invoice straight from the estimate using QuickBooks' built-in conversion process. Please note that if users choose to invoice for 10% of the estimate, for example, this will result in an invoice that contains all of the line items found within the estimate, and each will show a quantity of 10%. If you've gotten to this point in the past and then rejected it because you know it will confuse the customer, check out the section "Changing the Invoice's Printed Appearance" below.
   
   
3. Contract price jobs may also be invoiced as % of completion. Indeed, many lending institutions demand this type of invoice. QuickBooks is already set up to provide % of completion invoicing directly from the estimate. With this estimate-to-invoice conversion preference selected, users can choose designated %'s of each line item to include within the invoice.
   

Choosing the QuickBooks Estimate Template
For users exporting the HomeTech ADVANTAGE estimate to QuickBooks, the estimate should automatically show the estimated cost, a markup, and a sales price for each line item within the estimate. If this is not the case, first check to see that you are using an estimate template that shows all of the appropriate columns on the screen.

For example, if you are using the estimate template called Quote, the cost and markup columns will not be shown. Experiment with the various estimate templates provided by QuickBooks until you find one that contains all of the correct columns. It's always a good idea to check each line item of the HomeTech ADVANTAGE exported estimate to confirm that appropriate line items are marked up. Remember, what you see on the screen is not necessarily what your customer will see.

Preparing to Create the Invoice from the Estimate
Depending on the version of QuickBooks in use and the responses you provided during the initial QuickBooks setup interview process (if used when setting up the file), it may be necessary to activate the progress invoicing feature. To confirm that the software is ready to do progress invoicing, click "Edit -- Preferences" and from the preference list at the left of the screen, choose "Jobs & Estimates". On the "Company Preferences" tab, make sure that the question "Do You Do Progress Invoicing?" has been answered with "Yes". If it has, then, from the estimate, you can click on the invoice option icon.

Note: The location and name will differ from QuickBooks version to version but the icon remains the same.

Choosing the Right Invoicing Option
You will have three options for invoicing from the estimate (refer Figure 1):

1. Create invoice for the entire estimate (100%).
2. Create invoice for a % of the entire estimate.
3. Create invoice for selected items or for different percentages of each item.
   • Option 1 is very useful for small jobs.
   • Option 2 is useful for jobs with a payment schedule based on percentages of the contract price.
   • Option 3 is useful for % of completion (or progress) invoicing.
     

QuickBooks will keep track of prior invoiced %'s and offers a standard invoice template that will show original amount, past %’s, the current %, and the total % for each line item. Successive progress invoices will show the history of the % of each line item comprising the invoice’s total. Such progress invoicing requires users to be able to easily see what percent of each estimated cost has been incurred, in order to match those percents within the invoice. This keeps actual incurred costs aligned with recognized revenue.

Refer to Figures 2 and 3 representing two successive invoices for the same job. (Click here to see a larger version of the figures.)

What Will the Invoice Look Like?
In all cases, the screen appearance of the invoice will show individual line items from the estimate. Option 1 will look exactly like the estimate. Option 2 will look exactly like the estimate except that the quantity of each line will reflect the % chosen. Option 3 will contain only those line items selected, and quantities will reflect the %'s chosen for each.

Note: Users can choose to show all line items, even those with zero amounts, by changing the preference. Click "Edit -- Preferences -- Jobs & Estimate -- Company Preferences" and de-select the check box "Don't print items that have zero amount."

Changing the Invoice's Printed Appearance
Finally, each document in QuickBooks comes with a variety of templates. However, users can add their own templates. QuickBooks doesn't permit alterations to existing templates, but users can duplicate any template and then customize it. For example, a user wishing to choose Option 2 and create an invoice for 15% of the estimated could create an invoice template that would suppress all information other than the total price. The line item detail would remain on the screen for the user's review, but the printed version would contain only the bottom line figure.