Updated: Aug 3, 2020
Contractors, you would like to be paid on time? You need to send out invoices on time. Especially, people work in the Construction Industry. As a contractor, you usually involve in long-term projects. Asking for the whole payment at the beginning or end of the project is not a good idea. That is when Progress Invoicing is recommended.
So, why is Progress Invoicing suggested?
In most cases, projects with long timelines require an outstanding budget. To ensure the project to complete, contractors need to maintain reliable cash flow. By generating progress invoices, they could make sure they would be paid for the work completed on time and could arrange more materials or issue finance for the other stage of the work.
For customers or business owners, progress invoicing brings many benefits. Firstly, instead of putting down upfront a lot of cash, often a deposit of 50%, even when contractors have nothing done, they can break the money down. Progress Invoicing helps business owners split the total value of contract into smaller and continuous payments whenever a part/ stage of the project is done. Secondly, customers would not need to concern the idea that “contractors take the money and run”. Customers issue payment for the part of the work completed. In the worst case, project owners still have enough money and opportunities to continue the project. Finally, payment by progress invoicing could incentivize the contractor to wrap up the project as proficiently as possible.
Now, we understand what it is and why you may use it. Let us go step by step to generate a progress invoice.
In this blog, we use QuickBooks Desktop version 2018
Step 1: make sure you turn on this feature inside QuickBooks
Navigate to Edit, then access the Preference menu, and turn the Progress Invoicing on.
Step 2: Navigate the necessary Estimate
Make sure you have full information to create a customer, job under that customer, and an estimate as an original contract of that job. Then, choose the job that you want to do progress invoicing and open its Estimate.
Step 3: Create a Progress Invoice
On the Estimate window, click the Create Invoice button to start the progress invoicing. There are 3 available options for progress invoicing.
It is time for you to check the agreement between you and your customers, select the option to fit your business.
Your original estimates will not change when you create a progress invoice. Just need to make you that you do not directly change anything in it.
Step 4: Keep track of you progress invoices
QuickBooks offers reports helping you keep track of your progress invoices
1. Go to the Reports menu and select Report Centre.
2. Select the Jobs, Time & Mileage from the list.
3. Select a report and then select Run to view it.
Note: Check out the Job Progress Invoices vs. Estimates report tracking how much you invoice for each estimate.
If you need advice or services on any aspect of construction bookkeeping, accounting and tax, our construction accounting specialists are ready to help. Get in touch with us for free quote.
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