QuickBooks can do WHAT? Progress invoicing

Businesses that serve large customers have different needs than day-to-day retail and service companies. First, they have to put in a bid and land the job. They take a deposit on work to be performed. When the project begins, they invoice in stages, either as the services occur or by milestones. Payments aren’t always straightforward – sometimes customers make partial payments or pay against more than one invoice.

When I first started moving my customers to QuickBooks® Online, multi-stage business models still had to stick with QuickBooks Desktop or use intricate workarounds. With the welcome addition of Progress Invoicing, those customers are now eligible for QuickBooks Online.

What can it do?

Where do I find it?

How do I use it?

Tips and Tricks

Additional resources

What can it do?

Progress Invoicing provides a seamless workflow from Estimate to Invoice to Payment. Estimates are turned into Invoices by either line item or percentage. The Estimate itself then tracks percentage of completion, so you can always monitor the project income status.

Progress Invoicing dovetails nicely with QuickBooks Online’s new Project Center, giving business owners a dashboard to monitor all active jobs in one place.

Where do I find it?

Progress Invoicing is available in all versions of QuickBooks Online.

To start using Progress Invoicing, click on the Gear in the upper right corner, then choose Account and Settings > Sales > Progress Invoicing. Make sure there is a checkmark in front of “Create multiple partial invoices from a single estimate.”

This option is turned on by default in new files.

How do I use it?

Progress Invoicing has three steps: Estimates, Invoices, and Reports.

Estimates

The workflow starts with creating an Estimate. An Estimate is a non-posting sales transaction allowing the business to provide a bid to the customer for approval. Once approval is granted, the job can begin. If the business does not land the project, Estimates can be rejected.

By creating Estimates inside QuickBooks, it’s easy to monitor the status of potential upcoming projects and plan ahead.

To create an Estimate, click on the QuickCreate + New button, and choose Estimate. Assign the Estimate to a Customer Name (alternatively, you can create the Customer first, then click New Transaction > Estimate). Add line items for the entire project. Email the Estimate to the Customer for approval by choosing the “Save and send” button.

Invoices

When it’s time to run your first Invoice, get started in one of two ways:

1. Open the Estimate and click the “Create invoice” button in the upper right, or
2. While looking at the Estimate on the Customer’s transactions list, click the “Create invoice” link on the far right of the line.

The Progress Invoice window appears, with the choice of how to generate the progress payment.

• “Total of all estimate lines:” The entire remaining Estimate transfers to the Invoice in full, closing the Estimate.
• “% of each line:” Enter a percentage based on your project milestones. For example, maybe you invoice 25% at the beginning, 50% partway through, and 25% at the end of the job.
• “Custom amount for each line:” Pick and choose which line items to bill. This allows you to invoice in stages. For example, maybe you Invoice for materials and demolition at the beginning of a construction project, labor in the middle, and finishing at the end.

For this example, I’ve opted to Invoice for 25% of the entire Estimate. As a result, every Quantity has been set to 25%. The Estimate includes the original Rate, and calculates the resulting Amount.

Note that you can further modify the percentage or dollar amount on every line by clicking in the Due column.

If you won’t charge for a line item on the Estimate, either leave it at $0 on the Invoice, or click its Trash can. Choose “Remove line” to take it off this Invoice and leave it on the Estimate for future inclusion.

Reports

Once the Invoice has been saved, there are several views and reports that track the Progress Invoicing.

The first is to open the Estimate again. It has now been updated to show how much of each line has been Invoiced, and how much remains.

There is also a Estimates and Progress Invoicing Summary by Customer Report, showing each customer’s paid status:

Tips and Tricks

• Some jobs are complex and still require a planning spreadsheet to compile all the expected costs. By summarizing those line items into more general Product and Service categories on an Estimate, you streamline the documentation given to customers, as well as the real-time expense tracking as the project moves forward.
• If you’re using an iPad, the customer can actually sign the Estimate! They’ll use their finger, and you’ll have their approval on file instantaneously.
• Using the iPad or tablet app has additional advantages, including the ability to see the location on a map, get driving directions to the address, and attach images like before-and-after pictures.

When using Progress Invoicing and Billable Expenses together, it gets tricky when you already have a line item for those reimbursements. After you pull the Billable Expense onto the invoice, copy/paste its total dollar amount into the Progress Invoice’s existing line item. Click the trashcan next to the Billable Expense. A pop-up appears; click “Remove line.” The Billable Expense is marked as closed.

If you had attached a receipt to the original Expense, you will have to reattach it to this Invoice. Click “Show existing” below the Attachments box to select it again. The receipt can be emailed along with the Progress Invoice if you wish.

Additional resources

I have a class on QuickBooks Online’s Projects, Progress Invoicing, and Job Costing, so you can see it in action for yourself.

Liz Scott covers the topic on Insightful Accountant.