Many QuickBooks forms have a billable column, do you know what it’s used for and are you using it correctly?
Many QuickBooks forms have a billable column available for you to work with – checks, enter bills, timesheets, enter credit card charges, etc. The purpose of the billable column is to allow you to choose which expenses and/or time entries that you will be passing through to customers when you create an Invoice based on Time & Costs {also know as Time & Materials billings or Cost Plus billing in the construction industry.}
Welcome to Tuesday Training!
Tuesday Training is a new feature here on the QuickBooks for Contractors blog. While everyday focuses on training of one sort or another, Tuesday’s are dedicated to more in-depth training.
We’ll teach you the things you need to know about using QuickBooks, that you won’t find in the QuickBooks Help file, in order to successfully run your construction business and obtain accurate job costing reports; from eBooks, live webinars, and recorded training sessions.
You’ll find high-quality (budget friendly) training without having to leave the comfort of your home or office.
Important Facts About Items Left as Billable
Are you aware that if click into the billable column, which places a checkmark in the column {OR you leave that little Invoice icon found on many forms active and don’t “X” it out older versions of QuickBooks} that the information relating to that transaction line is stored within your QuickBooks file in a “waiting to be billed” status just taking up additional space and making your file larger than normal?
Selecting the billable column doesn’t mean that you want the costs assigned to this job {which is a common thought or assumption} but rather it tells QuickBooks that you want to take the information about that transaction and put it into a temporary database until you create an invoice for a specific customer using the Time/Costs button on the Invoice form.
If you really don’t pass these costs or time entries onto customers using the Time/Costs feature of QuickBooks – then this temporary database is just out there growing and growing – which causes the overall size of your QuickBooks file to become bigger and bigger.
If you are wondering if this is happening to you, an easy way to find out it to run an “Unbilled Costs by Job Report” {Report menu -> Jobs, Time & Mileage -> Unbilled Costs by Job} and look to see if there are a lot of entries in this report, if there are; all of those entries are just sitting there waiting for you to do something with them.
Download our 2 page article for instructions on how to clear out old unbilled costs – without having to edit each item in the report and manually making them unbillable.
We hope that you’ve found today’s Tuesday Training article to be helpful to your business – if so please take a moment to leave a comment or share this with others on your favorite social media network using the buttons below.
A QuickBooks tip for entering Job-to-data costs and billing data at the item level when converting or archiving.
Use this procedure to enter Job-to-date (“JTD”) costs and JTD billing so the Job Profitability Detail Report is accurate at the Item level after converting your existing Quickbooks file to a new database file, or after archiving old QuickBooks transactions. In both cases, you are bringing over beginning balances as of the conversion date into your new data file, and this procedure will prove useful for reporting on jobs that are in progress as of the conversion date.
From your old data file:
Run your Job Profitability Detail Reports for each job in progress to obtain the JTD cost and revenue figures as of the conversion date. In the date fields, leave the first field blank, enter the conversion date in the second date field. You will use the figures on this report for your data entry in the new data file.
In the new data file:
- Create a fake Vendor called “Opening Balance”. You will make this inactive after completing this procedure.
- Create an Other Expense account in the Chart of Accounts called “9999-Conversions-JTD Costs”. You will make this inactive after completing this procedure.
- Create an Other Income account in the Chart of Accounts called “9998 · Conversion – JTD billing”. You will make this inactive after completing this procedure.
- Create a Service Item called “Opening balance JTD Costs” and link it to “9999 · Conversion – JTD Costs”. You will make this inactive after completing this procedure.
- Print your Item List. (Reports>List>Item Listing) Modify the report to display columns for Account and COGS Account; remove price, cost, tax code, etc.
- Look at your Item list and determine which Service Items appear on your Job Profitability Detail Reports. These are the items to edit in step 9. These are active items.
- In the Item List window, make all other Service Items temporarily inactive. Making them inactive will keep them from appearing in the Add/Edit Multiple Items screen allowing you to quickly copy down the account edits you will perform in step 9.
- Create a backup before performing step 9!
- Using the Add/Edit Multiple Items screen (available in QB 2010 and later) ,edit “all active service items” and point the COGS/Expense account to account 9999 and point the Account/Income account to 9998. Change the top item, and quickly copy down the account edits to the other items. Click Save. Do not update existing transactions. You will have to answer No repeatedly by pressing N until it scrolls through all your changes.
- When you are done with the following procedures, you will edit these same Items again, and change the COGS/Expense and Account/Income accounts back to what they were. Do not update existing transactions. You will have to answer No repeatedly by pressing N until it scrolls through all your changes.
To enter the JTD Costs for each item on each job:
Enter a zero dollar Bill to the “Opening Balance” vendor for the JTD cost. On the item tab enter each Item and the costs on the job profitability detail report and the appropriate Customer/Job. Keep the Billable box checked. On the last line, enter a negative number to the “Opening balance JTD Costs” Item with no customer:job.
This results in no AP balance, leaves no effect on GL, but leaves the correct JTD cost by Item in your Job Cost reports.
Create a new zero-dollar Bill for each active job as of the conversion date.
To enter the JTD Billing for each job:
Enter an Invoice for the Customer:Job for the total Billing-to-date on the job. The Add Time/Costs box will pop up, select the Item tab and bring over all Items to the invoice. You now only have to edit the dollar amounts to agree with your JTD Billing on your Job Profitability Detail report.
Enter a Journal Entry for the total amount of the JTD Billing on the job. The debit is to the “9998 · Conversion – JTD billing” account, leave the Name field blank. The credit is to Accounts Receivable. Select the Customer/Job name in the Name field.
In Receive Payments, enter the Customer/Job, and you will find the above Journal Entry is available as a credit against the Invoice you created above. Apply the Journal Entry to the Invoice.
The net effect on GL is zero, the invoice is paid, and the correct Job-To-Date Billing as of the conversion date will be reflected in your Job Cost reports.
Create a new Invoice, Journal Entry and Receive Payment entry for each active job as of the conversion date.
Run your Job Profitability Detail Reports on the new data file and compare with the same report on the old data file. They should agree. If not, you’ll need to double check your data entry.
I hope you find this QuickBooks tip to be helpful. If so, please leave a comment or share it on your favorite social media platform by using the buttons below.
A QuickBooks tip for creating a job cost report that displays hours worked and payroll/labor burden costs.
Creating a job cost report displaying the hours worked by employee, on a specific job or on all jobs, for a specific week or at the end of a job which includes payroll/labor burden costs can provide a contractor with vital job costing information so you can see if you correctly bid the number of man hours and payroll costs required on a job.
NOTE: It is highly recommended that you start with a single pay period AND a single paycheck to ensure that your report is correct. Once the report is correct, memorize it and you can then either finish your payroll or change the dates to better suite your needs.
- From the Reports menu -> choose Custom Transaction Detail Report (the Modify Report:Custom Transaction Detail Report window may or may not automatically appear; if it does not, click the Modify Report button)
- On the Display tab, navigate to the Columns section and using the scroll bar on the right of the window select (click) only the following options – Date, Num, Name, Source Name, Item, Payroll Item, Qty, Sales Price, Amount and Balance. All other items in this list that were preselected should be unchecked.
- Click on the Filters tab
- in the Choose Filter block, click on Transaction Type -> from the Transaction Type drop down menu select Paychecks
- still in the Choose Filter block, click on Account -> from the Account drop down menu -> select Multiple Accounts -> and click on each of your Payroll Expense or Payroll Cost of Goods Sold Payroll Costs accounts.
- Click the OK button.
Print your Report – but do not close it yet:
Right click on the image to enlarge it
Compare the report to the employees paycheck – making sure that ALL of the amounts from the Company Summary section of the Paycheck Detail are included in your report.
Right click on the image to enlarge it.
If all of your costs are included, return to the report, click the Modify Report button -> click on the Header/Footer tab -> change the Report Title to Job Cost Report with Hours & Payroll/Labor Burden Costs -> click OK. Next click the Memorize button and save it.
You can now pull up the memorized report at any time and make further modifications for a specific date range or even a specific job.
To run the memorized report for a specific job:
- From the Reports menu -> choose Memorized Reports -> select your report
- Click the Modify Report button -> click the Filters tab -> from the Filters box -> click on Name -> from the Name dropdown menu select just the specific job
- From the Dates drop down menu -> select All
- Click the Refresh button
This will produce a report just for this specific job and include all payroll/labor burden costs to date. This is a valuable report to run at the end of a job.
We hope you found this QuickBooks tip for creating a job cost report which included hours and payroll/labor burden costs helpful. If so, please take a moment of your time to leave a comment.
Author’s Note: The idea for this post originally came from Ruth Perryman – however, it has been modified to include additional instructions and details.
Contractors switching to QuickBooks from another accounting program are often concerned about how to enter Job to Date Costs and Billing Data when converting, so they don’t loose this vital information.
Below is a procedure that I found several years ago, unfortunately I don’t remember where I found it or who wrote it (otherwise I would be happy to give them credit for it), but I do want to share it with you; as it is one way to handle this task.
Use this procedure to enter Job-to-date (“JTD”) costs and JTD billing so the Job Profitability Summary is accurate after converting your existing accounting software to QuickBooks, when you convert your existing QuickBooks file to a new database file, or after archiving old QuickBooks transactions.
Run your Job Profitability Summary Report to obtain the JTD figures as of the conversion date. In the date fields, leave the first field blank, enter the conversion date in the second date field. You will use the figures on this report for your data entry. If your cut-off date is 12/31/08, for example, use the next day (1/1/09) as the date for all the transactions below.
- Create a fake Vendor called “Opening Balance”. You will make this inactive after completing this procedure.
- Create an Other Expense account in the chart of accounts called “9999 • Conversion – JTD Costs”. You will make this inactive after completing this procedure.
- Create an Other Income account in the chart of accounts called “9998 • Conversion – JTD billing”. You will make this inactive after completing this procedure.
- Create a service Item called “Opening Balance JTD Billing” and link it to “9998 • Conversion – JTD billing”. You will make this inactive after completing this procedure.
To enter the JTD Costs for each job:
Enter a Bill to the “Opening Balance” vendor for the JTD cost. On the expenses tab select the appropriate Customer/Job, and select “9999 • Conversion – JTD Costs” for the account.
Enter an AP Bill Credit to the “Opening Balance” vendor for the same amount, but do not select the Customer/Job. On the expenses tab, select 9999 • Conversion – JTD Costs.
In Pay Bills, select the bill, click Set Credits, and apply the credit against the bill.
This effectively removes any AP balance, leaves no effect on GL, but leaves the cost in Job Cost.
Create a new Bill and AP Bill Credit for each active job as of the conversion date.
To enter the JTD Billing for each job:
Enter an Invoice for the Customer:Job for the total Billing-to-date on the job. Use the new service Item called “Opening Balance JTD Billing”.
Enter a Journal Entry for the total amount, the debit is to the “9998 • Conversion – JTD billing” account, leave the Name field blank. The credit is to Accounts Receivable. Select the Customer/Job name in the Name field.
In Receive Payments, enter the Customer/Job, and you will see the above Journal Entry is available as a credit against the Invoice you created above.
The net effect on GL is zero, the invoice is paid, and the correct Job To Date Billing as of the conversion date will be reflected in your Job Cost reports.
Create a new Invoice and Journal Entry for each active job as of the conversion date.
Run your Job Profitability Summary Report on the new data file and compare with the same report on the old data file. They should agree. If not, you’ll need to double check your data entry.
There are many times that a contractor will want to create a budget, to capture the costs and markup, for a job that they are working on. There are several methods to do so, but the one that I like best is to create a custom Estimate that will track estimated costs (the budget) a planned mark-up and a fixed sales price to the customer. This method is available to contractors using QuickBooks Pro, Premier (any flavor), or Enterprise (any flavor).
To accomplish this we’ll start at the Lists menu -> Templates ->
Right click on the image to enlarge it.
This will open a window displaying a list of all the available form templates within QuickBooks; scroll down until you find the Custom Estimate template – click on it to highlight it.
Right click on the image to enlarge it.
Click the Templates button at the bottom and select Duplicate -> Estimate -> and click OK. Your list now contains a template named Copy of: Custom Estimate. Double-click on this template. This opens the Basic Customization window.
Right click on the image to enlarge it.
Click the Manage Templates button, this opens the Manage Templates window. In the Template Name field, change the name FROM Copy of: Custom Estimate to something like Estimate with Budget and click the OK button.
Right click on the image to enlarge it.
Back at the Basic Customization window, you can:
- Insert/Use your company logo on the Estimate form by clicking into the box just in front of the words “Use logo”, this activates the Select Logo button and you can browse to the location of your logo file on your computer.
- Select a Color Scheme - click the drop down menu and choose from: Black, Gray, Maroon, Green, Blue or Beige.
- Change Font For – Title, Company Name, Company Address, Labels, Data, Subtotals Label, or Totals Label; you can change the Font Style, Color, and Size.
- Company & Transaction Information – select by checking whether or not you with to display Company Name, Company Address, Fax Number, Phone Number, Email Address, or Web Site Address. Click the Update Information button to make sure that the items you have selected are available in the Company Information window.
- Additional Customization button – this is the button that we want to click on.
- Right click on the image to enlarge it.
Clicking the Additional Customization button displays a window with several tabs – Header, Columns, Footer, and Print. These tabs allow you to design an Estimate that will meet the needs of your company. Starting with the Header tab, you can choose whether you want to print the following items on the actual Estimate form or to simply display them on your Estimate form, you can also change the titles of all the options available. Standard options include: Title (form Title), Date, Estimate #, Name/Address (billing), Ship To, Project/Job, P.O. Number, Terms, Due Date, Rep, Account Number, FOB, Other, and any Custom Fields that you have created in the Customer and/or Job Record.
Right click on the image to enlarge it.
When you have made your selections, click on the Columns tab. Here you want to make sure that the Item, Description, Quantity, Cost, Amount, Markup, and Total items are selected to display on your Screen; while the Description, Quantity, Amount and Total are selected to Print on the actual form. You can also change the title of these fields if you wish – for example, you can change the Markup title to Profit & Overhead.
Right click on the image to enlarge it.
Click on the Footer tab. Here, you can choose to Print a Message, Subtotal, Sales Tax, Total, and Signature on the final form. You will not be able to choose to display on your form the Subtotal, Signature, or Plain Text items. When you are ready click the Layout Designer button.
Right click on the image to enlarge it.
The Layout Designer allows you to arrange the elements that you have selected to appear on your printed Estimate form. In most instances clicking on an item will allow you to drag it to another location or resize it.
Right click on the image to enlarge it.
When you have arranged everything to your satisfaction click the OK button twice, and close the Templates List window.
Using the New Estimate:
When you use the new Estimate form, you need to use it in a specific order – enter information in the Item, Quantity, Cost and the Markup/Profit & Overhead columns. Overhead & Profit can be entered as a fixed dollar amount or a percentage – if you use a percentage you MUST enter the % sign.
Right click on the image to enlarge it.
When you enter the line items on your estimate in this way, QuickBooks automatically calculates the Total that you will be charging your customer using the following formula: Quantity (15) times Cost (125.00) = Est. Amount (1875.00) plus Profit & Overhead (33.3% or 624.375) equals Total (2499.38). You’ll also notice that QuickBooks will keep track of the totals of your Estimated Amount, your Profit & Overhead, and the Total that you will charge your customer.
Right click on the image to enlarge it.
When you’ve entered all of the vendor bills for this job and have billed it off to your customer, you should run an Actual vs. Estimate Report to see how you did. Compare the numbers from the report to the totals of your Estimate to see where you need to adjust your Profit & Overhead. Keep in mind that any difference in cost will effect your total Profit & Overhead.
Let’s assume that you had a small job, you estimated costs at $2375.00 added a total Profit & Overhead of $749.38 for a total contract of $3124.38.
When all bills were entered your actual cost was $2500.00 or $125.00 more than you Estimated; this means that your Profit on the Job is really $624.38 ($749.38 Estimated Profit & Overhead MINUS $125.00).
Right click on the image to enlarge it.
Having access to this information is vital to your bidding process.
