An “audit trail” for Accounts Receivable in QuickBooks is only one of the many complexities faced by government construction contractors. Running any sort of construction business can be difficult – but the amount of paperwork, the level of detail, and the additional requirements for a government contractor can cause 2 and sometimes 3 times the amount for a bookkeeper. Below is a question submitted by a reader named Shirley.
We are a Construction Company and do government contracting. Is it possible to use the Accounts Receivable Summary to track each Project and the invoices when received and when paid. It has been several years since I have used QuickBooks and have never used the Construction Version. We have QuickBooks 2011 Premier Construction.
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First, let me say that the Contractor version doesn’t work any differently than the Pro – it just has some built-in construction specific reports and other features that aren’t available in other versions. So your learning curve shouldn’t be difficult at all! That’s the good news 
As for using the Accounts Receivable Summary Report as an audit trail, personally I don’t think I would use that because it wouldn’t give me the detail that I would want – OR – that I “think” you are looking for. The A/R Summary report only shows you how much {total} money is overdue in 30, 60, and 90 day increments. This information may meet your needs if you just need to know how much money is how many days overdue by job.
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My own personal preference, would be to know which invoices were how many days past due; therefore, I would rather run the Accounts Receivable Aging Detail to determine exactly which invoices where outstanding.
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Both of these reports would provide me with information about just a specific job – each could be modified and filtered for a specific job or jobs.
Another very good report, especially if you are concerned about a specific job, is the Customer Open Balance Report {available from the actual QuickBooks job record and choosing Open Balance}.
Another alternative to obtain this information easily, without running and printing reports – would be to customize how job record information is displayed in QuickBook, that way anyone who has access to this type of information can easily see it without having to run, print, and then distribute reports. Remember, it’s all about efficiency and streamlining the workload/work flow. Customizing how information is displayed in the job record let’s you quickly see how much total money is outstanding for a specific job, when invoices were created {dated}, the date you anticipate receiving the money, how many days outstanding the money is, what the invoice was issued for and the open balance.
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For tracking Vendor costs you could run a Job Cost by Job and Vendor Detail, click the Modify Report button and customize it like the screenshot below:
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QuickBooks can do many things, including provide you with an “audit trail” for Accounts Receivable and Accounts Payable. You just have to get in there an poke around and see what works for you.
While the information provided about may not answer the original question to the 100% satisfaction of the person asking it, based on the information provided it should at least provide you with things to look at and modify to best meet your needs.
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A QuickBooks for contractors tip about receiving and applying joint checks from a general contractor to pay a lower tier subcontractor or material supplier for work completed or materials on a construction project.
Quite frequently, in the construction industry, a contractor will receive a joint check from a General Contractor to pay their lower tier subcontractors or material suppliers for work completed and/or materials delivered to the construction project’s job site.
Unlike many high-end construction accounting packages, QuickBooks doesn’t have a way to handle this automatically — or easily.
This QuickBooks for contractors tip provides what we consider to be a best practice when a situation like this arises.
Problem:
Your company, Sam Subcontracting, received a $10,000.00 joint check from Joe’s General Contracting; which is made out to both your company AND O’Fallen Gravel {your Vendor/Material Supplier} who delivered sand, gravel, and crushed rock to a jobsite. The $10,000.00 was included in your most recent invoice totaling $45,000.00 that you sent to Joe’s General Contracting AND you have a $10,000.00 invoice from O’Fallen Gravel in Accounts Payable. Amy, your bookkeeper, isn’t sure how to correctly receive this payment against your own Accounts Receivable AND correctly apply this payment to your Accounts Payable.
Solution:
When Amy is ready to receive the payment against the invoice issued to Joe’s General Contracting AND record the payment to O’Fallen Gravel, she should do the following:
- Verify that she has a special “Clearing” Account in her QuickBooks Chart of Accounts that is a “Bank” type – if one does not exist she should create it by going to the Lists menu -> Chart of Accounts -> Account -> New -> Type = Bank -> Continue -> Account Name = Clearing -> Save & Close.
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- Click the Receive Payment icon on the QuickBooks Home Page – OR – from the Customers menu -> choose Receive Payments. Received From = Joe’s General Contracting -> Amount = $10,000.00 -> Date = Current Date -> Pmt. Method = Check -> Check # = Check Number -> Memo = Joint Check issued to O’Fallen Gravel -> Deposit to = CLEARING ACCOUNT. Click Save & Close.
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- The balance in the Clearing Account should now be $10,000.00.
- Click the Pay Bills icon on the QuickBooks Home Page – OR – from the Vendors menu -> choose Pay Bills. Choose the O’Fallen Gravel bill -> Method = Check -> Select Assign check number -> Account = CLEARING ACCOUNT.
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- Click Pay Selected Bills.
- In the Assign Check Numbers window – enter the number of the check that you received from Joe’s General Contracting.
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- Click OK
- The balance in the Clearing Account should be 0.
Make sure that you also have the proper Lien Waive and Release forms.
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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.
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A QuickBooks tip about how to customize invoices without purchasing pre-printed forms.
You use the Create Invoice icon to invoice your customers. The invoices are plain looking, just your company name, no logo, nothing that really makes it stand out and look like a professional invoice. How would you like to customize the invoice without the cost of purchasing invoices? You can by using the customization tool available.
While in the invoice, go to the Customize button at the top and click the down arrow, then click on Manage Templates and you will see this screen:
Highlight the template you want to customize and click okay at the bottom of the page. The next window that opens will look like this:
This window will give you several options on how you want to design your invoice. To add your own company logo put a check mark in the box next to Use logo and then click on Select Logo. You can then upload the image from a file on your computer. To change the color to match your company color click on the Select Color Scheme and pick a color, then click on the Apply Color Scheme button.
You can change the font for any of the text by highlighting any field in the box below “Change Font For” and clicking on Change Font button. Do this for each text you want to change. Under the Company and Transaction information put a check mark in the box next to each piece of information you want to show on your invoice. Click on the Update Information button to update any company information.
Anytime during your customization process you can click on the Print Preview button located in the bottom right corner to see what your invoice looks like. If you don’t like what you have done, you can go back and make changes.
If you find you need to move different fields around, click on the Layout Designer button at the bottom of the window. This is what you will see:
Put your cursor on any field, highlight it and move it to the desired position. You can make the field bigger or smaller. Double click in the middle of the field to open up another window for more customization options for that particular field. It may take several tries to get it to look exactly the way you want.
Once you have your logo on your invoice and you have done some other customization your invoice will look professional.
A QuickBooks Payroll Tip for creating a more functional Payroll Liabilities section on your Chart of Accounts.
QuickBooks, by default, provides a limited Payroll Chart of Accounts containing only two accounts – Payroll Liabilities and Payroll Expenses. When you run a Balance Sheet or a Profit & Loss Report (or look at your Chart of Accounts listing) you only see the totals with no details and have to run further reports to find the individual amounts that make up the totals. I find this to be problematic.
This article will show you how to add sub-accounts to the standard Payroll Liabilities account so that you can quickly and easily “see” the individual amounts for each payroll liability and how to edit your existing payroll items to accurately point to these new accounts. A little extra work up front will provide you with a very function Payroll Liabilities section on your Chart of Accounts.
Step 1 – Determine the required Payroll Liability Sub-Accounts
Open your Payroll Items List {Lists menu -> Payroll Items} and scroll to the bottom, and pay close attention to the items that are currently pointing to or assigned to Payroll Liabilities.
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NOTE: You may want to customize the columns that are displayed in this list. To do so, right-click the Liability Account heading -> choose customize columns -> from the available columns list click on Expense Account -> the Add button -> Liability Account -> the Add button -> Payable To -> and the Add button. Click Ok. This will provide you a more detailed and functional Payroll Item List to work with, as shown in the screenshot above.
From this list, we will determine what we need to add to our Chart of Accounts to make it more functional. We will be adding sub-accounts for:
- Federal Unemployment {FUTA}
- Federal Withholding {FWH}
- Medicare {M-CARE}
- Social Security {FICA}
- State Withholding {STWH}
- State Disability {SDI}
- State Unemployment {SUI}
- Employee Training Tax (ESD}
Step 2 – Create Payroll Liability Sub-Accounts
Once you have the list of items that we will be adding as sub-accounts to the main Payroll Liabilities account; go to your Chart of Accounts {Lists menu -> Chart of Accounts}.
- Click the Account button {at the lower left corner of this window} -> choose New -> click the radio button next to Other Account Types and from the drop down menu choose Other Current Liability -> click the Continue button
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- In the Account Name, type in Federal Unemployment -> click the box next to Subaccount of and then from the drop down menu choose Payroll Liabilities. Add other details as required or necessary.
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- Click the Save & New button to create the other items from your list.
NOTE: Create a single account for Social Security and Medicare.
Step 3 – Edit existing payroll items mapping them to the new accounts
Going back to your Payroll Item List, edit each item assigning them to the newly created sub-accounts.
- Click on the Federal Unemployment payroll item -> click the Payroll Item button -> choose Edit -> click the Next button -> from the Liability Account drop down menu -> choose Federal Unemployment
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- Click the Next button until you get to the last window then select Finish.
NOTE: You may receive an Update transactions with new account window, here you can choose to update all existing transactions OR update transactions starting on a specific date. My personal preference would be to update all existing transactions – you may want to consult your accountant about this.
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When you have finished mapping the items to your new sub-accounts; simply opening and viewing your Chart of Accounts will provide you with a detailed account of each of your payroll liabilities, as well as the grand total.
On Wednesday, we’ll provide instructions for making the Payroll Expenses section of your Chart of Accounts provide more information on Profit & Loss Reports.
