If you use QuickBooks for your accounting and you create your Estimates in Excel instead of within QuickBooks you loose out on job costing capabilities and so much more!
I often see and hear comments such as this as I browse the web or talk with potential customers for our software:
Right now we are using QuickBooks Contractor. It is ok for our accounting software but we are looking for something that works as an overall system for our office – CRM, estimating, job costing, proposals, work tickets and most importantly easy for my guys to use. Right now we are using Excel for Estimates and invoices.
When I see and hear comments like this I get so confused – because QuickBooks does allow you to create Estimates, Proposals, and do Job Costing - so I thought I’d attempt to write a short article to address this.
Creating Estimates in Excel vs. QuickBooks – Pros and Cons:
Excel is REALLY easy to use – anyone can quickly whip up an Estimate, Proposal or a Work Order., you can create some great looking documents that you are proud to hand to your prospective customer. But that is about as far as you can go.
QuickBooks, on the other hand, if set up properly will allow you to create an Estimate, Proposal, Work Order, or an Invoice and perform job costing just by entering vendor bills, writing checks, entering credit card charges, and employee payroll. You then can access all kinds of Job Costing reports and an Actual vs. Estimate Report – which allows you to see the difference between what you thought you’d make on the job vs. what you actually made.
But….QuickBooks requires more work on the front end and then proper training for your employees.
I think I just heard everyone groan! There is no way that I can write a “short” article on the benefits of using QuickBooks to prepare these documents for your business, but I can provide you with some suggestions to get started.
- Is the QuickBooks Estimate function turned on? If not go to the Edit menu -> Preferences -> Jobs & Estimates -> Company Preferences tab -> set “Do You Create Estimates” AND “Do You Do Progress Invoicing” to Yes
- Modify/Customize the built in forms to meet the needs of your company using the Layout Designer, by downloading a pre-built template or by using the Create Form Design option. All of these options are available from the Lists menu -> Templates -> and then clicking the Template button at the bottom of the window.
- Create a FULL list of the services, cost codes and/or products your company uses for billing
- Have a meeting – get EVERYONE involved – take that master list of products and/or services/cost codes and come up with descriptions that EVERYONE can agree on {letting them know that they can “tweak” it more to their liking later}
- Go to the Items List and set up items that correspond to that master list of of the things your company does, creating Group Items or Inventory Assemblies if appropriate
- Create an Estimate, a Proposal, or a Work Order using the entries in your Item List – print it out and see what everyone things of it. If they are happy teach your Estimators how to use the Estimating function
- When entering Vendor bills, writing checks, or entering Credit Card Charges use the Items tab and assign the cost to the job
- Turn on time tracking, enter employee hours by Job, Service Item, and Payroll Item
- Create a Progress Invoice from an Estimate for the current amount that you are billing the customer
- Look at the Estimate vs Actual Report for a specific job and look at the report results
These suggestions are just the tip of the iceburg for taking QuickBooks from plain-Jane accounting to job-costing accounting. Use the search box on our site and enter specific keywords for additional tips.
If you can’t get your Estimators to leave Excel, there is a 3rd party application Transaction Pro Importer – that will import your Excel based Estimate into QuickBooks for you and you can implement some of the other suggestions in this article.
I hope you’ve found this article to be helpful, if so please take a moment to leave a comment or ask a question – or share it on your favorite social networking site if you think others would find it to be useful.
Progress Invoicing is a standard feature of QuickBooks® Pro, Premier, and Enterprise editions; each of these versions also offer several options for invoicing as well. In order to implement the Progress Invoicing function you must also utilize the QuickBooks Estimate function – this will eliminate repetitive data entry and help you achieve good job costing reports, such as Estimate vs. Actual reports.
To activate Progress billing you MUST first log into QuickBooks as the QuickBooks Administrator and be in single-user mode. From the Edit menu -> choose Preferences -> scroll down to Jobs & Estimate -> and click on the Company Preferences tab. Once you are in the Company Preferences tab, review and set the options as follows:
- Do You Create Estimates – should be set to Yes
- Do You Do Progress Invoicing – should be set to Yes
- Warn about duplicate estimate numbers – should be checked (this will prevent you from creating two or more estimates for different jobs with the same estimate number)
- Don’t print items that have zero amount – this option SHOULD NOT be checked (this allows you to display line items on a progress invoice even if you are not billing for them on the current invoice)
- Click Ok to save the changes that you have made.
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At this point, you can switch to multi-user mode so you and others can continue working.
Next, you’ll want to build your Estimate or Schedule of Values using the Job Cost Codes found in your QuickBooks item list. You will want to make sure that you QuickBooks Items or Job Cost Codes are set up as double-sided items in order to capture both expenses and income.
Your Estimate can be as simple or as detailed as you like – bearing in mind that an Estimate with multiple lines will provide better job costing information than a single line Estimate with the full dollar amount.
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Once you have your Estimate in place and you are ready to create your first progressing billing or draw, you will go back to the Estimate you created and look for an option that says “Create Invoice” – click on that button/option.
This opens a Create Progress Invoice Based on Estimate window, which provides you with 3 different options for creating your progress invoice:
- Create an invoice for the entire estimate (100%)
- Create an invoice for a percentage of the entire estimate (you then get to choose a percentage – 33%, 30%, etc.)
- Create invoice for selected items or for different percentages of each item.
Most construction contractors will choose the third option, to Create invoice for selected items or for different percentages of each item. After making your selection on how you want to create the progress invoice; click OK.
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This now opens a new window, Specify Invoice Amounts for Items on Estimate; where you will be able to see the various line items that are on your Estimate. You can specify the quantity, rate, amount or percentage for each item that you wish to bill for in the current period. As you enter amounts or percentages you will be able to see a running total for the current billing. When you are satisfied, click the OK button to have the information automatically populate the Progress Invoice form.
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If you didn’t enter an amount or a percentage for each line item on your Estimate, QuickBooks will display a message indicating that there are items with zero amounts.
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Most people will find this Zero Amount Items message to be very annoying; it can be turned off by checking the Do not display this message in the future and clicking Ok.
Following this procedure you have created your first basic progress invoice. When you Save it, you have automatically updated your Accounts Receivable, and can send it to your customer or General Contractor or you can use the information it contains to complete an special invoice format that is required.
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