QuickBooks Tip – Construction Accounts Payable
If you think that job costing is all it takes to have a good construction accounting system – think again!
You need a firm handle on your costs and QuickBooks when properly setup and used does a very good job, however, you also need to be able to control those costs.
Most construction managers know that subcontract and purchase order control can only be achieved with a good accounts payable system in place. As much as 75% of your Accounting Department’s time is spent on the Accounts Payable process. Receiving and paying invoices is a constant, on-going process. Therefore, it had better be good.
The problems of having to handle so many accounts with so many different people over extended periods of time can all be solved by how well you utilize the functionality found in the various pieces of the QuickBooks Vendor Center.
- Using the “Enter Bills” in conjunction with the “Pay Bills” functions reduces costs by preventing double payments.
- By setting up and using “Terms” you can improve profit by watching for available discounts.
- By using the Purchase Order function for tracking subcontracts and materials purchases you can avoid over payments.
- You can even setup and utilize a system to track the expiration dates of subcontractor Workers Comp and General Liability policies.
- It can even help you when you talk to your bonding company.
When you utilize the Enter Bills function and setup up Terms, QuickBooks then recognizes that you do not pay all your bills the same way.
- There are vendor invoices that need to be paid by some due date in order to take advantage of discounts.
- Other bills are paid when you are paid for a particular job.
Naturally tracking the discounts and retainages for each can be a time consuming job.
Whom do you owe money to? How much do you owe them? When do you have to pay them? These basic questions have to be answered every day. The QuickBooks A/P Aging Detail and Unpaid Bills Detail Reports are ready with the answers. Since the Enter Bills form asks for a due date, you can input any date, and use it for cash forecasting, or for a final checklist before you run checks.
Features and Functions of a good Accounts Payable system when using QuickBooks:
- Using the “Enter Bills” function allows for immediate posting of invoices
- Using the “Pay Bills” function allows you to take advantage of discounts and provides immediate posting of payments.
- Maintains vendor and invoice numbers to guard against double payments.
- Automatically calculates discounts.
- Track Retainage withheld from subcontractor payments.
- Track Workers Compensation and General Liability Insurance expiration dates for subcontractors.
- Print Joint Checks, 1099’s, and Lien Releases.
- Set up your own “cost” codes to track expenses and/or cost of goods sold expenditures.
- Assign vendor costs to specific cost codes and jobs.