A common theme in construction companies is to create a quote for a job, and have payments made at set milestones or stages. For accounting purposes as well as payment tracking, the client typically does not want to show the full amount of the project that is due, and instead only reflect the amount that has been billed. QuickBooks allows you to achieve this by using Progress Invoicing.
To use Progress Invoicing, you first must turn on the preference in QuickBooks. To do this, go to the Edit menu, select Preferences, then select Jobs and Estimates on the left side. Under the Company Preferences tab, you will want to Yes to both “Do you create Estimates?” and “Do you do Progress Invoicing?”, as seen in the following screenshot:
When you create a bid or quote for job, you will want to use the Estimate transaction. The Estimate is similar to creating an Invoice, and uses the same item list as you would if you created an invoice. The Estimate transaction does have a few differences, though. First, an Estimate does not have an effect on your accounting books. It is a non-posting transaction. Second, the estimate also includes columns to track your estimated cost, as well as your customer’s price. This allows you to ensure that you are making a profit on the bid/quote.
Once you have your estimate created and the work has begun, you can start to invoice for a portion of the estimate. When you click the Invoice button across the top of the estimate, you will have the option to create an invoice for the entire estimate, for a percentage of the estimate, or to select individual lines on the estimate. For example, if your milestones for the project are at 20%, 45%, 75% and 100%, you would invoice for 20% of the estimate first, then 25% (45%-20% already invoiced), then 30% (70%-45% already invoiced), then finally 25% for the remaining amounts. As you create the invoices, QuickBooks keeps track of what is left open, or non-invoiced on the estimate so you don’t have to manually remember that information.