Work in Progress

Let me assist you in accurately recording the partial payments of your clients in QuickBooks, bogdanovna13.

You can still use and create an invoice within the project and receive the partial payments the same way you record customer payments if you're on a cash-basis accounting method.

Since cash-basis accounting records revenue when customer payment is received, the only difference is when you run financial reports. If you run financial reports like the Project Profitability report, ensure to click on the Cash radio button and QuickBooks Online (QBO) will ignore the open invoices and only include the payment you received.

After you've created the invoice from within the project, here's how you can record the partial payment:

1. In your Projects page, select the construction project you are tracking.
2. From the Add to project drop-down list, select Receive payment.
3. Enter the partial customer payment in the Amount received field.
4. Click on Save and close.

To properly account for the project expenses accumulated and tracked in the Work in Progress expense account, you can consider utilizing the Billable expense feature. For more detailed guidance, you can refer to this article: Enter billable expenses in QuickBooks Online.

Moreover, the article below can be used to generate reports, providing you with valuable insight into the financial health of your business: Run reports in QuickBooks Online.

Feel free to click the reply button if you have any further questions about managing your payments in QuickBooks. I'll make sure to address them promptly.

Should these partial payments be included in the balance until the project is completed and the revenue is recognized, given that we are using the cash basis accounting method?

Yes, you're right, bogda.

Since you're using the Cash basis method, the partial payments made by your clients will be included in the cash balance and recognized as income immediately when tracked in QuickBooks Online (QBO).

However, please track the partial payments correctly to ensure the total revenue is only recognized once the project is complete. For more details about how the project feature works, please see this article: Create and manage projects in QuickBooks Online.

Furthermore, you can run the Project Profitability report in QBO. It helps manage your projects effectively and gain valuable insights into your financial and business performance. I've added the steps below to pull up the data:

1. Go to Projects.
2. Select the projects you want to view the report.
3. Choose Project Reports.
4. Click View beside Project Profitability.
5. Customize the report to pull up the correct data.

Please don't hesitate to drop by again by clicking the Reply button if you need assistance tracking the additional payments from your clients and keeping your project records accurate. My team and I are ready to help you out.