Billing against a contract Not To Exceed

Delighted to have you here, @KasiKoa.

I’d be glad to share some information on progress invoicing works in QuickBooks.

With QuickBooks Desktop, allows you to send invoices to your customers to be paid for the work you’ve completed based on the original estimate you’ve sent to them. Also, it enables you to track the progress of a particular job whether if it is complete or not.

First, let’s make sure to turn on this feature on your end. Here’s how:

1. Go to Edit.
2. Choose Preferences.
3. Select Jobs and Estimates.
4. Under Company Preferences, click Yes for the questions: Do you create estimates? and Do you do progress invoicing?.
5. Click Ok.

Once completed, you can create proceed with creating an estimate. Here’s how to create an invoice from an estimate:

1. Go to the Customers menu.
2. Select Customer Center.
3. Look for the name of the customer.
4. Open the estimate for the customer.
5. Click Create Invoice from the Estimate page.
6. Choose either of the following:
   • Create an invoice for a percentage of the entire Estimate.
     • Enter the % of the estimate you want to bill.
   • Create an invoice for selected items for different percentages of each item.
     1. Indicate how many % each item on the estimate would you like to bill your customer.
     2. Click Ok.
7. Review the invoice details.
8. Click Save and Close.

That should do it! This should get you going in billing your customers on the hours works and items completed.

Feel free to click the Reply button if you have other questions about tracking your Accounts Receivables in QuickBooks Desktop. I’m always here to help.

Thanks for responding @IamjuViel, but this is not really what I was asking. I know how to create an invoice and do progress billing against the invoice. In this case though, we don't have specific items in the estimate, all we have is an estimate Not To Exceed amount (kind of like a retainer?) and then agreed upon hourly rates and item amounts. I can't make the estimate with those hourly rates and items, because we don't know how many of each we will end up billing.

To explain in an example:

Not To Exceed amount: $20,000

Hourly rate, Project Manager: $150/hour

Hourly rate, Technical Staff 1: $125/hour

Hourly rate, Field Technician: $90/hour

Reimbursable item 1: $75

Reimbursable item 2: $30

Daily rental rate for equipment: $1,250

The whole project will coast the client no more than $20,000, but whether that involves lots of fieldwork, lots of technical work, or a bit of both we don't know.

So when we do monthly billings, how do we deduct our work done from that $20,000?

Doing some more reading, maybe I should just treat this as a retainer? Even though we aren't getting the money up front? Or is there a better way?

Hi KasiKoa,

The closest thing that I can think of this is entering the amount as a retainer. However, since you haven't received the amount yet, it sounds like it's not a good way to record it that way.

I'd suggest you consult an accountant first so that we'll know what's the best way to handle that money. I'm sure they have great knowledge about it. If he/she advises you to record the money as a retainer, you can follow the steps in the article about entering upfront deposits or retainers in QuickBooks Desktop.

Feel free to visit us back if you have other questions. We'd love to answer questions here and help our clients, like you, run their books.

No, nothing here is Retainer; you didn't Get Paid.

The Estimate is used for the Scope. What you list there is up to you. Example:

You and I contract for your wedding at $15,000. That's our Contract.

I use Estimate and I list the Qty and the item for Food, because your contract Fixed Bid was based on a specific amount of People and Meals. I also list Flowers and put the allowance value I intend to monitor. I put the Venue Rental, and list the projected cost.

This is Project Baseline Budget; I don't even provide it to you, the customer.

Now I job track all actual cost entries using the real items: Food, Flowers, Band, Venue (half deposit and balance later), etc.

I invoice you for the Contract Fee under our terms of our agreement, such as 1/3 at signing, 1/3 at 30 days in advance of the wedding date, and 1/3 + Overruns, after the wedding date, to be paid Net 30.

And you use the Reporting, such as Estimate vs Actuals, and Job Profitability Summary and Details, to see and manage the project over time.

Not to Exceed/Succeed is your Management of the project and not a Retainer. A Retainer is a Prepayment.

Using Estimates does not require you to Invoice from them. They are your Planning tool. You can later invoice Progress, from Sales Orders,  from Actual Time & Costs as Billable entries, or Flat amounts.

@JessT

Please learn from this input. You don't enter Real data unless there is Real Money also involved.