Credit Memos and Progress Billings

Hey there, @ControllerBVTC.

Once you set up and use progress invoicing in QuickBooks Desktop (QBDT), the total percentage used on the estimate should reflect when you create an invoice.

If the percentage column isn't updating, you can perform some basic troubleshooting steps to address the issue. There might be data damage in your company file that's causing this unexpected behavior.

You can follow these steps to address it. 

First, update QuickBooks Desktop to the latest release. Doing this will help you resolve minor issues in your desktop file. Here's how:

1. Go to the Help menu and select Update QuickBooks Desktop.
2. Click the Update Now tab. 
3. Select Get Updates to start the download.
4. When the download finishes, restart QuickBooks.
5. Once prompted, accept the option to install the new release.

If you're still getting the same behavior, run the Verify and Rebuild Data tools. Verify Data self-identifies the most commonly known data issues within a company file while Rebuild Data self-resolves most data integrity issues that the Verify Data finds.

I'm always here to help if you have any other concerns or questions. Just tag my name in the comment section and I'll get back to you as soon as I can. Have a great weekend.

Hi Customer, @ControllerBVTC.

Hope you’re doing great. I wanted to see how everything is going about the total percentage used on the estimate issue you had yesterday. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at anytime.

Looking forward to your reply. Have a pleasant day ahead!

I believe I am having the same issue and the question was not answered. Let me give an example. If I have an estimate for $5000 and I bill 100% of that, there is a zero open balance on the estimate. However, if I have to create a credit memo for $1000 due to a billing error, the estimate amounts are not updated. It still shows an open balance of -0- when it should show $1000. And any item quantities are not updated either. For example, if my estimate was for 100 of X item at $50 each ($5000 total) and I billed all of them but then applied a credit memo for 20 @$50 or $1000, the item quantity should update to show that I have 20 left to bill on the estimate but it does not. Is there a way to make the estimate update to the correct quantity and amount?

Hello SrAcct1,

Thank you for reaching out to the QuickBooks Community! That is a great question! With QuickBooks, the original estimate wouldn't change when creating a progress invoice. QuickBooks simply keep a record for both.

You can learn more about setting up and sending progress invoices in QuickBooks Desktop by using this link. If you have any other questions,  hit that Reply button below, and I will be delighted to help further! I hope you have a productive day! 

When creating an invoice using progress billing, the original estimate does not change but the open balance of the estimate is reduced by the amount of the invoice. Why does a credit memo not increase the amount of the open balance? 

You cannot rely on that estimate open balance to show at a glance how much more work you have to do because the open balance is not correct if you've ever had to do a credit memo. 

Thanks for updating this thread, @SrAcct1.

I'm joining in to share additional insights about this progress invoicing topic.

Just so you know, estimates are non-posting entries. Regardless of whether you enable progress invoicing, the original details of the estimate will remain unchanged, like the quantity and the totals. The only thing that is updated is the estimate's open balance indicating that a progress invoice is created within the estimate itself. 

If you want to update the open balance of the estimate, make sure to select the option to apply it to the invoice. Also, the credit memo must use the actual item and quantity that was on the progress invoice.

Another option is deleting the invoice and recreating it within the estimate to update the progress. If you want to keep track of your progress invoices, you can open a report in QuickBooks. Here's how:

1. Go to the Reports Center.
2. Choose Jobs, Time & Mileage from the list.
3. Scroll down to the Job Estimates section.
4. Pick Job Progress Invoices vs. Estimates.

To learn more about how QuickBooks handles progress invoicing, see this link: Set up and send progress invoices in QuickBooks Desktop.

Visit us again if you need further help with your progress invoicing in QuickBooks Desktop. I'll be more than happy to help you out. Have a lovely week!

I appreciate you trying to help unfortunately, it did not really answer the question either. Sometimes credit memos are needed because I can't simply delete an invoice and re-create it because it would change the financials of that time period. When creating a credit memo, I always pull up the invoice that has the error, click on the refund/credit button at the top and change the quantities and line items to reflect only what I need to credit. Once this credit memo has posted, the open balance on the estimate is still the same as it was before credit memo. I would like to know if there is a way to make it update?

As far as the report, job progress invoices vs. estimates, it is not always correct due to credit memos. I have one job that the estimate open balance is negative but I still have it checked as active, however, it does not show up on the report at all. The open balance on the estimate should be around 80K but due to a credit memo, it is a negative balance. 

Hello there, @SrAcct1. Let me share some insights about progress invoicing and adding a credit memo.

Updating an invoice will not affect the associated estimate. And the credit memos will also not affect progress invoices unless you apply them as payment. 

When you have a credit memo, you need to create a receive payment transaction for the invoice and apply it.

Follow the steps below:

1. From the Receive Payments window, select a customer:
2. Choose the invoices you want to pay.
3. Look for the UNUSED CREDITS window.
4. Select Apply Credits to open a window with the AVAILABLE CREDITS.
5. Choose the credit to apply.
6. Click Done.

Once done, you can refresh the report that you open.

I am also adding this article to refer to in resolving common issues when applying a payment towards an invoice: Resolve common issues when you receive payments towards an invoice.

Let me know if you have any other questions about applying a credit to an invoice. I’m happy to help anytime.

Nevermind. Apparently I'm not explaining myself very well because I'm getting some good information but not an answer to my question. I have tried all items suggested and all credit memos have been applied. I guess there is just not a way for QuickBooks to update the open balance of an estimate after a credit memo has been applied to the customer.

There is! We have done it before and I'm trying to find the article again. I need to do it again so I wanted to make sure I was doing it right.

What we found is that you can reduce the progress invoice's line item (the one that ties to the estimate that you need to change) to what you need, and then create a line item in the body of the invoice, just some random line. We used "Labor", for the SAME AMOUNT that you deducted from the progress invoice line item that ties to the estimate. That means the dollar value is the same. We had to adjust retention stuff, but I think we did retention off the NEW value, AND retention off the "random" line item. Retentions should match.

Then we created a credit memo, and the credit memo, including position retention value (so the retention account balances), took the "new line item" from the progress invoice, and they canceled out. Which meant, the reduced progress invoice (tying to estimate), credited the percent BACK to the estimate!

I cannot find the original thing we found on google or I would. I hope this makes sense to you!

Thank you CBG_Admin!  that worked for me! but it ridiculous we have to do this work around and there isn't an easier straightforward way to credit back to an estimate for progress billing. Anyhow, thanks again. 

I desperately want to understand what you're saying to do but everything I've done to follow what I think you're saying does nothing to fix my problem  The invoice will look right and the accounting looks right but when I create the next invoice it shows I'm overbilled more.  

I have an estimate that had a deductive change order.  I'm overbilled on a couple line items at 100.14%.  Doing everything as I understand it still creates the next invoice as overbilled at 100.28% and screws the prior billing amounts up.  

Please help!

Hello @RebeccaT,

Before we can accomplish your goal for today, can you tell me more about your invoice? Saying you're overbilled, how did you enter or  create the line items of the invoice in question?

Keep me updated in the comments below. Hope to hear from you soon. Take care and stay safe!

The same as others have said:  I create an estimate that has 5 line items.  I bill the first 4 at 100% and bill the fifth line item in increments.  I had a deductive change order that has resulted in me being billed at 100.14% on line items 1-4 but I have enough billing on line item 5 to cover the overbilled amounts on items 1-4.  If I do -.14% on the billing it looks right on the invoice but doesn't translate on the back end so the next invoice will show I'm overbilled by 100.28%.  If I create a credit memo to each line item and apply it to the invoice, it doesn't connect to the estimate so when I go to bill again it still shows I'm billed at 100.14%.  So the only option that works (but is really bad accounting) is to recreate every invoice off the adjusted estimate, delete the other invoices (7, at this point), apply the payments so I have a credit that I can apply but this is such a bad option because then what I've actually sent the Owner and what I'm showing in QB doesn't match and the prior billing/paid to date on the invoices doesn't match up. 

I feel like this is not a super uncommon or difficult issue so it's incredibly frustrating that QB doesn't have a simple answer.  At least not one that I have found.    

RebeccaT, I just experienced the same thing.  A line item showed as being billed 100.18% and every time I added a credit to the line the percentage increased.  I finally realized that QB is adding a negative number as if it were a positive number (it doesn't seem like that should be that hard to fix).  My invoicing is for architectural services, so you may need to tweak these steps for your business.

 The first thing I had to do was to get the total billed % to be less than 100%.  Here are my steps: 

• Restore the amounts of the estimate before the change order
• Void all invoices after the one where the Total Complete to Date equaled 100% (I only had to go back to January; this may not be practical for you)
• Go to the invoice when the line item became 100% billed
• Adjust the line item(s) connected to the estimate to reflect the credit caused by the change order (in your case, items 1-4)
• On separate lines in the invoice bill the same amounts of the credits so that your GL account amounts will be the same
• Make sure the invoice amount is maintained.   
• Reapply the payment if applicable
• Save and close
• At this point when you go to prepare the next invoice, the Prior Amount should be less than 100% for all line items  

That's the first stage and it only applies when the percentage billed is over 100% in QB.  Next you need to reinstate the invoices that were voided, paying attention to the 100% threshold, you do not want to exceed it.  

My steps for Processing a Credit Change Order:

• Update the estimate to reflect the change order
• Determine the amount of the credit for each line item
• Create the progress invoice
• The Prior Amt in the "Specify Invoice Amounts for Items on Estimate" for all line items should be less than or equal to 100% and should not exceed what is on the new estimate 
• If the prior amounts are correct proceed with creating the invoice

          Note:  The prior amount on the invoice you are creating will not match the prior amount on the invoice                         for items that were already 100% billed

• Include amounts in the “Specify Invoice Amounts for Items on Estimate” only if there is “new” activity 
• When the invoice opens, create a new line(s) for the item(s) that was previously billed 100% (do not enter data on the prepopulated lines that were generated by the Estimate) with the credit amount(s)     

I use Excel to print invoices whenever I have a change order. 

I hope this helps (if it's not too late).