How to Handle Progress Billing for Vendors?

JABUIL · ‎March 07, 2025

Hello

I'm using Quickbooks Desktop Premier Contractor 2020 and I'm trying to figure out the best way to handle progress billing from our vendors based on their estimates.

Before we start construction, we get estimates from our vendors, e.g., $10,000 to do drywall, so I enter a bill from them for $10,000 into Quickbooks dated a few months in the future when we expect drywall to be complete. Then when the drywaller finishes some portion of the work, they send me a bill for $3000. If I'm going to pay them immediately then there's no problem, I enter a bill payment of $3000 towards the $10,000 bill and send them a check. But if I'm not going to pay them immediately (because they messed something up or haven't actually finished their portion yet), I don't know how to keep track of this $3000 request in QB.

If I enter a new $3000 bill then our cost tracking for this job will show $13,0000 for drywall, which isn't correct. If I add a new line item to the existing $10,000 bill for -$3000 and then enter the $3000 request as a separate bill, the total amount will be correct but it makes the line item reports confusing and messy.

Is there a better way to do this? At any given time, I need to be able to quickly and easily see: how much I expect to pay each vendor, how much they've billed for and when, and how much I've actually paid and when, while ensuring that my cash and accrual reports for each job are always correct.

If it matters, these estimates are almost exclusively for labor and I don't have or track inventory or items.

BigRedConsulting · ‎March 07, 2025

Probably, don't enter imaginary bills in the future. Instead, wait until they send you a bill, then enter it and then pay it when appropriate.

You could enter a Purchase Order for the $10,000 bid and then create bills from it as they send you bills, though I don't really see the point if they don't need a PO

EvethC · ‎March 07, 2025

Thank you for sharing your experience with QuickBooks Desktop (QBDT) Premier Contractor 2020, @JABUIL. I agree with BigRedConsulting on making use of the purchase order for your recording. I'll share more details below to help you further.

Managing progress billing in QBDT can be complicated, especially with partial payments. It's crucial to have a system that accurately tracks expected payments, billed amounts, and actual payments to avoid overstating your expenses.

First, we can create a Purchase Order (PO) from your vendor to record the $10,000 transaction. Once done, we can generate multiple bills to record the partial bill of $3,000.

Here's how we can do this:

Go back to Vendors.
Select Enter Bills.
Click Select PO.
Select your vendor.
Open the PO you previously created.
Edit the QTY to have the desired amount to pay.
Click Save & Close.

Once you've entered the $3000 bill, you can review your Purchase Order to determine the outstanding balance you still need to pay.

If you encounter complexities or need further personalized guidance, consulting with a QuickBooks professional or a certified accountant can provide additional support tailored to your business needs.

Additionally, if you need to keep track of your purchase orders by site, status, or vendor, you can refer to this article: Use the purchase order management worksheet.

Furthermore, as you would balance your checkbook, it's important to review your accounts in QuickBooks to ensure they align with your bank and credit card statements. This article can help: Reconcile an account in QuickBooks Desktop.

If you have any more questions or need further assistance with recording your bill payments, please don’t hesitate to reach out. Here's to smooth and accurate financial management in your contracting business!

Topics

Training

Community

Resources

How to Handle Progress Billing for Vendors?

How to Handle Progress Billing for Vendors?

How to Handle Progress Billing for Vendors?

Need to get in touch?