@Damien1 , this is a great question that deserved a real answer. The double-counting issue you describe is a classic completed contract method problem.
Under completed contract, when you send a progress billing invoice, you're creating A/R (asset) for work that's also sitting in CIP/WIP (asset). The fix is an offsetting liability account, typically called "Billings in Excess of Costs" or "Deferred Revenue - Construction."
The journal entry when you invoice:
- DR: Accounts Receivable (the invoice does this automatically)
- CR: Billings on Construction Contracts (liability)
This liability offsets the WIP asset on your balance sheet. Your net WIP position is: CIP/WIP Asset minus Billings liability. If billings exceed costs, you have a net liability (overbilled). If costs exceed billings, you have a net asset (underbilled).
At job completion, you close everything out:
- DR: Billings on Construction Contracts (zero the liability)
- CR: Construction Revenue (recognize income)
- DR: Construction Expense / COGS
- CR: CIP/WIP (zero the asset)
In QBO, you'd need to create the Billings liability account manually and post a JE each time you invoice. It's doable but adds a manual step to every billing cycle.
@DylanMiller77, the approach above should work for you too.
For the WIP schedule itself (the report your surety/bank/CPA wants each month that shows over/under billing per job), I built a tool that connects to QBO and automates the calculation: wipreports.com. It handles the percentage of completion math and generates the PDF. But the balance sheet treatment Damien described is a separate accounting setup that needs to happen in QBO regardless of what tool you use for reporting.
