Do you manage a construction business? If so, you likely deal with many financial tasks. These tasks need close attention to detail. One such area is progress invoicing. In this article, we will talk about progress billing. We'll discuss its role in construction and how to manage it efficiently. If you want to make your construction accounting easier and boost your success, stick around.
The Basics: Understanding Progress Billing
Progress billing is common in many industries. These include construction, technology integration, aircraft, and defense. It is a standard invoicing practice for large, long-term projects needing regular funding for supplies and labor. Progress billing acts as an effective communication tool. It keeps everyone working on the project on the same page. This includes project owners, general contractors, subcontractors, and other stakeholders.
Progress billing benefits both vendors and customers. For vendors, it ensures a regular cash flow. It reduces debt and empowers them to cease work in case of payment delays. Customers, on the other hand, benefit from reduced risks as they don't have to make upfront payments. They also have the advantage of having a contractor who is motivated to complete the project promptly.
Challenges in Progress Billing
There are challenges in implementing progress billing.
Vendor Challenges: Vendors often struggle with setting up projects. They also have to issue many invoices. Resolving disputes is another problem they face.
Customer Challenges: Customers face the risk of overpaying. They often depend on local building inspectors and planning boards for payment decisions.
Industry Challenges: These problems include following complex regulations, upholding standards, and coordinating with numerous subcontractors and individuals.
Progress Billing in QuickBooks Desktop
QuickBooks Desktop is comprehensive accounting software. It offers a useful feature called QuickBooks progress invoicing. This tool allows you to invoice your clients in stages. This aligns with the progress of your work.
QuickBooks Desktop offers three options for billing contracts:
Create an Invoice with the Entire Estimate
Create an Invoice with a Percentage of the Estimate
Create an Invoice with Each Percentage of Each Item — This is CCA's recommended method.
If you don't use progress invoicing in QuickBooks Desktop, you might have money problems during your project. For any project that lasts more than a month, using progress invoicing in QuickBooks Desktop is a must. This way, you keep your cash flow steady.
Making Progress Invoicing Easy With QuickBooks: Our Helpful YouTube Tutorial
Invoicing with QuickBooks may seem tough at first. That's why we made a YouTube video to help you. This video talks about the important parts of this process.
The video teaches you the three ways to bill contracts. It guides you from making estimates to setting up progress invoices. Progress invoicing in QuickBooks Desktop isn't as hard as it seems. There are just some key steps you need to follow. Our video makes sure you do it right.
Navigating Cost Changes and Disputes in Progress Billing
Progress billing projects are usually lengthy and complex. This makes them vulnerable to changes in costs. There are several reasons why you might need to adjust costs:
Prices of materials and labor may go up and down.
Customers might have new requests. They might also change their orders.
Errors can occur in construction or design.
There may be damage, theft, or other losses.
Local inspectors might impose unexpected regulatory challenges.
To prevent expensive mistakes, you should have clear rules in your contract. These rules should explain when and how to make change requests. They should also outline the range of possible adjustments.
Furthermore, they should explain how to handle these changes in relation to the progress invoice.
Normally, the customer must sign a form that explains the changes and confirms the costs. Only then will the contractor continue with the work.
How CCA Can Help
While the video serves as a great guide, remember that we're here to help at CCA. Our services range from setting up and managing your QuickBooks system to handling progress invoicing. Here's how we can help:
Manage invoice submissions
Facilitate customer review
Ensure prompt invoice payment
Don't hesitate to contact us. We are always ready to answer your queries. Book a 15-minute consultation here. Let us help you streamline your construction accounting process.
In Conclusion
In the tricky world of construction accounting, progress invoicing is very important. Understanding and using progress billing right can help manage projects better, keep cash flow steady, and improve client relationships. QuickBooks Desktop can make progress invoicing much easier, and our YouTube video can show you how.
We know it might be hard to do all this on your own. That's why CCA is here to work with you. We offer complete construction bookkeeping services to handle these tough tasks.
Keep in mind that you're great at building projects, and we're great at building strong financial systems. Let's join forces to create a solid foundation for your financial success.
Reach out to us for any questions or schedule a quick 15-minute meeting here. Together, we can tackle construction accounting and progress billing.
Stay informed with more useful tips from our blog. Let's create your financial success story together!
Contact us today via support@constructioncostaccounting.com or call us at (949) 356-0840
