Creating an invoice for the entire project seems like it is the simplest way to track payments and have the current balance. The harsh reality is that if all of the work is NOT done, accounts receivable is reflecting a balance due that is NOT REAL. Without proper tracking and matching of income and expenses, most construction companies never know if they made a profit until the job is over.

However, due to your work’s nature, as construction contractors provide services on a per-job operation, issuing invoices make it all the more challenging and difficult than it has to be. The good news is that it doesn't have to stay that way. Consider the following invoicing errors contractors make and take actionable steps on how to avert them.

Common Issues With Accounts Payable

It is easy to put transactions in Accounts Payable (A/P) Aging Summary, and them forget about them. When writing a check from the checking QuickBooks does not automatically go look to see if you put something in Accounts Payable. Sometimes Accounts Payable will have transactions in Accounts Payable that do not belong there.

Challenges Of Keeping Accounts Receivable Simple And Up To Date

Creating an invoice for the entire project seems like it is the simple way to track payments and have the current balance. The harsh reality is that if all of the work is NOT done Accounts receivable is reflecting a balance due that is NOT REAL.

You are a small contractor who needs an Admin Assistant to answer your phone, so you hire someone for your contracting company office.

Calls come in, and your Admin Assistant has some free time between calls, so you want to make use of that famous Standby Time, and you ask them to do a little more. Being nice; you give a new title of Office Manager.  

As the Office Manager; that person is in control of the bookkeeping, customer invoices, vendor payments and more. As the contractor, you are excited because you are handing off the responsibility for the day to day activities.

From your side; you have checked off the box called Office Manger DONE, phones DONE, bookkeeping DONE and material pickup and delivery person DONE. Everything is solved. Good now you can go back to work and start doing the work which is the part you are good at and like to do.  

Are you expecting Too Much from your Office Manager?

Contractors Bookkeeping Service Nine Critical Steps

Construction Bookkeeping Is something you understand then you learn. Hundreds of contractors and regular bookkeepers have told us how easy QuickBooks is to use and yet they cannot understand why QuickBooks for Contractors is so hard to use and it is getting harder every year and I agree with them.

I Have Used QuickBooks For 25 Years and in the early years the DOS versions were very easy because it had a fraction of the features it has in 2016 and the reports were bare bones. 

There Are Apps that make almost everything easy including accounting software. Too many contractors find out too late the old adage "You get what you pay for" still applies.

Cheap Construction Accounting Is The Most Expensive Accounting On Planet Earth

Operating A Backhoe is easy too! I found out just how easy it is to find underground utilities and bring them to the surface with the greatest of ease like the daring young man flying man on the trapeze. A gentle tug on a lever and water was gushing everywhere! It was very entertaining and extremely costly!

This Is Susan's* Story she answered an help wanted ad from a General Contractor, Brutus Hardway*, who was looking for a super cheap bookkeeper with a deep understanding of construction accounting they had to know how to make his QuickBooks For Contractors give him the QuickBooks financial reports and Job Costing Reports he needed to operate and grow his construction company. Brutus offered Susan $15.00 an hour for 10 hours a week. Susan as a good heart and she had QuickBooks experience, but not using QuickBooks For Contractors so she contacted us and I invested an hour of my time at no charge to share a quick overview of what I call the Contractors Bookkeeping Service Nine Critical Steps.

A Short While Later - I stopped by to see how everything was going for Susan and her employer. We reviewed the Nine Steps to see how she was using what she had learned. 

*The names have been changed to protect the real identity of Susan and Brutus