Managing for Profitability with QuickBooks Part 2: Invoicing and Job Cost Reports

Transcription

1 Managing fr Prfitability with QuickBks Part 2: Invicing and Jb Cst Reprts 2018 CEDIA Exp San Dieg Cpyright Materials This presentatin is prtected by US and Internatinal cpyright laws. Reprductin, distributin, display and use f the presentatin withut permissin f the speaker is prhibited The ShinerGrup. All rights reserved The ShinerGrup. All rights reserved. Page 1

2 Instructr Intrductin Leslie Shiner - Owner f The ShinerGrup LShiner@ShinerGrup.cm Financial & management cnsultant fr ver 25 years MBA in Accunting and Finance frm U.C. Berkeley Advanced QuickBks PrAdvisr Sage Certified Cnsultant CEDIA Fellw CPA Practice Advisr Tp Thught Leader Authr A Simple Guide t Turning a Prfit as a Cntractr ( fellw Learning Objectives Explre invicing methds including T&M and Fixed Price Invices Determine hw t handle custmer depsits and ther CEDIA specific issues Develping and btaining valuable jb cst infrmatin and reprts 2018 The ShinerGrup. All rights reserved. Page 2

3 Invice the Custmer Frm the Custmer Center Can create frm estimate Can imprt Time and Expenses fr T&M wrk Can create frm scratch Custmize Yur Invices Lists, Templates Make a cpy Mdify 2018 The ShinerGrup. All rights reserved. Page 3

4 Determine Fields n Screen, n Print Can change names Mdify t make it just the way yu want Pp-up Windws in Invicing Prgress Billing If yu have an Estimate: 2018 The ShinerGrup. All rights reserved. Page 4

5 Mre Pp-up Windws in Invicing T&M Billing If yu track billable expenses by jb r time by jb Must Jb Cst t Create T&M Invices Enter items r expenses If yu use expenses: Directly cded t General Ledger accunt Can still be included in T&M Invice But will shw up n Jb Cst Reprts as N Items Anther reasn t use items! 2018 The ShinerGrup. All rights reserved. Page 5

6 Pick Items T Include Can summarize t ne line item Pick frm time, expenses, mileage and items Mileage and time nt tied t accunting Add Subttal, Add Markup Optin t add subttal items fr better presentatin Add markup item (Other Charge Item) Autmatically multiplies abve number times percent 2018 The ShinerGrup. All rights reserved. Page 6

7 T&M Invice - QBO Can create in bth QBO and Desktp As lng as item is marked billable, it is available t be included in a T&M Invice Price Levels Withut Price Level, sales price (standard rate) frm item is pulled int invice With Price Level, yu can assign different sales price t custmers r jbs Enter in Additinal Infrmatin Tab Can set sales price by item. Example: Design charged at $115 per hur Prgramming charged at $95 per hur Can set amunt as percentage markup (r discunt) f price Adds r subtracts set percentage t default sales price Used t create glbal discunts r surcharge t jbs Create price level as a list 2018 The ShinerGrup. All rights reserved. Page 7

8 Billing Rate Levels Billing Rate Level allws yu t assign different sales price by emplyee r vendr Can set custm hurly rate per service item. Example: Design charged at $115 per hur Prgramming charged at $95 per hur Can set fixed hurly rate fr all items per billing rate Example: Prject Manager at $105 fr any item wrked n jb First: Create billing level as a list Secnd: Assign billing level t emplyees and/r subcntractrs (vendrs) Additinal infrmatin tab Used nly fr invicing des nt affect payrll A "per item" price level verrides bth billing rate levels and standard rates Create Billing Rates Fixed Hurly r Custm Rate Per Service Item Can create Billing Rate Level per emplyee r subcntractr 2018 The ShinerGrup. All rights reserved. Page 8

9 Create Billing Rate and Then Assign It Emplyee Vendr T&M Tips and Tricks Can bill fr subcntractrs and/r emplyees by hur withut prcessing in accunting If yu need t bill subcntractr by hur, enter timecard Beware! Is this a subcntractr r an emplyee? The IRS may just g ahead and decide differently than yu! Be careful when viding T&M invice Items will nt becme billable again Cannt preview withut saving Added t prevent fraud But can turn ff in preferences 2018 The ShinerGrup. All rights reserved. Page 9

10 Use Estimate t Create Prgress Bill Create Invice Frm Estimate screen Frm Custmer screen Select the Estimate Chse selected items with different percentages Create Invice frm Estimate Invice each specific line item Be sure t decide Preferences Sales & Custmers Dn t print items that have zer amunt? Uncheck t shw t the clients Prir amunts inviced Current amunts in invice Future amunts t invice later Remind yurself t invice client Use T-D list 2018 The ShinerGrup. All rights reserved. Page 10

11 Prgress Billing by Percentage Enter either Amunt r Curr %, r Ttal % Invices Keep them simple Save and print Can as PDF Include in statements Invice date is crucial t true accrual accunting Incme recgnized based n invice date Create terms Make sure all custmers and jbs have valid terms Set in Payment Settings tab f the custmer Otherwise, aging reprt is always wrng Wrkarund: Custmize t use ship date fr date mailed t shw t clients instead f invice date 2018 The ShinerGrup. All rights reserved. Page 11

12 Receive Mney frm Clients Tw step prcess: Receive payments Shws payment against invice Puts mney in Undepsited Funds accunt Then, make depsits Lump tgether all payments int ne depsits Shuld equal the ttal depsit t bank Manage Accunts Receivable Run Open A/R Invice reprt regularly Did smene create an invice and then make depsit? Are yu duble cunting incme? Creating Custmer Credits QuickBks asks if yu want t apply it t an invice Smetimes, yu shuld say N D yu need t shw credit n statement? 2018 The ShinerGrup. All rights reserved. Page 12

13 Payrll Issues Mre Jb Csting Labr has the mst risk f variance Enter time cards t jb cst time fr better management Allws fr T&M billing and time tracking Be sure t turn n preferences t jb cst all burdens Be sure t set emplyees t Use time data t create paychecks Withut this ptin selected, QuickBks will nt cnvert hurs f time int dllars f cst Enter payrll whether it is prepared in-huse r by utside service Sign up fr Intuit payrll subscriptin service r activate manual calculatin f payrll Emplyee and payrll preference set t Full Payrll Payrll in QBO Was infrmed that Intuit is wrking n ADDING burdened labr t prjects There is n way t turn a timesheet int Jb Csting Will need t enter time int QBO Using app such as T-Sheets Enter a Zer dllar bill r use PO s as wrkarunds 2018 The ShinerGrup. All rights reserved. Page 13

14 Payrll and Jb Csting in QuickBks Desktp Payrll expenses, by default, are set up wrng Create payrll items s that prductin r billable labr will g abve the line! Separate ut Grss Payrll frm Labr Burden Payrll liabilities, by default, are set up wrng Use subaccunts t track different payrll liabilities by agency Payrll Issues Mre Jb Csting Payrll cmpensatin items Determines where wages will appear n financial reprts Create separate payrll items fr abve the line vs. belw the line Wrkers cmpensatin by wrk cdes Turn n Wrk Cmp in Payrll Preferences Setting different tasks and different rates (set preferences) Find ways t fully burden yur jb csts 2018 The ShinerGrup. All rights reserved. Page 14

15 Tip - Jb Cst Additinal Burdens Allcate ther indirect-direct csts Small tls Vehicles Cmmunicatin equipment Set up new payrll item Cmpany Cntributin: Labr Burden Allcatin Track expenses by jb Liability accunt in Expense range Expense accunt in COGS range Calculate based n quantity r hurs Quantity mre expensive emplyees carry mre burden Hurs be careful with salaried emplyees Labr Burden Allcatin 2018 The ShinerGrup. All rights reserved. Page 15

16 A Payrll Item fr Allcatin Only Allcate Yur Overhead N change t net prfit Jbs nw reflect true labr csts Increase COGS What are yu allcating? Car/truck ($2207) Tls ($350) Ttal ($2557) Decrease expenses Is $2670 t much r t little? 2018 The ShinerGrup. All rights reserved. Page 16

17 The Imprtance Of Jb Csting If yu aren t jb csting, yu can t measure margins Create the end result (jb cst reprts) t begin the prcess f jb csting What d yu really want t track? What infrmatin is imprtant? T sales? T prductin? T bkkeeping? T wner/cfo? Which reprts give yu what infrmatin? Start Out Right Pll emplyees t find ut What they need t knw Hw ften they need t knw it Review yur jb cst reprts D they meet needs? Is all the infrmatin yu need in the reprts? Are there missing reprts? 2018 The ShinerGrup. All rights reserved. Page 17

18 Jb Analysis QuickBks helps yu jb cst t track prfitability by custmer, salespersn, installer Start at the summary, mve t the detail Jb Prfitability Summary all jbs Jb Prfitability Detail by jb Prfit and Lss by Jb Cmpare actual csts t actual revenue Cmpare estimated csts t actual csts Jb Cst Reprting Basics Create an estimate fr actual expected expenses (nt hpes and dreams) Estimated csts d nt include verhead and/r prfit Track jb csts prperly and prmptly Utilize jb cst reprting t cmpare estimated t actual jb csts Include methd f updating estimate t include Change Orders as they ccur Labr has the mst risk? Are yu tracking labr hurs and labr dllars? 2018 The ShinerGrup. All rights reserved. Page 18

19 Jb Cst Reprting A big part f cntrlling the jb cnsists f cntinuus mnitring thrugh reprts Cmpare csts t budget Only as gd as the budget Only as gd as the csting D yu suffer frm t many items? Under budget desn t guarantee prfit Avid surprise bills at the end f the jb Lk fr pen purchase rders Lk fr csts that have nt been billed by vendr Lk fr csts that have nt been inviced t custmer Getting Value Frm Reprts Reprts shuld serve tw purpses: 1: Answer questins 2: Raise additinal questins Why is Jb C less prfitable than Jbs A and B? What created that cst verrun n Jb B? Are there cnsistent areas f slippage amng jbs? Why aren t we shwing enugh revenue fr Jb C? Did we invice fr that change rder? What is ur increased GPM due t this year (and hw can we keep n ding it?) 2018 The ShinerGrup. All rights reserved. Page 19

20 Less is Mre! Determine the level f detail needed T much detail prvides useless reprts! Apples t apples cmparisn Items in Estimate must match items n Jb Cst Reprts T imprve fcus, limit number f items n list Start with the utcme: Hw d yu want yur jb cst reprts t lk? Then create the list backward frm there Instead f starting with the detail n bills Summary Reprt Jbs must have an estimate t be included in this reprt! Watch ut fr jbs where Est. Cst = Est. Revenue It means yu haven t included Markup in Estimate! 2018 The ShinerGrup. All rights reserved. Page 20

21 Detail Reprt Use fr Cst Management Select clumns Ntice rder f items D Yu Use This Reprt? It s a great reprt It shws grss prfit by jb! But Shws Markup, nt Margin! 2018 The ShinerGrup. All rights reserved. Page 21

22 Wh Wuld Be Mst Interested in This? Wh Wuld Be Mst Interested in This? 2018 The ShinerGrup. All rights reserved. Page 22

23 Wh Wuld Be Mst Interested in This? Wh Wuld Be Mst Interested in This? 2018 The ShinerGrup. All rights reserved. Page 23

24 Wh Wuld Be Mst Interested in This? Jb Analysis Cntractr Editin Expenses nt assigned t a jb This is a must run reprt But mdify and memrize t include nly COGS Unpaid Bills by Jb Are yu in a pay when get paid state? Or try the Unpaid Jb Bills by Vendr reprt Reprt that require Estimates and Items Jb Estimates vs. Actuals Summary Jb Estimates vs. Actuals Detail Dn t frget t include pen Purchase Order reprt Lk at jb csts estimate t actuals Then lk at PO reprts Open PO by Vendr, Open PO by Jb 2018 The ShinerGrup. All rights reserved. Page 24

25 Wrk In Prcess Tw different meanings 1. WIP fr prductin builders, spec builders Smetimes called Cmpleted Cntract Capitalize all jb csts All jb csts start n Balance Sheet All items are assigned t Asset accunts Jb csts becme Expenses n Prfit and Lss Statement at end f jb 2. WIP fr lng term jbs with bth incme and jb csts Recgnizes Underbillings and/r Overbillings Let s WIP yur cmpany int shape! Custmer Depsits in QuickBks Three methds 1. Create item that pints t liability accunt When is depsit used up? 2. Make depsit withut receiving payment Creates false A/R reprt and incrrect Balance Sheet 3. Create mnthly WIP adjustment Requires understanding f accunting 2 ways t accmplish A) All invices cded t incme and adjusted with WIP entry B) All payments cded t Liability accunt with incme invice adjusted mnthly 2018 The ShinerGrup. All rights reserved. Page 25

26 Methd 1 Create Custmer Depsit Item Create invice fr Custmer Depsit using Item All depsits are cded t Liability accunt n Balance Sheet Create invice and receive mney against invice Nt cnsidered incme and nt included in P&L Create zer dllar invice fr wrk perfrmed Enter line items f all incme t date use incme items Add line: Less Custmer Depsit (use Custmer Depsit item) Ttal f invice equals zer Recncile depsit accunt Use QuickBks recncile feature Print reprt by custmer Click n custmer name and create quick reprt Issues with Custmer Depsit Liability Can create tw jbs Custmer Depsit Jb Wrk Perfrmed Jb Balance in Custmer Depsit jb represents verbilled r underbilled amunts Need t recncile Custmer Depsit accunt and clear ut as part f end f jb prcess 2018 The ShinerGrup. All rights reserved. Page 26

27 Track Depsit Balance by Custmer Methd 2 Make Depsit Make depsit withut receiving payment D nt create invice Increases cash, creates A/R credit Create invice when wrk cmplete Fr ttal f wrk t date, nt fr ttal due! D nt let QuickBks apply credit t invice Print statement Histry will shw crrectly n statement Issues Net A/R is difficult t manage Balance in A/R f $10,000 may actually represent $100,000 in receivables less $90,000 in depsits 2018 The ShinerGrup. All rights reserved. Page 27

28 Methd 3 Create WIP Entry Create invice whenever requesting mney frm custmer Cde all invices t Incme There is n difference between Custmer Depsits and ther incme invices Create jurnal entry at end f each mnth t adjust Incme Statement fr WIP Create entry t autmatically reverse at beginning f next mnth Issues With WIP Entry Only way t create accurate financials t measure prfitability Requires ability t prject prfit and create budget Requires accurate jb csting and budgeting Requires understanding f accunting principles Requires mnthly WIP adjustment Other methds abve may still require WIP adjustments 2018 The ShinerGrup. All rights reserved. Page 28

29 The Pitfalls f Overbillings Expenses vs Cash Flw Beware Vlume Cash Flw Expenses Time Change Orders Any changes t an estimate can be nted n riginal estimate Specific t Cntractr Versin Recrd changes t bth sides: Update estimate t change budgeted csts Include markup t change the estimated revenue as well Yu decide hw t recrd changes rders D it the ld way create anther estimate D it the new way mdify the estimate and save as change rder Bth ways will update ttal budgeted csts Better t use change rders t cmmunicate changes t client Prvide detail what has changed and why it changed Depends n hw change rder will be integrated int invicing 2018 The ShinerGrup. All rights reserved. Page 29

30 Change Orders - Flexibility Yu can decide when yu change an Estimate Add Change Order? It will shw n the Estimate as separate sectin D yu want the change integrated r as separate lines? Change Order Management Cannt add t estimate if yu want t include n Prgress Bills Create anther estimate May need t create a new jb if yu need t bill T&M Create a cntract jb and bill milestnes Create a change rder as a different jb and bill T&M 2018 The ShinerGrup. All rights reserved. Page 30

31 The 80/20 Rule Paret s Principle The 80/20 rule means that in anything, 20% is vital and 80% is trivial Fcus n that 20%, dn t get lst in the 80% The mre cmplex the estimate, the less value in the reprt In fact, the mre detailed infrmatin, the less valuable the reprting becmes Create prcess that wuld wrk fr anyne reviewing the jb D nt rely n infrmatin in yur head Make QuickBks Sing! Custmize the icn bar Create memrized reprts Turn ff messages Create memrized transactins 2018 The ShinerGrup. All rights reserved. Page 31

32 Summary Using items r expenses yu decide Creating, maintaining and using Items Setting up custmers and jbs and invicing Setting up vendrs and entering and paying bills Getting valuable jb cst infrmatin Yur takeaways? Cnclusin Better manage jb csts fr maximum prfits by utilizing the features within QuickBks Determine hw t better enter bills, pay bills and track csts by jb Create a prcess t track true csts f each jb by line item Imprve verall prject management thrugh better purchasing and imprved cst cntrl n jbs 2018 The ShinerGrup. All rights reserved. Page 32

33 Questins and Thank Yu Jin Leslie fr mre: Wednesday Wrk Smarter, Nt Harder Thursday Cash is King - 6 Tips fr Imprving Cash Flw Friday A Cntractr's Guide t the Financial Stuff 25 Dwn and Dirty Ways t Increase Prfits Leslie C. Shiner, MBA LShiner@ShinerGrup.cm (415) Please cmplete and submit curse evaluatin fellw 2018 The ShinerGrup. All rights reserved. Page 33