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Estimating in QuickBooks – Why is it important?

Many people don’t think so but Estimating can be a very important task in QuickBooks, especially for a contractor.  Because they don’t realize the power of QuickBooks, lots of companies will create their customer’s estimates in either Excel or Word and not bother putting any of that information into QuickBooks. They just use QB for once the job starts generating income.  Why do I point this out?  Well, it’s because QuickBooks can actually make your life easier if you create your estimates there as well as give you some nice reporting after the fact.  Let’s take a deeper look.

Once you create an estimate in QuickBooks (Customers>Create Estimates), you can do a few things with it to get some really nice information.  First, once the proposal becomes an actual job that you want to start billing for, all (or most) of the information is already on the estimate.  When it’s time to bill, you can easily open up the Estimate and click the Create Invoice button and choose which line items you want to bill for on this particular invoice. (Make sure you preference is turned on that says ‘Yes’ to ‘Do you go Progress Invoicing?”)  On this next screen, you can choose what you want to bill for. Choose either “Create Invoice for the entire estimate”, “Create Invoice for a percentage of the entire estimate” or “Create Invoice for selected items or for different percentages of each item.”  If you choose the last option, you can manually enter in what you want to bill for now and what you want to leave for later.  Once you have made your selections, click ok and the invoice appears.

Now, you see that since you took the time to create the Estimate originally, the time that it takes to create the invoice is cut down dramatically. What’s even better is that once you start doing this on a regular basis you will be able to utilize the “Estimates vs. Actuals” report.  This report can be found in Reports>Jobs, Time & Mileage> Job Estimates vs. Actuals Summary or Detail.  These reports will show you by Customer:Job the amounts that you have estimated compared to what you have actually invoiced for.  This tells you if you under or over estimated the original job and by how much.  I can’t even begin to tell you how beneficial this is to a contractor.  You can get a really good idea of how you are doing in your estimating and if you need to adjust how you come up with your numbers.  This will keep you from losing money in the long run.

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We have worked with tons of contractors over the years.  If you need a hand, you know where to find us :)  Happy Friday!

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