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Robert M.
Robert M., Consultant
Category: Financial Software
Satisfied Customers: 8750
Experience:  30 yrs. of computer experience in financial and marketing departments.
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We are a remodeling construction company and subcontract

Customer Question

We are a remodeling construction company and subcontract most of our small jobs. We make an estimate in Quickbooks for the job we were requested a bid on. When awarded, we make that estimate into an INvoice. When we recieve payments on that invoice, we apply payments toward that invoice. Well, when we subcontract work to independant contractors, we pay them a set amount for a job. For example, if we bill $5500 on a job, we pay the IC for the labor performed (we provide all job materials), say $1500.00. Yet, since they want to receive some type of monies on a weekly basis, they take draws on that invoice for labor they charge us. So how do I enter the vendor's invoice in Quickbooks? AS a bill for that vendor? Then apply the periodic payments (draws) we make to IC to that Bill? Is that the correct way of record keeping?for when a IC bills us for labor? That's the way we enter it into Quickbooks for Vendors who sell us job materials. I'm not sure if it works the same because the IC bills per job. Help?
Submitted: 11 months ago.
Category: Financial Software
Expert:  Robert M. replied 11 months ago.

so you put the vender invoice in for the job but they bill you by the hour ?

As long as the bills are going to match up at the end you can put either bill in but not both.

i would leave your bill in the system and just make partial payments on it each week and put a memo with their invoice number on each payment. That would be the simplest method. And the one that is most likely to keep your books straight while still being able to reference their invoices if necessary.

Customer: replied 11 months ago.

They don't charge us by hour. They charge us by a fixed price for labor. If we say, I'll pay you (subcontractor) $1500 for this job (A $5000 job we are billing our customer), that's the amount of their invoice, $1500. But they don't wait to collect until job is complete. They come and pick up draws on those $1500. We retain the 10% of the $1500 for any warranties that may arise on their labor performed. So how do we enter this subcontractor's invoice and draws into the system without doubling entries so we can have a running balance and know how much we still owe them per job?

Should I just enter a bill (subcontractor invoice given to us for labor by subcontractor) for the vendor aka subcontractor and then apply check payments to that bill? would that be the correct way of doing it? If so, what type of vendor should I create for the subcontractor? Accounts payable? or expense? or other current liability?

or...
would i need to make an expense account under subcontractors for each subcontractor name and keep a running balance that way? will I still be able to track balance per job?

What I am trying to do is keep track of aging on retainage (10% withheld from subcontractors for when issues arise that they need to go back and fix)

Expert:  Robert M. replied 11 months ago.

just make a partial payment on the invoice. The same way that you would if you bought 1000 widgets for 10000 and paid 5k this month and 5k next month.

you put in their invoice for 1500 and the first week you write them a check for 400. you apply that to the invoice and it says you still owe 1100. You should be able to create a memo that has their invoice number if you want to track it that way.

You might even be able to set them up as a vender with terms 25% net 7 25% net 14 25% net 21 25% net 30 But i wont swear to that. some accounting packages can, I am not sure if qb can do split terms

If you really wanted to be fancy you would set it up as a labor item that you sell 1500 units for $1 each ( or whatever you charge the customer ) and then buy the unit from them for $1 a piece in how ever many dollars they bill you each invoice. But it seems needlessly complicated if you are a small business.

Customer: replied 11 months ago.

I don't think you are understanding what I'm asking.

Expert:  Robert M. replied 11 months ago.

My understanding is that you charge a customer x amount of dollars for labor as part of the job

you bill that as part of the job

the people that do the work agree to a flat fee.

But you pay them weekly.

my answer was to put in an invoice from them for the whole job and then pay it partially every week

OR

put in their invoices as you get them and pay them

just don't do both.

and if you do it the first way than you can be sure that their invoices match your agreement.

which part do you not understand?

you seem to have a hard time making a partial payment against an invoice maybe ?

Customer: replied 11 months ago.

That's the part I don't understand. How do I enter the invoice for the subcontractor into QuickBooks? As a bill? Or as a PO?

I can't enter invoices for subcontractors in QuickBooks. I can only enter invoices we charge customers. And apply payments to those.

Expert:  Robert M. replied 11 months ago.

either a bill or a purchase order.

if it is a purchase order it would be converted to a bill before you paid it.

The same way you enter the bills or purchase orders for the material that you purchase for the job.

labor is a non stocked item. that can be treated the same way as cement

you purchase it and you sell it. purchase with a po they send you a bill and you pay it. You generate a sales order and an invoice and they pay it.

what i am saying is that you don't have to use their invoices if that is confusing the system. you can put in your own bill that matches the final cost and pay it partially if you want it to clearly match something in the job costing.

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