Chapter 9
Invoicing Your Customers
In this chapter:
• Create invoices
• Use price levels, discounts, and subtotals
• Edit and memorize invoices
• Issue credit memos
• Create and work with estimates and progress billing
• Invoice customers for reimbursable expenses
For many businesses, the only way to get money in is to send an invoice to a customer. Creating an invoice in QuickBooks is easy once you understand what all the parts of the invoice do and how to modify these parts to reflect the way you do business.
In addition to invoices, you may have to issue credits, print packing slips, and create estimates. These and other sales-related transactions are covered in this chapter.
Create Invoices
QuickBooks gives you multiple ways to open the Create Invoices window. You can select Customers | Create Invoices from the menu bar, press CTRL-I, or click the Create Invoices icon in the Customers section of the Home page.
A blank invoice form will open, and at the top of the window you’ll see four tabs: Main, Formatting, Send/Ship, and Reports. If you take a moment to open each tab and review its contents, you’ll see that they each contain a set of buttons that allow you to complete any and all tasks for creating and working with an invoice. Clicking the Full Screen icon (see Figure 9-1) at the top right of the Create Invoices window hides these buttons (as well the Icon Bar), making the Invoice template larger and easier to work with.
FIGURE 9-1 |
The Create Invoices window has all the fields you need to track sales and manage all the information that relates to a sale. |
The Create Invoices window also displays an informational panel that will initially be blank. When you select a customer for invoicing, this panel will show information about the customer, such as open balance, recent transactions, or notes—if any exist. To close this panel, simply click the Hide History arrowhead to the immediate left of the customer’s name. Clicking the Full Screen icon will also close the panel.
Several invoice templates are built into QuickBooks, and you can use any of them as well as create your own (covered in Chapter 24). The first thing to do is decide whether the displayed template suits you—keeping in mind that the prebuilt templates available to you may vary depending on the version of QuickBooks that you’re working in and the industry you choose during the QuickBooks setup. You should probably look at each of the templates available in your version before settling on the one you want to use. To do that, click the arrow next to the Template field (located in the upper-right corner of the window) and select another invoice template from the drop-down list. The most common templates that QuickBooks includes for you are outlined here:
• Finance Charge This template appears the first time you use the Assess Finance Charges feature. Information about finance charges is in Chapter 10.
• Intuit Packing Slip This template is discussed in the section “Print Packing Slips,” later in this chapter.
• Intuit Product This template has more fields and different columns because it’s designed for product sales, including inventory items.
• Intuit Professional and Service These two templates are almost identical. There’s a difference in the order of the columns, and the Service template has a field for a purchase order number.
• Progress This template is covered later in this chapter in the “Create Progress Billing Invoices” section. It is designed specifically for progress billing against a job estimate. It doesn’t appear in the Template list unless you have specified Progress Invoicing in the Company Preferences tab of the Jobs & Estimates category of the Preferences dialog.
For this discussion, we’ll use the Intuit Product invoice template. If you’re using any other template, you’ll still be able to follow along, even though your invoice form may lack some of the fields related to products.
The top portion of the invoice is for the basic information and is called the invoice header. The middle section, where the billing items are placed, is called the line item section. The bottom section, called the footer, holds the totals and other details (such as customer messages). Each section of the invoice has fields into which you enter data.
Entering Basic Information in the Invoice Header
To create an invoice, start with the customer or the job. Click the arrow to the right of the Customer:Job field to see a list of all your customers. If you’ve attached jobs to any customers, those jobs are listed under the customer name. Select the customer or job for this invoice.
If the customer isn’t in the system, choose <Add New> to open a new customer window and enter all the data required for setting up a customer. Read Chapter 3 for information on creating customers and jobs.
If you’ve charged reimbursable expenses or assigned time to this customer, QuickBooks displays a message reminding you to add those charges to this invoice. You’ll learn how to charge customers for reimbursable expenses in Chapter 11.
In the Date field, the current date shows by default, but if you want to change the date, you can either type in a new date or click the calendar icon at the right side of the field to select a date. If you change the date, the new date appears automatically in each invoice you create during this session of QuickBooks (the current date returns after you close and then reopen the software). If you want QuickBooks to use the current date on the next invoice you create during this session, see the ProAdvisor Tip that follows.
ProAdvisor Tip: If you want QuickBooks to use the current date as the default date when creating a new invoice, you can set this option from the Edit menu. Choose Edit | Preferences, and in the General category of the Preferences window (in the My Preferences tab) select the option Use Today’s Date As Default instead of the default option, Use The Last Entered Date As Default. The first time you enter an invoice, fill in the invoice number you want to use as a starting point. Hereafter, QuickBooks will increment that number for each ensuing invoice.
ProAdvisor RecommendsUsing Multiple Invoice Number Sequences
QuickBooks is smart enough to work with alphanumeric invoice numbers. So, for example, if the previously saved invoice number is R-0001, the next invoice number will be R-0002. But suppose you run a contracting business and you’d like your residential invoices to have the numbering scheme “R-0001” and your commercial invoices to use “C-0001,” and you don’t want to change the numbering scheme manually each time? Consider creating another accounts receivable (A/R) account (refer to Chapter 2 to learn how to create a new account). This will allow you to maintain the different numbering schemes easily when creating an invoice.
If you do decide to use more than one A/R account, the top of the Invoice window has a field to select the A/R account you want to use to post this transaction. Keep in mind that you must select the same A/R account when it comes time to receive payment for the invoice.
The Bill To address is taken from the customer record, as is the Ship To address that’s available on the Product invoice template (using the Ship To address you configured to be the default Ship To address). You can select another Ship To address from the drop-down list or add a new Ship To address by choosing <Add New> from the list. Learn more about defining a default Ship To address for a customer in Chapter 3.
ProAdvisor Tip: If you enter or change any information about a customer (such as a change to the customer’s Bill To address, for example) while you’re creating an invoice, QuickBooks offers to add the information to the customer record when you save the invoice. If the change is permanent, click the Yes button in the dialog that displays the offer. This saves you the trouble of going back to the customer record to make the changes. If the change is for this invoice only, click the No button. If you never make permanent changes, you can tell QuickBooks to turn off this feature by changing the option in the Company Preferences tab in the General category of the Preferences dialog. Select the option Never Update Name Information When Saving Transactions.
If you have a purchase order from this customer, enter the PO number in the P.O. Number field. Optionally, you can click the Attach File icon, located at the top of the Invoice window, to scan and store an online copy of the customer’s PO (or any other document that you’d like to associate with this transaction) that relates to this sale so you can easily retrieve it at a later date if the need arises.
The Terms field is filled in automatically with the terms you initially entered for this customer. You can change the terms for this invoice if you wish. If terms don’t automatically appear, it means you didn’t enter that information in the customer record. If you enter it now, when you save the invoice QuickBooks offers to make the entry the new default for this customer by adding it to the customer record.
The Rep field (available by default in the Product template, but it can be added to any template) will automatically fill in the salesperson attached to this customer. If you didn’t link a salesperson when you filled out the customer record, you can click the arrow next to the field and choose a name from the drop-down list. If the rep you want to use doesn’t exist in the list, you can select <Add New> to add the rep on the fly. See Chapter 6 to learn how to add reps to your system.
The Ship field (available only in the Product and Packing Slip templates) is for the ship date, and the date defaults to the invoice date. You can change the date if you’re not shipping until a later date.
The Via field (available only in the Product and Packing Slip templates) is for the method of shipping. Click the arrow next to the field to see the available shipping choices or select <Add New>. (See Chapter 6 for information about adding to this list.)
The F.O.B. field (available only in the Product and Packing Slip templates) is used by some companies to indicate the point at which the shipping costs are transferred to the buyer and the assumption of a completed sale takes place. If you use Free On Board (FOB), you can enter the applicable data in the field; it has no impact on your QuickBooks financial records and is there for your convenience only.
Entering Line Items
You can now begin to enter the items for which you are invoicing this customer. Click in the first column of the line item section.
If you’re using the Product invoice template, that column is Quantity. (If you’re using the Professional or Service invoice template, the first column is Item.) Enter the quantity of the first item you’re invoicing.
An arrow appears on the right edge of the Item Code column. Click it to see a list of the items you sell (see Chapter 5 to learn how to enter items) and select the item you need. The description and price are filled in automatically using the information you provided when you created the item. If you didn’t include description and/or price information when you created the item, you can enter it manually now.
QuickBooks does the math, and the Amount column displays the total of the quantity times the price. If the item and the customer are both liable for tax, the Tax column displays “Tax.”
Repeat this process to add all the items that should appear on this invoice. You can add as many rows of items as you need; if you run out of room, QuickBooks automatically adds pages to your invoice.
For line items that are inventory items, QuickBooks checks the quantity on hand (QOH) and warns you if you don’t have enough inventory to fill the sale. It’s a warning only; QuickBooks lets you complete the sale anyway, but it’s never a good idea to sell into negative QOH, as it can affect the average cost of that item.
Applying Price Levels
If you’ve enabled price levels in QuickBooks Preferences and created entries in your Price Level list (explained in Chapter 6), you can change the amount of any line item by applying a price level. Most of the time, your price levels are a percentage by which to lower (discount) the price, but you may also have created price levels that increase the price.
If you have already assigned a price level to this customer, the appropriate price shows up automatically. If not, to assign a price level, click within the Price Each column to display an arrow. Click the arrow to see a drop-down list of price level items, and select the one you want to apply to this item. As you can see in Figure 9-2, QuickBooks has already performed the math, so you not only see the name of your price level, but you also see the resulting item price for each price level. After you select a price level, QuickBooks changes the amount you’re charging the customer for the item and adjusts the amount of the total for this item.
FIGURE 9-2 |
Assign a predefined price level to the price of any item. |
The customer sees only the price on the invoice; there’s no indication that you’ve adjusted the price. This is different from applying a discount to a price (covered in the next section), where a discrete line item exists to identify the discount.
Using Discounts
You can also adjust the invoice by applying discounts. Discounts are entered as line items, so the discount item has to first exist in your Item List.
When you enter a discount, its amount (usually a percentage) is applied to the line item immediately above it. For example, suppose you have already entered the following line items:
• Line 1: Qty of 1 for Some Item with a price of $100.00 for a total line item price of $100.00
• Line 2: Qty of 2 for Some Other Item with a price of $40.00 for a total line item price of $80.00
Now you want to give the customer a 10-percent discount, so you’ve created a 10-percent discount item in your Item List (if you’re not sure how to do this, refer to Chapter 5). If you enter the discount item on the line immediately after line 2, QuickBooks will calculate the discount value as 10 percent of the last line you entered—for an $8.00 discount.
Using Subtotals
If you want to apply the discount against multiple (or all) line items, you must first enter a line item that creates a subtotal of items you want to discount. To do this, use a subtotal item type that you’ve created in your Item List. Then enter the discount item as the next line item after the subtotal, and the discount is then applied to the subtotal.
Subtotals work by adding up all the line items that have been entered after the last subtotal item (the first subtotal item adds up all line items starting at the first line item on the invoice). This gives you the added benefit of offering a discount to some line items but not others and to apply a different discount rate to each group of subtotaled items. And because discounts are displayed on the invoice, your “generous” discounts are clearly communicated to the customer!
Checking the Footer Section
When you’re finished entering all the line items and any discounts, you’ll see that QuickBooks has kept a running total, including taxes, in the footer section of the invoice (see Figure 9-3).
FIGURE 9-3 |
The invoice is complete, and all the items and discounts are accounted for in the Balance Due field. |
Adding a Message
If you want to add a message to the invoice, click the arrow in the Customer Message field to see the messages you created in the Customer Message list (described in Chapter 6). You can create a new message if you don’t want to use any of the existing text by choosing <Add New> from the message drop-down list and entering your text in the New Customer Message window. Click OK to enter the message in the invoice. QuickBooks automatically saves the message in the Customer Message list so you can use it again. You can also type the message directly in the Customer Message field and press the TAB key, which opens a Customer Message Not Found dialog that offers you the chance to do a QuickAdd to put your new message in the Customer Message list.
Adding a Memo
You can add text to the Memo field at the bottom of the invoice. This text doesn’t print on the invoice—it appears only on the screen (you’ll see it if you reopen this invoice to view or edit it). However, the memo text does appear on statements next to the listing for this invoice. Therefore, be careful about the text you use—don’t enter anything you wouldn’t want the customer to see (unless you never send statements).
Choosing the Method of Sending the Invoice
There are several ways to get an invoice into the hands of your customer:
• Print each invoice as it’s completed. Click the Print button on the Main tab of the Create Invoices window. This will open the Print One Invoice window from which you can select your printer, set additional print options, and print a single invoice.
• E-mail each invoice as it’s completed. Click the Email button on the Main tab of the Create Invoices window. The way your invoice is sent will depend on the send method and template you selected in Company Preferences. In addition, if a document or file has been “attached” to this invoice, you’ll see an option to send that as well, along with the invoice, via e-mail. You’ll learn more about how to e-mail forms and the attach file feature in Chapter 14.
• Print your invoices later. Select the Print Later option to print this invoice in a batch along with other invoices marked Print Later. When you’re ready to print the batch, click the down arrow below the Print button on the Main tab of the Create Invoices window and select Batch. Read more about batch printing your invoices (as well as other transaction forms) in Chapter 14.
• E-mail your invoices later. Select the Email Later option to add this invoice to a batch of other invoices that you’ll send via e-mail to your customers. When you’re ready to e-mail the batch, click the down arrow below the Email button and select Batch. The Send Forms window will open, where you can also edit the e-mail that will accompany your invoices. Read more about batch e-mailing your invoices (as well as other transaction forms) in Chapter 14.
You can also configure QuickBooks to allow your customers to pay their invoices online. If you’re interested in accepting online payments for invoices, click the Online Pay button on the Main tab to learn more about or to configure your payment settings. Once you’re set up to receive online payments, you can designate which online payment methods you’ll accept—your choices are bank account only or from a credit card and bank account. Additional fees may apply. Read more about receiving customer payments in Chapter 10.
Saving an Invoice
Click Save & New to save this invoice and move on to the next blank invoice form. If this is the last invoice you’re creating, click Save & Close to save this invoice and close the Create Invoices window.
ProAdvisor Tip: In the General section of the Preferences window is a default setting that automatically saves a transaction (such as an invoice or check) before printing. I recommend that you don’t turn off this default setting—it’s not only a good business practice to save a transaction before you print it, but it’s also a way to protect your business from dishonest users.
Edit an Invoice
If you want to correct an invoice (perhaps you charged the wrong amount or forgot you’d promised a different amount to a particular customer), you can do so quite easily.
Open the Create Invoices window and click the left-pointing blue arrow button located on the Main tab to move back through all the previous invoices in your file. However, if you have a large number of invoices to sort through, it’s faster to click the Find button located just below the blue arrows. In the Find Invoices window, you can search by the customer, date, invoice number, or amount.
Use the following guidelines when you’re editing a previously entered invoice:
• If a previously entered invoice has been paid, don’t change anything, unless you want to edit the text in the Memo field.
• If a previously entered invoice has not been paid but has been mailed, you shouldn’t edit anything, although it’s probably safe to enter or modify text in the Memo field if necessary.
• If the previously entered invoice has not yet been sent to the customer, you can make any changes you wish.
When you click Save & Close, QuickBooks displays a message dialog asking whether you want to save the changes you made. Click Yes.
Mark an Invoice as Pending
Marking an invoice as “pending” makes it nonposting, meaning that it does not affect your account balances or reports. If, for example, you require a final approval for invoices before they are sent out to customers, marking them as pending is a great way to make them available to the appropriate person for review, editing, and final approval.
To mark an invoice as pending, click the Mark As Pending button on the Main tab in the Create Invoices window. A watermark will appear indicating that the invoice is now Pending/Non-Posting. Similarly, to mark an invoice as final, click the Mark As Final button.
The Pending Sales report lists all invoices currently marked as pending as well as the accounts that will be affected once the pending status is removed and the invoice is considered final. To run this report from the Reports menu, you can choose Sales | Pending Sales.
Void and Delete Invoices
There’s an important difference between voiding and deleting an invoice. Voiding an invoice makes it nonexistent to your accounting and customer balances. However, the invoice number continues to exist (it’s marked “VOID” on reports) so you can account for it. To void an invoice, open it, and on the Main tab in the Create Invoices window, select the Void option from the drop-down arrow below the Delete button. Then click Save. When QuickBooks asks if you want to record your change, click Yes.
Deleting an invoice, on the other hand, removes all traces of it from your transaction registers and most reports (with the exception of the Audit Trail report). To delete an invoice, open it and click the Delete button on the Main tab in the Create Invoices window. Then click Save. When QuickBooks asks if you want to record your change, click Yes.
ProAdvisor Tip: QuickBooks tracks transactions that you void, unvoid (a voided transaction that you decide to re-enter into QuickBooks), or delete, and it displays them in two reports: the Voided/Deleted Transactions Summary report and the Voided/Deleted Transactions Detail reports. Both reports show transactions that have been voided, unvoided, or deleted in the date range selected for the report. These reports can be accessed by selecting Reports | Accountant & Taxes | Voided/Deleted Transactions Summary (or Detail).
Print Packing Slips
QuickBooks provides a template for a packing slip, which is basically an invoice that doesn’t display prices. Product prices are not necessarily something that warehouse personnel who manage, pack, and unpack products need to know.
Printing the Default Packing Slip
To print the default packing slip, complete the invoice. Then click the arrow below the Print icon at the top of the Create Invoices window and select Packing Slip from the drop-down list. The Print Packing Slip dialog opens so you can select your printing options (see Figure 9-4).
FIGURE 9-4 |
Select the appropriate options for printing the packing slip. |
Changing the Default Packing Slip
If you create your own customized packing slip template, you can select it each time you print a packing slip, or you can make that new form the default packing slip by choosing Edit | Preferences to open the Preferences dialog.
Go to the Sales & Customers category and click the Company Preferences tab. In the Choose Template For Invoice Packing Slip field, select your new packing slip form from the drop-down list and click OK. If you have multiple packing slips, you can choose any of them for printing. Instead of selecting Print Packing Slip from the Print button’s drop-down list in the Create Invoices window, select a packing slip template from the drop-down list in the Template field. The Create Invoices window changes to display the packing slip, as shown in Figure 9-5.
FIGURE 9-5 |
View a packing slip before you print it. |
I know I just told you that a packing slip doesn’t display any amounts, and there they are! Confused? Don’t be! The packing slip in Figure 9-5 is the Intuit Packing Slip, which has one set of configuration options for the screen and another set of configuration options for the printed version. In this case, the amounts are visible on the screen but will not appear on the printed version. This is true for any packing slip template you create as a customized template. It’s a handy feature, as you’ll learn when you read the section on customizing templates in Chapter 24.
To see what the printed version of the packing slip looks like, click the arrow below the Print icon on the Create Invoices window toolbar and choose Preview. Satisfied? Close the Preview window and return to the Create Invoices window. Now you can print the packing slip.
Batch Invoicing
Suppose you own a landscaping company and you charge the same monthly maintenance fee to several of your customers. Batch invoicing gives you an easy way to create and send the same invoice to these customers. You can also choose to create a billing group and add customer names to that group if those customers will need to be invoiced for a similar service in the future.
1. From the Main tab on the Create Invoices window or from the Customers menu, click the Create A Batch button. You’ll see a reminder about updating your customer information. Review and click OK.
2. From the Batch Invoice window (refer to Figure 9-6), individually select the names of customers for whom you want to create an invoice (you can also hold down the SHIFT key and select multiple, contiguous customer names), and click the Add button to include them in this batch. Alternatively, you can create a billing group (by selecting <Add New> from the Billing Group drop-down list) to which you can add customers in the same manner. Click Next.
FIGURE 9-6 |
Choose the customers to invoice in this batch or create a new billing group. |
3. Select the items for your batch invoice, add a customer message, and update the invoice date and template if necessary. Click Next.
4. Review the list of batch invoices to be created. You can deselect a customer to prevent them from receiving an invoice in this batch by clicking the check mark next to their name in the Select column. Click the Create Invoices button.
5. Review the Batch Invoice Summary window to confirm and execute the send methods (either Print or Email) of the invoices in the batch. Click Close when finished or to send any unmarked (meaning there’s no send method in the customer record) invoices later.
ProAdvisor Tip: This invoicing method relies on the details you’ve entered for your customers (such as mailing address, terms, and send method), so to get the full benefit from using this feature, you’ll want to be sure that this information is up to date and complete.
Use Memorized Invoices
If you have a recurring invoice (common if you collect rent from tenants, for example), you can automate the process of creating it. Recurring invoices are those that are posted to QuickBooks at regular intervals, usually for the same amount.
Create the first invoice, filling out all the fields. If there are any fields that will change, leave those fields blank and fill them out each time you send the invoice. Then press CTRL-M to open the Memorize Transaction dialog, shown next:
Fill in the fields using the following guidelines:
• Change the title in the Name box to reflect what you’ve done. It’s easiest to add a word or phrase to the default title (which is the customer or job name), such as Retainer. You can use up to 31 characters, including spaces.
• Choose Add To My Reminders List. Then specify how and when you want to be reminded in the How Often and Next Date fields. The reminder will appear in the automatic QuickBooks Reminder window.
• Choose Do Not Remind Me if you have a great memory, or if you use this memorized invoice only for special occasions.
• Choose Automate Transaction Entry if you want QuickBooks to issue this invoice automatically. If you opt for automatic issuing of this invoice, you must fill in the fields so that QuickBooks performs the task accurately, as follows:
• The How Often field is where you specify the interval for this invoice, such as monthly, weekly, or so on. Click the arrow to see the drop-down list and choose the option you need.
• The Next Date field is the place to note the next instance of this invoice.
• The Number Remaining field is a place to start a countdown for a specified number of invoices. This is useful if you’re billing a customer for a finite number of months because you only have a one-year contract, for example.
• The Days In Advance To Enter field is for specifying the number of days in advance of the Next Date you want QuickBooks to create the invoice.
Click OK when you have finished filling out the dialog. Then click Save & Close in the Invoice window to save the transaction. Later, if you want to view, edit, or remove the transaction, you can select it from the Memorized Transaction List, which you open by pressing CTRL-T.
Creating Memorized Invoice Groups
Let’s say you have a lot of invoices that you’ve memorized but they need to be created and sent out on a particular day of the month. You can create a separate Memorized Transaction Group and QuickBooks will automatically take action on every invoice in the group on the day that you specify. To use this feature, follow these steps:
1. Press CTRL-T to display the Memorized Transaction List.
2. Right-click any blank spot in the Memorized Transaction window and choose New Group from the shortcut menu.
3. In the New Memorized Transaction Group window, give this group a name (such as 1st Of Month or 15th Of Month).
4. Fill out the fields to specify the way you want the invoices in this group to be handled.
5. Click OK to save this group.
Adding Memorized Invoices to Groups
After you create the group, you can add memorized transactions to it as follows:
1. In the Memorized Transaction List window, select the first memorized invoice transaction you want to add to the group.
2. Right-click and choose Edit Memorized Transaction from the shortcut menu.
3. When the Schedule Memorized Transaction window opens with this transaction displayed, select the option named Add To Group.
4. Select the group from the list that appears when you click the arrow next to the Group Name field and click OK.
Repeat this process for each invoice you want to add to the group. As you create future memorized invoices, just select the Add To Group option to add each invoice to the appropriate group.
Issue Credits and Refunds
Sometimes you have to give money back to a customer. You can do this in the form of a credit against current or future balances, or you can write a check and refund money you received from the customer. Neither is a lot of fun, but it’s a fact of business life.
Creating a credit memo is similar to creating an invoice. You can use the credit memo either to reduce a customer’s balance or issue a cash refund to them. What’s more, QuickBooks makes it easy for you to issue a credit against a particular invoice or retain it as an available credit to be used on a future date. (Information about applying the credit memo against the customer’s account when you’re entering customer payments is in Chapter 10.)
Creating a Credit Memo Against an Invoice
Suppose you’ve sold merchandise to a customer on an invoice and later they return some or all of the items. You can issue a credit memo directly from the original invoice, saving you the time of having to research the particulars of the original sale (such as price and quantity sold). This feature also saves you from having to re-enter the item information a second time on the credit memo.
To issue a credit memo, locate and open the original invoice. Click the Refund/Credit button on the Main tab (see Figure 9-7) to create a return receipt for this invoice. All items from the invoice are automatically listed on the newly created credit memo. From here, you can edit the line items as needed to account for what is being returned. When you save the credit memo, QuickBooks asks you to specify the way you want to apply the credit amount. See the section “Applying Credit Memos” later in this chapter for information on how to do this.
FIGURE 9-7 |
Creating a credit memo from the original invoice will save you time and ensure accuracy. |
Creating a Credit Memo Without a Previous Invoice
To create a credit memo (also referred to as a return receipt) that is not attached to a particular invoice, choose Customers | Create Credit Memos/Refunds from the menu bar to open a blank Create Credit Memos/Refunds window.
Select the appropriate customer or job, and then fill out the rest of the heading. Move to the line item section and enter the item, the quantity, and the rate for the items in this credit memo. Do not use a minus sign—QuickBooks knows what a credit is.
On the Main tab, you can use one of two buttons to designate how to use this credit—Use Credit To Give Refund or Use Credit To Apply To Invoice. Alternatively, when you click Save & Close to save the credit memo, QuickBooks asks you to specify the way you want to apply the credit amount. See the next section, “Applying Credit Memos.”
Applying Credit Memos
When you save the credit memo, QuickBooks displays an Available Credit dialog where you can choose the way you want to apply this credit:
Retaining the Credit
Choose Retain As An Available Credit to let the credit amount stay with the customer. You can apply the credit to a future invoice or apply it to a current open invoice later if the customer sends a payment that deducts the credit. When you create new invoices or apply customer payments to existing invoices, the credit is available.
If the credit is for a job and the job doesn’t have any outstanding invoices, you should retain the credit, because you can re-assign and then apply it against a different job for the same customer.
Giving a Refund for the Credit
Choose Give A Refund to give money back to the customer. When you click OK, the Issue A Refund window opens (see Figure 9-8). Use the following guidelines to configure the Issue A Refund window:
FIGURE 9-8 |
Tell QuickBooks how to manage the refund you want to send to the customer. |
• In the Issue This Refund Via field, select the method for the refund from the drop-down list (Cash, Check, or Credit Card).
• If you choose Cash or Check, be sure to select the appropriate bank account in the Account field.
• If you choose Check, the dialog adds an option labeled To Be Printed, which is selected by default.
• If you print checks, leave the check mark in the check box, and click OK. The check is added to the list of checks to be printed when you choose File | Print Forms | Checks. (The check also appears in the bank account register with the notation “To Print.”)
• If you write checks manually, deselect the check mark in the To Be Printed check box, enter the check number you’ll be using, and click OK. The check is added to your bank account register, using the next available check number.
• If you choose Credit Card, follow the usual procedure for creating a credit card transaction.
Applying the Credit to an Invoice
Choose Apply To An Invoice to apply the credit to a current invoice. When you click OK, QuickBooks displays a list of open invoices for this customer or job and automatically applies the credit against the oldest invoice (see Figure 9-9).
FIGURE 9-9 |
Select the invoice against which you want to apply the credit. |
If the credit is larger than the oldest invoice, QuickBooks applies the remaining amount of the credit to the next oldest invoice. If there are no additional invoices, the remaining amount of the credit is held in the customer’s record and is treated as a retained credit. Click Done to save the transaction.
Using Estimates
Certain customers or certain types of jobs may require you to create an estimate. An estimate isn’t an invoice, but it can be used as the basis of an invoice (or multiple invoices if you choose to send invoices as the job progresses). Estimates are also a great way for you to create a “budget” for the job on which you’re bidding, since there are some comprehensive job reports in QuickBooks that help you keep track of actual job income and costs versus what was initially estimated.
ProAdvisor Tip: Estimates are available only if you enable them in the Jobs & Estimates section of the Preferences dialog (Edit | Preferences).
Creating an Estimate
The first (and most important) thing to understand is that creating an estimate doesn’t affect your financial records. No amounts in the estimate post to income, accounts receivable, or any other general ledger account.
To create an estimate, choose Customers | Create Estimates from the menu bar. As you can see in Figure 9-10, the Create Estimates transaction window has virtually the same navigation and task buttons as the Create Invoices window—including an informational panel to the right.
FIGURE 9-10 |
Estimates provide a way to bid for a job and then track your progress. |
You’ll notice that once you’ve selected an existing customer or job, this panel will display their most recent transactions, including the current balance if one exists. To close this panel, simply click the Hide History arrowhead to the immediate left of the customer’s name as it appears in the pane. Clicking the Full Screen icon at the top-right of the window will also close the panel. Fill out the fields the same way you would for invoices.
Some estimate templates permit you to invoice customers with a markup over cost (such as the built-in Custom Estimate template). This is often the approach used for time and materials on bids. Just enter the cost and indicate the markup in dollars or percentage. If you decide to change the total of the item, QuickBooks will change the markup to make sure the math is correct.
If the item you use has been set up with both a cost and price, the Custom Estimate template displays both the cost and the price and automatically calculates the markup percentage for you. You can change the markup (as either a percentage or dollar amount) if you wish and the new price will appear in the Total column. If the item you use has only a price associated with it, the estimate uses that price as the cost on which the markup is calculated.
The Markup field is displayed only on the screen version of the estimate—this column doesn’t appear on the printed version. And if you’ve created price levels, they’ll appear in the Markup field for easy selection.
Creating Multiple Estimates for a Job
You can create multiple estimates for a customer or a job—a very handy feature. You can create an estimate for each phase of the job or create multiple estimates with different prices. Of course, that means each estimate has different contents.
When you create multiple estimates for the same job, they remain active (or open) by default. If a customer rejects any estimates, you can either delete them or click the Mark As Inactive button on the Main tab of the Create Estimates window—effectively closing the estimate.
Copying Estimates
A quick way to create multiple estimates with slightly different contents is to make copies of the original. Click the Create A Copy button on the Main tab while the estimate you want to copy is displayed in your QuickBooks window. You can also right-click in the estimate header and choose Duplicate Estimate from the shortcut menu to accomplish the same thing. The Estimate # field changes to the next number, while everything else remains the same. Make the required changes, and then click Save & Close.
Memorizing Estimates
If you frequently present the same estimated items to multiple customers, you can use the Memorize feature to create boilerplate estimates for future use. QuickBooks removes the name when memorizing the document so you can easily use it for other jobs.
First, create an estimate, filling in the items that belong in it. Don’t fill in amounts that usually change (such as quantities, or even prices). Then click the Memorize button on the Main tab (or press CTRL-M) to memorize the estimate. Use the following guidelines to fill out the Memorize Transaction dialog:
1. Give the estimate a name that reminds you of its contents.
2. Select the option Do Not Remind Me.
3. Click OK.
To use this boilerplate estimate, press CTRL-T or choose Lists | Memorized Transaction List to open the Memorized Transaction List. Double-click the estimate, fill in the Customer:Job information and any pricing information that’s not automatically included, and then save it. The memorized estimate isn’t changed; only the new estimate is saved.
Create Progress Billing Invoices
If you’ve enabled estimates and progress billing in the Jobs & Estimates category of the Preferences dialog (reached by choosing Edit | Preferences), you can use the Progress Invoice template to invoice your customers as each invoicing milestone arrives.
Choosing the Estimated Job
Progress invoices are invoices that are connected to an estimate for a customer or job. Open the Create Invoices window, select Progress Invoice from the Template drop-down list, and choose the customer or job for which you’re creating the progress invoice. Because you’ve enabled estimates in your QuickBooks Preferences, the system always checks the customer record to see if you’ve recorded any estimates for this customer or job, and if so, presents them:
Select the estimate you’re invoicing against and click OK. QuickBooks then asks you to specify what to include on the invoice.
Fill out the dialog using the following guidelines:
• You can create an invoice for the whole job, 100 percent of the estimate. When the line items appear, you can edit individual items.
• You can create an invoice for a specific percentage of the estimate. The percentage usually depends upon the agreement you have with your customer. For example, you could have an agreement that you’ll invoice the job in a certain number of equal installments, or you could invoice a percentage that’s equal to the percentage of the work that’s been finished.
• You can create an invoice that covers only certain items on the estimate, or you can create an invoice that has a different percentage for each item on the estimate. This is the approach to use if you’re billing for completed work on a job that has a number of distinct tasks. Some of the work listed on the estimate may be finished and other work not started, and the various items listed on the estimate may be at different points of completion.
After you’ve created the first progress billing invoice for an estimate, a new option is available for subsequent invoices. That option is to bill for all remaining amounts in the estimate (it replaces the 100 percent option). This is generally reserved for your last invoice, and it saves you the trouble of figuring out which percentages of which items have been invoiced previously.
As far as QuickBooks is concerned, the items and prices in the estimate are not etched in stone; you can change any amounts or quantities you wish while you’re creating the invoice. Ultimately, however, your ability to invoice for amounts that differ from the estimate depends on your agreement with the customer.
Entering Progress Invoice Line Items
After you choose your progress billing method and click OK, QuickBooks automatically fills in the line item section of the invoice based on the method you selected. Figure 9-11 shows an example of a progress bill for 50 percent of the estimate to reflect the fact that half of the work was done.
FIGURE 9-11 |
Progress invoices are automatically filled in using the information in the estimate. |
Changing Line Items
If you chose to invoice a percentage of the estimate’s total, the amount of every line item on the estimate reflects that percentage. This doesn’t work very well for those lines that have products (it’s hard to sell a percentage of a physical product). You can leave the invoice as is, because the customer will probably understand that this is a progress invoice, or you can make changes to the invoice.
In addition, the line items for services rendered may not be totally accurate. For example, some of the line items may contain service categories that aren’t at the same percentage of completion as others.
To change the invoice and keep a history of the changes against the estimate, don’t just make changes to the line items on the invoice. Instead, click the Progress icon on the Main tab of the Create Invoices window. This opens a dialog (see Figure 9-12) that allows reconfiguration of the line items. You can change the quantity, rate, or percentage of completion for any individual line item.
FIGURE 9-12 |
You can make changes to the data that QuickBooks automatically inserted in the invoice. |
If you select Show Quantity And Rate, the columns in the dialog display the columns from the estimate, and you can make changes to any of them. Click the Qty column for any line item to highlight the number that’s been used to calculate the invoice. Replace the number with the amount you want to use for the invoice. You can also change the rate as agreed to by you and the customer.
If you select Show Percentage, the dialog displays the Curr % column, which shows the percentage of completion for this and previous billings. The percentages compare the dollar amounts for invoices against the estimated total. You can change the percentage for any line item.
Select both options if you need to make changes to one type of progress on one line item and another type of progress on another line item. All the columns (and all the previous billings, if any exist) appear in the window.
Click OK when you have finished making your adjustments. You return to the invoice form, where the amounts on the line items have changed to match the adjustments you made. Click Save & New to save this invoice and move on to the next invoice, or click Save & Close to save this invoice and close the Create Invoices window.
Using this method to change a line item keeps the history of your estimate and invoices intact, as opposed to making changes in the amounts directly on the invoice form, which does not create a good audit trail.
Invoice Customers for Reimbursable Expenses
When you pay vendors, some purchases may be made on behalf of a customer, or they may be purchases needed to complete a job. When you create a vendor bill or write a check to a vendor, you can specify expenses as reimbursable and link those expenses to a specific customer or job.
You can automatically invoice customers for those expenses. In addition, you can link mileage costs and time costs (for employees or subcontractors) to customers and automatically invoice customers for those expenses. (Chapter 19 has information on tracking mileage and time.)
Any amounts you link to a customer are saved in the customer record, and you can collect the money by adding those amounts to the next invoice you create for that customer. In fact, you could create an invoice specifically for the purpose of collecting reimbursable expenses, with no other services or products included on the invoice.
Configuring Reimbursement Settings
In addition to enabling the option to track reimbursable costs when entering transactions for vendors (vendor bills and writing checks to vendors are covered in Chapter 11), QuickBooks gives you options for invoicing customers when you want to recover your reimbursable expenses. To set your own preference, choose Edit | Preferences and select the Sales & Customers category in the left pane. In the My Preferences tab, select one of the available options.
• Prompt For Time/Costs To Add Choosing this option tells QuickBooks to open the Choose Billable Time And Costs dialog, which displays the current reimbursable expenses whenever you create an invoice or sales receipt for a customer with outstanding reimbursable costs. This is the option to select if you always (or almost always) collect reimbursable costs from customers.
• Don’t Add Any Selecting this option prevents the automatic display of the Choose Billable Time And Costs dialog. Choose this option if you collect reimbursable expenses periodically on separate invoices. When you’re ready to create an invoice for these expenses, click the Add Time/Costs button on the sales transaction form.
• Ask What To Do Select this option to tell QuickBooks to ask you what you want to do whenever you create a sales transaction for a customer with outstanding reimbursable costs. Depending on your selection in that dialog (discussed in the next section), you can add the costs to the sales transaction or omit them.
Creating a Transaction for Reimbursable Expenses
When you’re creating a sales transaction (an invoice or a sales receipt) for a customer that has outstanding reimbursable costs, QuickBooks uses the preference you set to determine how to manage those costs.
If you selected the preference Prompt For Time/Costs To Add, when you select the customer, QuickBooks automatically displays the current reimbursable expenses so you can select those you want to include in the current transaction.
If you selected the preference Don’t Add Any, the invoice or sales receipt transaction window opens as usual. If you want to check for reimbursable costs for this customer and then decide whether you want to recover any of them, click the Add Time/Costs button on the Main tab above the transaction form. When the Choose Billable Time And Costs dialog opens, you can see if there are any reimbursable expenses you want to collect from your customer. If you do, follow the steps in the next section, “Adding Expenses to the Sales Transaction.”
If you selected the preference Ask What To Do, when you select a customer that has unpaid reimbursable costs in the transaction window, QuickBooks displays a dialog asking how you want to handle those amounts. Your response determines whether the Choose Billable Time And Costs dialog opens automatically.
Adding Expenses to the Sales Transaction
To collect expenses, also called reimbursable costs, from a customer, select those costs from the Choose Billable Time And Costs dialog (see Figure 9-13). Each type of expense is displayed in its own tab, and you’ll need to review each tab to see if any amounts exist. Unfortunately, the amount displayed on each tab doesn’t help you head for the appropriate tab—all the amounts are set at $0.00 until you actually select amounts to add to the sales transaction. So start clicking each tab to find reimbursable expenses to transfer to the transaction.
When you find a tab that has contents, click in the leftmost column to place a check mark next to the expense(s) you want to include (see Figure 9-13).
FIGURE 9-13 |
Select the reimbursable time, expenses, mileage, or items you want to add to the transaction you’re preparing. |
Click OK to move the item(s) to the transaction window to join any other items you’re entering in that transaction. You may find reimbursable expenses on more than one tab—for example, you may have expenses on the Expenses tab and expense items on the Items tab—so you have to check each tab. QuickBooks automatically transfers the selected reimbursable costs to the invoice. The description of the reimbursable expenses that appears on the invoice is taken from the text you entered in the Memo column when you entered a bill or created a check for this vendor. If you didn’t use the Memo column on the Enter Bills or Write Check window, you’ll have to enter text manually in the Description column of the invoice. Otherwise, the customer sees only an amount and no explanation of what it’s for. (The description of mileage or item costs is taken from the Description field of the item you configured.)
Adding Taxes to Reimbursable Expenses
If an expense is taxable and the customer is not tax exempt, choose the option Selected Expenses Are Taxable. When the expenses are passed to the invoice, the appropriate taxes are applied. If you select the taxable option and the customer is tax exempt, QuickBooks won’t add the sales tax to the invoice.
If some expenses are taxable and others aren’t, you have to separate the process of moving items to the invoice. First, deselect each nontaxable expense by clicking its check mark to remove it (it’s a toggle). Click OK to put those expenses on the invoice. Then return to the Choose Billable Time And Costs window, put a check mark next to each nontaxable expense, deselect the Selected Expenses Are Taxable option, and click OK.
Omitting the Details on the Invoice
Each of the tabs has the option Print Selected Time And Costs As One Invoice Item. When you click OK and view the results in the invoice, you still see each individual item. Don’t panic—you’re not seeing things. The screen version of the invoice continues to display the individual items. However, when you print the invoice, you’ll see a single line item with the correct total in the Amount column.
QuickBooks changes the format of the printed invoice to eliminate the details but doesn’t change the data in the onscreen version of the invoice. This means you can open the invoice later and see the detailed items, which is handy when the customer calls to ask, “What’s this reimbursable expense item on my bill?”
Excluding a Reimbursable Expense
If you have some reason to exclude one or more expenses from the current invoice, just avoid putting a check mark in the column. The item remains in the system and shows up on the Choose Billable Time And Costs window the next time you open it. You can add the item to the customer’s invoice in the future.
Removing a Reimbursable Expense from the List
Suppose when it’s time to invoice the customer, you decide that you don’t want to ask the customer to pay an expense you marked as reimbursable; you’ve changed your mind. The Choose Billable Time And Costs window has no Delete button and no method of selecting an item and choosing a delete function. You could deselect the check mark that tells QuickBooks to move the item to the sales transaction, but afterward, every time you open the window, the item will, strangely enough, still be there.
The solution lies in the Hide column. If you place a check mark in the Hide column, the item is effectively deleted from the list of reimbursable expenses that you see when you’re preparing invoices but the amount is still in your system. This means you won’t accidentally invoice the customer for the item, but the link to this expense for this customer continues to appear in reports about this customer’s activity, which is helpful for job costing. In effect, by selecting the Hide option, you’ve marked the expense as “nonbillable,” and it’s not available in the future.
Changing the Amount of a Reimbursable Expense
You’re free to change the amount of a reimbursable expense. To accomplish this, select the amount in the Amount column of the Choose Billable Time And Costs window on the Expenses tab, and enter the new figure.
If you reduce the amount, QuickBooks does not keep the remaining amount on the Choose Billable Time And Costs window. You won’t see it again because QuickBooks makes the assumption you’re not planning to pass the remaining amount to your customer in the future.
You may want to increase the charge for some reason. If you’re increasing all the charges, you’ll find it’s easier to apply a markup (covered next) than to change each individual item.
Marking Up Reimbursable Expenses
You can mark up any expenses you’re invoicing, which many companies do to cover any additional costs incurred, such as handling, time, or general aggravation. To apply a markup, select the items you want to mark up by placing a check mark in the Use column in the Expenses tab of the Choose Billable Time And Costs window. Then enter a markup in the Markup Amount Or % field in either of the following ways:
• Enter an amount.
• Enter a percentage (a number followed by the percent sign).
Specify the account to which you’re posting markups. You can create an account specifically for markups or use an existing income account.
When you click OK to transfer the reimbursable expenses to the customer’s invoice, you’ll see the reimbursable expenses and the markup as separate items.
Although it would be unusual for you to be marking up expenses without having discussed this with your customer, if you don’t want your customer to see the markup amounts, select the Print Selected Time And Costs As One Invoice Item option. You’ll see the breakdown on the screen version of the invoice, but the printed invoice will contain only the grand total.
One big difference between using the markup function and just changing the amount of the reimbursable expense in the Amount column is the way the amounts are posted to your general ledger. If you use the markup function, the difference between the actual expense and the charge to your customer is posted to the markup account. If you change the amount of the expense, the entire amount is posted to the income account you linked to the reimbursable expense account.
ProAdvisor Tip: If you void or delete a saved sales transaction that contains reimbursable expenses, these expenses are not automatically made “billable” again. You’ll need to go to the original expense transaction and click the Invoice icon in the Billable column to make it available to invoice again.
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