Progress invoicing in QuickBooks is a feature that allows you to invoice your customers for a project or job in increments, based on the completion of specific stages. This can be particularly useful for businesses that provide services or products that require multiple steps to complete.
Scenarios for using progress invoicing
Following is a list of some of the situations when you might consider using progress invoicing in QuickBooks:
Long-Term Projects: If you’re working on a project that will take an extended period to complete, progress invoicing can help you receive payments as the project progresses, rather than waiting until the end. You can easily start generating some revenue before the completion of the project.
Complex Projects: For projects that involve several phases or stages, you can create invoices that reflect the completion of each milestone. This can help in keeping track of payments and project status.
Large Orders: If you’re fulfilling a substantial order, you might consider invoicing for partial payments as items are delivered or completed, rather than waiting for the entire order to be fulfilled.
Service-Based Businesses: Small Businesses offering services, such as consulting, web development, or construction, can benefit from progress invoicing by billing clients based on the completion of specific tasks or project stages.
Customized Products: If you’re creating customized products for your clients, progress invoicing in QuickBooks can be used to bill for different phases of production or customization.
Managing Cash Flow: Progress invoicing can improve your cash flow by allowing you to receive payments throughout a project’s duration, rather than relying on a lump sum payment at the end.
Client Agreements: If you have a contract or agreement with a client that specifies payment terms based on milestones, progress invoicing can help ensure that you’re billing according to the agreed-upon terms.
Transparency: Progress invoicing provides transparency to your clients about the work completed and the corresponding costs. This can help build trust and reduce disputes.
Budgeting and Planning: It helps both you and your clients in better budgeting and financial planning, as payments are spread out over time rather than being concentrated at the project’s end.
Large Projects with Uncertain Timelines: In cases where project timelines might be uncertain, progress invoicing in QuickBooks can help you receive payments for completed work even if the project gets delayed.
Is Progress Invoicing in QuickBooks always feasible?
It’s important to note that progress invoicing might not be suitable for all businesses or projects. Some businesses prefer to invoice for the entire project upfront or at the end. The decision to use progress invoicing should be based on your business model, the nature of your projects, and your clients’ preferences.
When using progress invoicing in QuickBooks, make sure you’re familiar with the software’s features and settings related to this invoicing method. It can help you streamline your billing process and maintain accurate records of project-related finances.
How does Progress Invoicing in QuickBooks Online work?
If your business handles extensive and multi-phase projects for clients, waiting until the entire project is completed before sending an invoice might not be the best approach. This situation can be particularly challenging when a project requires substantial upfront costs, such as purchasing materials, that will ultimately be charged to the clients.
QuickBooks Online offers a solution through its progress invoicing feature. Once you’ve obtained approval for an estimate, you can divide it into multiple segments as needed. This allows you to send partial invoices to clients for the goods and services provided at different stages of the project, rather than holding off until the entire project wraps up. If maintaining a steady cash flow is a concern, this feature can be remarkably effective. It might even enable you to take on projects that you might otherwise decline due to cash flow limitations.
setup Progress invoicing in QuickBooks
To begin with progress invoicing in QuickBooks, a few specific setup steps are necessary. Firstly, verify if QuickBooks Online is configured for this function. Access this through the gear icon at the top right, then choose “Account and Settings” under the section for your company. Navigate to the “Sales” tab and locate “Progress Invoicing.” Ideally, you’ll see an “On” indicator next to “Create multiple partial invoices from a single estimate.” If not, click the edit icon and activate it. Afterward, save your changes.
You’ll also need to adopt a distinct template for progress invoices, distinct from your standard ones. Navigate to “Custom form styles” through the gear icon, and create a new style by clicking “New style.” Select “Invoice” and assign a new name for the template, such as “Progress Invoice.” Then proceed to customize the template using the “Airy new” option.
While configuring the template, access “Edit print settings” and ensure that options related to fitting the form in an envelope window are unchecked. Proceed to the “Content” tab, where you can adjust various preview and activity options according to your preferences. Once done, save the template.
Designating a Default Form Style QuickBooks Online allows you to specify a default form style. This is the template that will open when you’re creating a new invoice or estimate. If you plan on using progress invoices frequently, consider making your new template the default. To achieve this, locate your new template in the list and use the “Make default” option in the “Edit” dropdown. If you prefer to use the standard invoice as the default, you can still switch templates during the invoice creation process by clicking “Customize.”
Creating a Progress Invoice Creating progress invoices in QuickBooks Online is a structured process. Similar to estimate forms, invoice forms also play a crucial role. To start the progress invoicing in QuickBooks procedure, select the estimate you wish to bill using this method. Navigate to the “Sales” tab and access “All Sales.” Locate your estimate and click “Create invoice.” This action will open a window where you can begin the progress invoicing process.
At this stage, you can bill a percentage of each line item or manually input custom amounts. If you choose the latter option, the invoice will display zeros in the “Due” column. You can adjust these amounts by percentages or specific values, and the “Balance due” will reflect your changes. Once you reach the final invoice for the project, be sure to mark “Remaining total of all lines.”
Upon selecting the appropriate option, proceed to create the invoice, review its details, and save it. Subsequently, you can manage the progress invoice just like any other invoice. For an overview of your progress invoices, you can generate the “Estimates & Progress Invoicing Summary by Customer” report.
This process underscores the precision required in creating progress invoices. Each step is vital to ensure accurate billing for the final total owed.
If you need assistance, our team is available to guide you through this process, and you may reach out to QuickBooks Customer Support.
In this article, we have discussed some of the use cases of progress invoicing. There are clearly instances not just within business management, but also within organization of the same. We have also provided an elaborate step -by –step of how to set up progress invoicing.