Hey there, friends. Have you heard about QuickBooks Online Avanced‘s latest feature? It has rolled out a brand-new way to track project profitability with its Project Estimates vs Actual Profitability Reports.
If you work with clients who use projects, you know how important it is to gather reports to determine project profitability. And now, QuickBooks Online has a new enhancement that makes this process even easier.
In this article, I will take a look at the new QuickBooks Online advanced functionality designed for project-based businesses.
To see this new feature in action, CLICK HERE.
Configuring projects before adding estimates
There are a few settings you will need to turn on before you are able to see this new feature. First, you will need to go over to your settings and turn on Projects in QuickBooks Online Advanced.
You also will need to adjust your expense settings and make sure the “Show items table on expenses and purchase forms” and “Track expenses and items by customers” are both on.
Estimates versus actuals feature
First let’s chat about the Estimates versus Actuals feature. This awesome function allows you to easily determine project profitability by comparing what you originally estimated the project would cost to what it actually cost.
Creating a project estimate
When you’re inside QuickBooks Online, go to your project center and select a specific project. Then you can create a project estimate by selecting the dropdown.
For each item in your estimate, you can see the cost and markup, which won’t be visible to your customer. This information helps you to see how much you’ll be spending and what the expected price of the project will be.
The other thing that you can see that is new is the profit margin at the top. This tells you whether you are on track to make a profit based on what you’ve entered into your estimate.
Adding costs to the project
You’ll want to enter all project-related expenses. QuickBooks makes it easy, so make sure to use the item detail categories as they provide easily comparable totals.
Converting estimate to invoice
And finally, it’s time to invoice for the project! QuickBooks can easily turn an estimate into an invoice. You can use a percentage of the lines or invoice the entire balance due, and QuickBooks will make suggestions on whether any adjustments are necessary to your rates or prices.
Once you’ve invoiced your client, you can view the new “estimates versus actuals” report to see all the estimated costs compared to actual costs.
This report allows you to quickly determine your project’s profitability and see what was invoiced, what was purchased and at what rate you received income.
It is important to note that this functionality is only available in QuickBooks Online Advanced. But with this advanced functionality, managing project profitability has never been easier.
Liz Scott is a multi-business entrepreneur working to bring together technology and accountants through her business, Liz Scott Consulting. A member of Intuit Trainer/Writer Network, she authored and taught Master level courses, including Advisory Guides and Consulting Tools for Accountants. In addition to Liz Scott Consulting, she also owns Accounting Lifeline, a firm to serve small businesses with their financial needs. Liz is a co-host of the “Appy Hour,” which helps other accountants learn about the different tools and apps for small business needs. Holding a high passion for real estate investment, she owns properties throughout Oklahoma.
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