Change Orders: How to Organize Them In QuickBooks

Change Orders: How to Organize Them In QuickBooks

Each customer that you set up in QuickBooks is allowed to have jobs as sub”customers”.   Each contract should be its own job and each change order its own job as well.  For example, Joe Smith signs a contract for a construction project and then adds a patio that is outside the contract, and some driveway improvements.  Each add-on is independent of the other.  The QuickBooks client would look like the example below.

Smith, Joe
Smith Contract 2015
Smith CO #1 Patio
Smith CO #2 Driveway

This allows you to review job costing as well as Estimate v. Actual reports independently for each portion of the work for the client as well as in an aggregated format.  If change orders are not added as jobs under the customer their costing in the job costing reporting will become commingled with the cost of the original contract.  This will make it difficult to control job costs, report out on those costs and in the case of allowances or contract stipulations that require detailed reporting to the client those numbers would become entangled with the contract costs.  It is important the original contract also be its own job as well.  When assigning costs and invoicing the various jobs related to the customer should be used in the customer field in QuickBooks.  Payments can be received by the main customer name and applied across various jobs when a single payment is issued for various segments of the job.

The files that are kept for this client, either paper or digital, should also be separated.  Individual files for each change order should be kept.  Signed change order copies, documentation related to the costs, and payment records should be maintained independently of the main contract.

If there is disagreement at a later time or any kind of litigation you will be grateful that the costs and income related to various non-contract aspects of the project are easily reported on separately.

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