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Invoicing Basics: Customer Deposits, Retainage, Fixed Price, Progress, Time & Cost, Change Orders (2520/Level 1)

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Invoicing Basics: Customer Deposits, Retainage, Fixed Price, Progress, Time & Cost, Change Orders & Allowances

Approximately 75 minutes:

  1. 7 Reasons to Create Invoices
  2. Using the right date on your Invoices…
  3. Type of job dictates type of Invoice (3 examples)
  4. 3 different techniques you can use to track & report on customer deposits (choose one and stick with it!)
  5. Understanding and invoicing for Retainage Receivable (future and current receivables).
  6. Preparing Invoices – Includes illustrations for:
    • Fixed price contracts
    • Progress billing arrangements
    • Time & Cost jobs
    • Cost Plus jobs (variation on Time & Cost)
  7. Don’t forget to Invoice for customers’ “adjustments”:

Diane Gilson: Hi and welcome, this is Diane Gilson with today’s class an inventory overview. What everybody should know about inventory at the very least, okay this is an introduction to basic inventory concepts. We’re going to talk about how do we keep track of the right stuff, we’re going to cover some big concepts in QuickBooks. It’s not going to be a morning ahead of time, this is a fairly short session, we are not going to try to cover everything that you would want to know about inventory if you’re heavily involved in inventory that will need to be a totally in depth class on its own and we will be doing, offering that as well. This is just to give you a feel for what all is involved with inventory, so as we talk about inventory items I’ll show you how to set up some basic items, we’ll talk about related items, we’ll be going through some basic buy/sell entries, what’s going on with QuickBooks behind the scenes in terms of posting and we’ll touch on some related topics and issues to keep in mind. So this isn’t a detailed inventory class, just a conceptual, primarily conceptual overview but I think there will be enough here if you haven’t been working in inventory to get your mind thinking and maybe even spinning a little bit. QuickBooks and Enterprise have some excellent basic inventory functions, now depending upon the nature of your company inventory control and usage can get very, very complex, so depending on your needs of your particular company, you may end up needing other more sophisticated inventory programs to plug in with your QuickBooks and there are a variety of them out there. But, QuickBooks still has a lot of power on the inventory side so we want to get a feel for what’s out there. QuickBooks inventory costing, okay, the way that cost and ultimately end up in your profit and loss is based on what they call average cost. So if you purchase something today at, a whole bunch of items at $1 a piece and tomorrow you purchased a bunch more at $1.50 and if you were to have bought equal quantities, it, when it’s time for it to move items out of inventory it’s going to be pulling them out at the average cost that you paid. So if you bought equal amounts then the easy answer is they’d be averaged at $1.25 each, you bought half of them at $1 and half of them at $1.50 so that’s the way it’s going to move the costs out. Now of course, inventory goes up and it goes down because you’re buying and you’re selling and you’re paying different prices and so it always kind of adjusts what the average cost is based on what’s in inventory at the time you purchase more inventory. Okay, so if we had three things at $1 and we bought one hundred things at $1.25 then obviously our price would be much closer to $1.25. Okay, it does not work and will not work on what’s called a LIFO which is a last in first out cost basis, and if you went through accounting classes you’d be familiar with LIFO and the idea is that we cost based upon the most recent price that we paid for inventory or the FIFO bases which is first in first out, meaning that we would pull cost out of inventory based on the oldest things in our inventory that we bought first. So, first in is going to be first out, think about that think about maybe a big stack of cereal boxes sitting on a shelf and either you pull off the front of the shelf or you pull off the back of the shelf, LIFO is off the front of the shelf and FIFO would be off the back of the shelf. That’s kind of the way I think of it, ok, average cost would mean that we, you know, if we were selling three we’d pick out every other one or something along that line, you get the idea. Okay, so really important concepts and these are critical concepts in QuickBooks is that if you’re going to use inventory you have to always, always buy before you sell, okay, it just is logical, it makes logical sense you can’t sell something you don’t have and if QuickBooks is looking at what you paid for something in order to recognize the cost at the time that you…


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