I’m not sure what I have recorded wrong. I have a negative amount in my billable expenses under other assets. I have gone and over looked all my logs and can’t seem to find the problem. What would give me a negative expense?
A couple of suggestion - which you may have already checked out
Have any of your billable expenses been invoiced twice?
Has a credit entry from any source been incorrectly posted there?
As its a Balance Sheet item you can solve the problem by reconciling the account.
You could start from the last time the account was reconciled (hopefully, the last end of year), or at some point since then if it has had a zero balance.
Does the account have some sort of identifying data such as client/project, then you could group these and see which one ends up in credit. Not knowing the volume of data involved but analysing it via a spreadsheet may assist. Best of Luck
Having just read the Guide it would appear that double invoicing can be ruled out.
But another situation could be the cause - do you edit the invoices by using mark-ups or by inserting other amendments. If you have done and these were posted to Billable Expenses instead of either Billable Expenses - Mark-ups or another income account then they would create extra credits into Billable Expenses. Just a thought
I would also look at your basic workflow when you use Billable Expenses.
First, understand that billable expenses are things you buy on behalf of a customer. An example is travel expenses that will be invoiced to and reimbursed by the customer for consulting work. These are not expenses of running your company, but work that is billable to the customer. Another example would be plumbing fixtures for installation in a customer’s home. The fixture has nothing to do with inventory or manufacturing. It is just an expense that the customer will reimburse. As I recall, you have a welding business. You should not be using Billable Expenses in any way to manage your raw materials. An example of when such usage might be appropriate would be a customer that has you fabricate a cookware storage rack. The customer tells you she plans to purchase new cookware and asks you to buy one of the pots to be sure it fits the new rack, then bill her for the pot. The pot is not part of your work, just something you bought on behalf of the customer. All that is a long way of saying that the first step of figuring out the negative balance is to make sure you are using the module correctly.
Second, make sure you are entering such expenses with the right type of transaction. Virtually always (unless you are recording a return of a billable item), this will be a Spend Money transaction from a cash or bank account. Allocate the transaction to Billable expenses and the appropriate customer’s subaccount. Enter the amount as a positive number; Manager knows what to do with it. Once you have done that, it will appear as an asset, because it creates the possibility of future revenue. (Should you have return, use Spend Money, but also enter it as a positive number.)
Third, when it is time to invoice the customer, generate the sales invoice from within the Customers tab. There, click on the blue Uninvoiced balance for the particular customer and tick all the items you want to add to the sales invoice.
If you are doing all that, things should work out correctly, with generally positive balances in the Summary. To see how you went wrong, click on the Billable expenses balance in the Summary and look for negative amounts.
Thank you very much for both of your responses. Tut is it incorrect to use billable expenses for items such as hardware and paint supplies that are directed towards that specific customer. I know my steel purchases need to be allocated under inventory, but I am not 100% certain on things such as hardware that are difficult to keep an inventory on?
Would you like to expand upon “I am not 100% certain on things such as hardware that are difficult to keep an inventory on” with examples.
Sure. A lot of the time I purchased hardware to instal handrails for example and I purchase that hardware specifically for that job because a lot of instals are different so when I purchase those nuts, bolts and installation hardware would it be better to do a billable expense to that customer or is it more correct to do an inventory on those items as well?
@AAmey you wrote “is it incorrect to use billable expenses for items such as hardware and paint supplies that are directed towards that specific customer”
It really depends on how the work is being priced.
If you have quoted an all up price (no extras/variations) then such items would be allocated to your cost of sales/purchases etc. as they aren’t going to be recovered/invoiced for separately.
If however the job is quoted on a price plus basis, then those specifically purchased item that are going to be recovered/invoiced should be allocated to Billable Expense
@Brucanna I appreciate your input. I think I am making this more complicated for myself then necessary. I am very new to the book keeping side of things, its not my strongest quality. When I put together a sales invoice I don’t break down the individual cost for every item, I just give a price on my billable time and then this is the part I am struggling with I give a materials used cost but I am not sure of the best way to account for all my materials used without it being complicated on the book keeping end. I apologize if I am being confusing.
I think my other response probably covers what you have outlined, however you have raised another question regarding inventory.
The first response is, how much paper work do you want. You have different solutions and a lot depends on the values involved… Generally if you are going to be running that sort of inventory you start requiring inventory requisitions.
- Lets say you purchase in bulk standard nuts & bolts items and the cost is less then a 1000, I personally would expense the purchase and if you have a large amount/value at year end do a stocktake and make the appropriate year end entries.
- Lets say you are purchasing specific nuts & bolts, but just enough items for the install, I would just expense the purchase, assuming that they are not to be billable items.
It all depends on your organisations requirements, some like to track/count every paperclip.
@Brucanna thank you again for all your input, I think I am starting to get a clearer picture of everything.
You are not being confusing at all’
The first thing to clarify - are you quoting or “do & charge”.
If you are quoting I think that has been fairly covered by other responses.
If you are “do & charge” it sounds as the time side is under control, for the materials side I suggest that for each project you have a Job Card on this you can note down the materials used and their direct costs if known or otherwise your estimate. At the end of the install add them up and enter on the invoice,
As for the bookkeeping just expense it all, otherwise to track every thing by an accounting system would take more time then its worth
Hope this has been of assistance
Yes your information has been a life saver! I can finally start to see the right direction. Thank you a million times over.
No problem
But just to add one thing, when you invoice the materials have an income account called “Material Costs Recovered” Then as time goes on you can compare that account against the cost of sales/purchases account. That can give you a “rough” idea how your charging is going against costs.
Also, getting back to your original problem - it might be best to go back and edit the posting in Billable Expenses. Unless you did have some specific Billable Expenses - all debits could be reallocated to purchases and all credits reallocated to the above income account
Happy installing
@Brucanna has given good advice, and is correct that there is judgment involved. Think about a different trade than your metal fabrication business.
A cabinetmaker might want to account for the cost of exotic hardwoods going into a custom furniture piece by the project, but that doesn’t necessarily mean creating and tracking inventory items for Brazilian rosewood and tiger maple. Those purchases could be factored into the cost of the finished piece. Normally, auditors would find that acceptable since the hardwoods are not being stored in anticipation of a future sale. An even simpler example would be the carpenter’s glue, which is purchased with the expectation (and necessity) of consumption within a short time period. The glue would surely be expensed as miscellaneous supplies.
On the other hand, if that cabinetmaker wanted to have a ready stock of the same hardwoods for customers to choose from, inventory tracking would make more sense. A particular lot of wood might be on the rack for years before the right customer came along. It could be removed from inventory for accounting purposes by a production order, converting it into a different inventory item, say a finished table.
I might also recommend a conversation with an accountant to get advice on local laws that influence the type of reporting you may need to make to any tax authority. While the expense might seem frivolous, it is axiomatic that a good accountant saves you more than he or she costs, especially if they keep you out of trouble.