Intuit Accountants News Central

Using Purchase Orders for Job Costing in QuickBooks®

Article Post Date
September 4th 2013 by Monica Muir

Many businesses don’t use Purchase Orders unless they order products to resell, but Purchase Orders can be a big help in many ways.

If you’re a larger organization, it’s a way to track what is due to you AND how much it should cost. If you’re a contractor, Purchase Orders can be a big help. You can use them to track the materials needed for the job. Then you can run a report to see what all is due to you for your various jobs.

You can also use these if you work with subcontractors. It can be a great way to track what the sub quoted, keep up with the subs, and see what the final cost is compared to estimated. Another benefit is that some subs are slow to invoice (I personally find that hard to believe, but I know it’s prevalent in the contract world), so you can use these to know costs and maybe help the sub get an invoice to you. Since many of them don’t like the paperwork side of the business, this can speed up the process.

Another reason for using Purchase Orders in the contractor’s world when working with QuickBooks® is that Purchase Orders force you to use Items. Items are key to job cost reports. Since a Purchase Order uses Items, then when the materials and bill come in, you simply work off the PO and the Items will be pulled in for you.

First step is to be sure your Purchase Order feature is turned on in the Company Preferences. Click on Edit>Preferences>Items & Inventory.

Creating a Purchase Order will be very similar to creating invoices: Either click on the Purchase Order icon in the vendor section on the home page or click on Vendors>Create Purchase Orders. If for any reason you do not have a column for the Customer:Job, then you’ll need to edit the layout of the template.

Next, select the vendor and enter the Items.

As materials come in or work is done, you will receive a bill (and a packing list if materials are involved). Because Purchase Orders are often for materials, there are two parts – (1) acknowledging the receipt of the materials (or service) along with how many/much you received, and then (2) entering the bill (similar to Progress Invoicing). In QuickBooks you have the option of receiving the Items and entering the bill all at one.

If you simply click on the Enter Bills icon instead of Receiving Inventory, you will be asked if you want to receive against the PO you have with the vendor. Click Yes, select the PO and then the products/services you received.

If you are in Pro or Premier, the difference between the bill and an Item Receipt is the box by “Bill Received.”  If you are in Enterprise, you have an option to receive inventory on one day and have a different date for the bill, but this is not needed if you are simply purchasing services or materials for a job – even if you have materials left over to use on other jobs.

You can view open Purchase Orders from the Purchases, Job Cost or Contractor report menus, including by Vendor or Job.  You can also create an Open Purchase Order by Job Detail report when you use the Custom Transaction Detail feature.

Using Purchase Orders for jobs can help you track services and materials not received yet, which helps you monitor your upcoming costs on a project.

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  • About Monica Muir

    Monica Muir Monica Muir, an Advanced Certified QuickBooks ProAdvisor and Intuit Premier Reseller, offers QuickBooks training, sales, and installation to small and mid-market businesses around Frederick, MD. She is the author of “The Keys to Mastering Job Costing in QuickBooks for Better Job Profitability,” a video training product on job cost excellence. Certified in Enterprise and Point of Sale, Monica helps save her clients time and money with QuickBooks. Reach her at mmitchmuir@muirassoc.com See all of Monica's articles… See all of Monica's articles…

    You can also visit Monica's Website

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