google-site-verification=r5RE_sFo6Mtsn_tney55t1PJk_pDvRBII61s7xNYm3g
 
Search

Using QBO to Bill Customers for Time and Expenses

Updated: Mar 23

Don't let purchases made on behalf of your clients eat into your profit margin. Ensure you're billing them by utilizing QuickBooks Online's features.


While money almost exclusively moves from your customers to your business and in that direction only, there may be times when it must flow the other way. Maybe you need to make a purchase on behalf of your customer or provide and pay for labor in order to deliver the services promised, all before you've received payment from the customer. And if you’re a sole proprietor with no payroll and no reserves, of course, you just have to wait to be paid for your work.

In the first two cases, you’re spending money upfront that will eventually be paid back. In all three cases, QuickBooks Online calls these billable expenses and billable time, and it does a good job of tracking these transactions – much better than if you were scribbling notes on a receipt or a paper timecard.

Obviously, you want to be paid for these expenditures as soon as possible to minimize their impact on your own cash flow. QuickBooks Online can “remind” you that these billables need to be passed through to the customer when you create an invoice. It also offers reports that help you track unbilled time and expenses. Here’s a look at how it works.


Tracking Billable Time

Creating a billable time activity in QuickBooks Online is simple. Click +New, then Single time activity. Fill in the blanks and select items from drop-down lists until you’ve completed a form. The critical section of this screen is pictured below:

When you create a record of a billable single-time activity, be sure to mark it as such.

In this example, the employee will receive $50/hour for the work done (Cost rate). Because the Service being provided will be billed back to the customer, you'll need to select the check box in front of Billable. Since you’re charging the customer $65/hour (a $15/hour markup), you need to enter that number in the Billable field. You don’t have to worry about remembering that; QuickBooks Online retains that information and makes it available to you, just like it does with all of your other company information.


Tracking Expenses

You probably already know how to record expenses in QuickBooks Online. You can either click the +New button and then Expense, or you can click the Expenses link in the toolbar and the New transaction | Expense. Just as you did to record time activities, you should complete the fields and place a checkmark in the Billable column, and select the Customer/Project from the drop-down list.


Once you’ve saved a billable expense, it will appear in the table on the Expense Transactions page. To display it again, click View/Edit at the end of the corresponding row. When the transaction opens, you’ll notice a small View link in the Billable column. Click it, and you’ll see this:

A partial view of the Billable Expense screen

In this example, there’s been no markup applied to the transaction. If you want to add markup costs to all billable expenses, click the gear icon in the upper right and go to Account and settings | Expenses. Click the pencil icon to the far right of the Bills and expenses block of options. Click the box in front of Markup with a default rate of to create a checkmark and enter a percentage. All of your billable expenses will now include a markup of that percentage.

Invoicing Time and Expenses

The next time you invoice a customer who has outstanding time and expenses, QuickBooks Online will remind you that these charges are pending. To see this in action, open an invoice form and select a customer whom you know has billables. The right vertical pane will contain a box with information like this:


QuickBooks Online reminds you when a customer you’re invoicing has outstanding billable time and/or expenses.

Click Open if you want to see the original expense record. Clicking Add will, of course, add that transaction to the invoice.


You can also view pending billables in QuickBooks Online via another route. Click the Reports link in the toolbar and scroll down to the Who owes you section. You’ll see two related reports here: Unbilled charges and Unbilled time.

Ensuring that you're billing for all charges and time enables your business to increase its profit margins. If you have any questions in relation to receiving reimbursements for time and/or expenses incurred on behalf of your clients, please reach out to us.

0 views0 comments

Recent Posts

See All