This Podcast Is Episode Number 0235 And It Will Be About Key Reports For Your Contracting Company Explained QuickBooks has over a hundred reports that can be viewed on a regular basis You could spend all of your time seeing a report in QuickBooks and trying to find the way to populate numbers in the report. Many reports are designed for specific things. Take for example the view of the Home Page. Just because the feature is on the Home Page in QuickBooks does not mean it is useful for every contractor. Five Key Performance Indicators Every Construction Company Needs To Survive And Thrive! It is not practical or recommended for the Small Contractor or Handyman to track inventory. For most contractors, the material goes from the supplier directly to the job which is not the definition of inventory. Inventory is what goes into the warehouse and stays, and stays and stays. Most contractors do not have the money to invest in inventory. Your supplier is just down the street.  They have on-demand inventory – what you need when you need it.   Plumbers, Electricians, and HVAC Contractors tend to have a certain amount of inventory, and it is better to do a physical inventory a couple of times a year. (End of year and maybe mid-point of the year and enter as bulk numbers) There are specialty programs that are an add-on to QuickBooks for those larger companies who need to track inventory. Most inventory programs only work with QuickBooks Enterprise. Trying to keep track of each item in the job can be overwhelming and not practical for smaller jobs. If it is a Cost+ or Time and Material job then be sure you only purchase what you need and assign that receipt to that specific job.      Five Key Performance Indicator Reports that are useful to every contractor regardless of their size. #1 Cash How much cash is in the bank. Why because you have bills to pay, material to purchase and upcoming expenses.   #2 Accounts Receivable How much work have I completed and billed the customer? Contractors get confused and think that the signed contract is for “X Amount” and therefore they have that much coming before the job starts.   Accounts Receivable is for completed work that you bill your customer or client. In other words, how much can you expect to pick up a check for today? From someone doing their accounting, it seems simpler to create an invoice for the whole job and then takes payments on it. The problem is that the balance is aging nicely and give a false impression of the company’s financial position. Add the time it takes to determine what is owed to you. After a short while, QuickBooks becomes a real MESS. Then your banker asks for financials, and you are trying to explain to the Banker that your Accounts Receivable includes work not started or completed. Bankers want to know How Much Money can you expect to collect today!           #3 Accounts Payable What bills do I have coming up? Accounts Payable is where you track all your supplier invoices, match against the month end statement and your subcontractor bills. It is not the place to track your monthly payments to your credit cards, your payroll or other tax payments to State and Federal Agencies. These items are in other places as liabilities in your QuickBooks file. Please Note: All transactions on your credit cards need to be entered into QuickBooks (not just the month in balance with payment due).   #4 Profit and Loss Profit and Loss are keeping track of your income and expenses and will reflect the Gross Profit and Net Profit of the business. This report is date specific. Please Note: Expenses are broken down between the Cost of Goods Sold (direct costs to jobs) and Expenses (which tend to be overhead related). QuickBooks by default is on the accrual method. Reports are converted to the Cash Method for Sales Tax and Federal and State Income Tax Reports. #5 Balance Sheet The...