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Helping Plumbing Contractors Understand QuickBooks
This is the first in a series of articles intended to help plumbing contractors like you
understand and get more value out of your QuickBooks accounting software. I will be opening the curtain and shedding some light onto the mystery of QuickBooks. It is my sincere desire that plumbing contractors will come to understand QuickBooks reporting as well as you understand how to read an isometric drawing and install a DWV and Potable Water system in a house or commercial building.
The only differences between isometric drawings are the size of scope of the structure they represent. In QuickBooks the size and scope of your plumbing company will determine the reports you need to have and understand in order to operate and grow your plumbing company to the size you want and generating the profit you desire.
Different Reporting for Different Types of Plumbing Companies
Plumbing contractors involved in residential and commercial new construction have
QuickBooks reporting needs that may include Work-In-Process, Job Deposits, Change Orders, Progress Billing, Payment Applications and Retention Tracking. Some of you have your own custom Schedule of Values or Scope Of Work and some of you use parts of the 16 or 50 CSI codes.
Plumbing contractors involved in residential remodel and light commercial tenant improvement have a different set of reporting needs. And finally plumbing contractors involved in service and repair have a completely different set of reporting needs from the previous two groups.
There is no one size fits all QuickBooks setup and day-to-day construction bookkeeping services system. There are basic building blocks and custom settings that can be applied to fit any plumbing contractor’s needs including those of you who are involved in all the market segments listed above.
The good news is I am familiar with all three segments listed above both as an licensed journeyman plumber, owner and operator of a plumbing company that did all three types of work and now as the co-founder of the premier outsourced construction accounting firm handling the day-to-day bookkeeping and accounting needs of a number of contractors with annual sales volumes between start-up $0 to $10 million dollars across the USA.
QuickBooks is one of the most popular construction accounting software packages and one of the most frustrating, aggravating, generator of foul language, broken keyboards and thrown coffee cups of any construction accounting software on the market. And that is on a good day!
I understand how to setup and use QuickBooks for plumbing contractors and other contractors at a very deep level because as the co-founder of plumbing company in the Seattle area I switched our entire construction bookkeeping services system from a very expensive fully integrated construction software program to QuickBooks in 1992. It took three months just to get it to the point where QuickBooks could generate some basic useful financial reports. At the time it did not have any useful Job Costing Reports. QuickBooks was very simple in those early days and it came in one version, DOS.
Many New Features Added but Power is Underutilized
Over the years Intuit, the parent company of QuickBooks has added more features in response to construction contractors who keep asking for more, bigger and better functionality. QuickBooks has grown up and become extremely powerful and is offered in several versions including Windows, Mac and QuickBooks Online; which is in my experience next to worthless for construction.
For plumbing contractors and other contractors who do not need the full power of QuickBooks and want a simple accounting software that offers full online access we are qualified Xero accounting online consultants specializing in the construction industry.
With power comes complexity and yet QuickBooks is still marketed and sold as something simple and easy that anyone with a pulse can setup and start using in a very short time. Nothing is impossible for the person who does not have to setup QuickBooks or generate reports for your construction company.
Plumbers are very intelligent and we are able to find ways to solve extremely complex problems which means we tend to suffer from the “Halo Effect” or the “I am so good at plumbing, I can do anything I put my mind too; especially pushing a few keys on a computer…how hard can that be compared to hanging 6” No-Hub cast-iron DWV pipe in an underground parking garage?”
The issue is plumbing and all other construction operates in a tangible world. You can see it, touch it, smell it, hear it but please do not taste it. Construction accounting is intangible and everything takes place inside a computer or “Black Box”.
5 Important Reports for Your Plumbing Contracting Business
I will close this introductory article by giving you some information that I trust you can use right away. There are Five Key Indicator Reports that I call “The Five At Five For Five“ that can be easily setup in QuickBooks and used by all plumbing contractors regardless of sales volume or target market:
#1 Cash on Hand (Cash is a fact & Profit is an opinion)
#2 Accounts Receivable (Cash coming in)
#3 Accounts Payable (Cash going out)
#4 Balance Sheet (The 3 “0’s” “Owned” – “Owed” = left “Over”)
#5 Profit & Loss (The opinion and accuracy depends on Bookkeeper)
In the next article I will go more in depth about how to set these up in QuickBooks and how to begin using them.
I leave you with this heartfelt blessing “You deserve to be wealthy because you bring value to other people’s lives”.
Randal L. DeHart, PMP, QPA