I have a number of clients using QBO that have agreements or contracts where they offer their services over an extended period of time. Even though the agreement might be for a year they don’t want to invoice and charge HST for the full year if they’re not being paid. This is where installment billing can be applied.
Who Benefits from Using Installment Billing?
Coaches, personal trainers and technical support services are an example of these types of businesses. And one of their “selling features” is that they offer an affordable option to pay the total amount spread equally over a specified period of time. This is Installment billing and Installment payments, not to be confused with Progress billing. Progress billing is generally associated with the construction industry with invoices generated for a percentage of work that is completed. QBO does not currently offer the Progress invoicing feature.
Easily Setting Up Installment Billing in QuickBooks Online (QBO)
So how can you easily set-up Installment billings where you don’t have to remember to invoice your client monthly? My suggestion is to do the following;
- Prepare your agreement or contract as an estimate. Estimates do not have an effect on your Sales or GST/HST accounts. Make sure to include the details of the equal monthly billings. After you have the signed estimate in QBO, you can either leave it as is, or mark it rejected. Or you can prepare the proposal in your preferred software. I personally like to keep everything in one place.
- Prepare the first equal billing invoice. At the bottom of the invoice, in the centre, is Make Recurring. This is a template and the default name will be your client’s name. Feel free to change the default name, which you would need to do if the same customer had additional recurring transactions. Select “Scheduled along with Automatically Send Emails. Choose the other options that best suit your needs. i.e. start date of first invoice and last invoice date, or after so many occurrences. Then save the template.
- The invoices will now be automatically sent based on the invoice date you selected, or the number of days prior to the invoice date if chosen during the set-up.
- If you want QBO to automatically send you a copy of all sent invoices, go to Company Settings, Sales, Messages, then select Email Me a Copy
- Want to review your recurring transactions or make changes? Go to the Gear icon and under lists select Recurring Transactions. It is here that you can edit the body of the invoice, use, copy or delete.
Recurring transactions are only available in QuickBooks Essentials and QuickBooks Plus.
You have now established a process for ensuring your invoicing is sent on time, and no one is overlooked. The amounts reported for GST/HST returns are based on actual and not future dollars. Hopefully this will also help with your cash flow.
If you have another process you use with QBO and have questions about, I would like to hear from you, and possibly share with my readers.
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Until next time,