The comparison between creating estimates in Excel and creating estimates in QuickBooks highlights some important differences in terms of capabilities, ease of use, and business efficiency, particularly for contractors and businesses focused on job costing. Here's a breakdown of the pros and cons of both approaches:
- Pros:Simplicity: Excel is easy to use, and you can quickly create estimates, proposals, or work orders.Customizability: You can design professional-looking documents tailored to your company’s brand and customer preferences.Flexible Layout: Excel gives you total control over the appearance and structure of your estimates.
- Cons: No Built-in Job Costing: Excel doesn’t track costs against revenue automatically, so you lose out on job costing functionality.Manual Effort: You’ll need to manually track and compare actual costs versus estimates, which can be prone to errors and time-consuming.Disconnected Workflow: Estimating in Excel is a standalone task, meaning you have to input data separately into your accounting software, which results in duplicative work.
- Pros: Job Costing Integration: QuickBooks automatically tracks job costs against revenue as you enter vendor bills, pay employees, and record expenses, giving you powerful reports such as Job Estimates vs. Actuals.Centralized System: QuickBooks allows you to handle estimates, proposals, invoices, and job costing all in one system, making the workflow seamless.Progress Invoicing: You can create progress invoices from estimates, which is especially useful for contractors billing over time.Reports: You have access to various reports like the Estimate vs. Actual Report, Job Profitability Reports, and more, which help you track the financial health of your jobs in real time.
- Cons:More Setup Time: QuickBooks requires proper setup, including creating a list of cost codes, items, and services your company uses.Training: Employees need training on how to use the estimating, invoicing, and job costing functions, which might initially take time.Less Customizable Forms: While you can modify forms within QuickBooks, the customization options may be more limited compared to designing freely in Excel.
The key advantage of using QuickBooks is job costing. By entering estimates directly in QuickBooks, you can:
- Track your actual costs against your estimates in real time.
- Avoid double data entry, as all transactions (bills, checks, credit card charges) can be assigned to jobs, updating your job cost reports automatically.
- Create progress invoices directly from your estimates, keeping your billing aligned with your project’s progress.
To unlock these benefits, you'll need to:
- Turn on Estimates:Go to Edit → Preferences → Jobs & Estimates-> Set “Do You Create Estimates” and “Do You Do Progress Invoicing” to Yes.
- Customize Estimate Forms: Use Layout Designer or download templates to tailor the form to your needs.
- Create a List of Items:Set up items in QuickBooks (cost codes, services, products) that reflect your business operations.
- Train Your Team: Ensure everyone understands the importance of proper setup and how to use the QuickBooks estimating function.
By investing the time up front to set up QuickBooks correctly, you’ll unlock the full power of job costing, allowing you to accurately monitor the profitability of each job and make data-driven decisions to improve your business operations.
Would you like more details on how to customize QuickBooks for your business or help with setting up job costing?
