Electrical Contractors: Billing by Phase and Tracking Unbilled Work

What electrical contractor books need to track

An electrical job is not one invoice. It is a set of phases. The rough in comes first, then the trim, then the fixtures and the final. Each phase has its own costs and its own billing. The books need to track each one so you can see what is done, what is billed and what is still open.

When the phases sit in one pile, you can not tell where the money is. The rough in might be done and billed. The trim might be done but not billed. The fixtures might not be installed yet. When it all blends together, you can not see which phase is holding the cash and which one is holding the work.

A clean job carries its phases. The rough in has its costs and its billing. The trim has its costs and its billing. The fixtures have their costs and their billing. When you run the report by phase, each one shows what it cost, what it billed and what is still open.

Here is what a clean job looks like.

When each phase carries its own costs and its own billing, you can see the job clearly. When they sit in one pile, you are guessing.

How billing by phase works

Billing by phase means you invoice for each part of the job as it gets done. The rough in gets billed when the wire is pulled and the boxes are set. The trim gets billed when the outlets and the switches go in. The fixtures get billed when the lights and the fans hang. Each phase has its own price and its own invoice.

The clean way is to bill each phase when it is done. The invoice ties to the phase. The payment ties to the invoice. When you run the profit and loss by phase, the billing and the costs sit side by side, and you can see what each phase earned.

The messy way is to bill one big invoice at the end. The rough in costs hit the books first. The trim costs hit next. The fixture costs hit last. But the income does not show until the final invoice. For months, the job looks like it is losing money, because the costs pile up and the billing waits. Then one big invoice lands and the job looks great. The books swing from bad to good for no reason.

You can read more about how we keep billing tied to the work on our bookkeeping page.

How unbilled work piles up

Unbilled work is the cost of work you did but never invoiced. It is the most common way an electrical contractor loses money. The crew finishes the trim. The walls close. The owner moves on to the next job. The invoice never goes out. The work is done. The cost is on the books. The income never shows.

The pile grows for a few reasons. A phase finishes and no one bills it. A change order gets done but the extra invoice never goes out. A fixture gets installed but the final bill waits for the punch list that never comes. Each one is money you earned sitting on the shelf.

The clean way is to track what is done and what is billed for each phase. When a phase finishes, it shows as done. When the invoice goes out, it shows as billed. The gap between done and billed is the unbilled work. When you watch that gap, you can chase the money before it gets old.

The messy way is to ignore the gap. The work is done. The costs are on the books. But no one tracks the billing. At month end, the costs show but the income does not, because no one sent the invoice.

Here is how to keep unbilled work from piling up.

• **Mark each phase done when it finishes: ** so the billing clock starts.
• - **Send the invoice for that phase right away: ** not at the end of the job.
• - **Track the gap between done and billed: ** that gap is money waiting.
• - **Bill change orders when they get done: ** not bundled into the final invoice.
• - **Review the unbilled list each month: ** chase the oldest ones first.

How to track billed and unbilled by phase

The key to clean electrical books is tracking each phase on its own line. In QuickBooks Online, you can use projects or classes to split a job into phases. Each phase gets its own costs and its own billing.

The clean way is to set up a project for the job and a phase under it for each part. The rough in costs go to the rough in phase. The trim costs go to the trim phase. The fixture costs go to the fixture phase. When you bill a phase, the invoice goes to that phase. At month end, the project report shows each phase with its costs, its billing and its gap.

Here is how to set it up.

• **Create a project for the job: ** so the whole job pulls together.
• - **Add a phase or class for each part: ** rough in, trim, fixtures, final.
• - **Book all costs to the right phase: ** not to one flat job line.
• - **Bill each phase to its own phase: ** so the billing ties to the work.
• - **Run the project report at month end: ** see the costs, the billing and the gap per phase.

When each phase sits on its own line, you can see the job. When they sit in one pile, the rough in and the trim and the fixtures all blend, and you can not tell which one is holding the cash.

How to see what is done but not billed

The whole point of tracking by phase is answering one question. What is done but not billed?

When the phases sit on their own lines, the answer is right there. Each phase shows its costs. Each phase shows its billing. The gap is the unbilled work. When the gap grows, the money is sitting on the shelf. When the gap is zero, every bit of work done has been billed.

When the phases sit in one pile, you can not answer that question. The costs show on the job. But the billing shows as one number. You can not tell if the rough in is billed and the trim is not, or if the whole job is one big invoice waiting at the end.

Here is a simple check.

• **Pull the project report by phase: ** not by total income.
• - **Look at the costs for each phase: ** they show what is done.
• - **Look at the billing for each phase: ** it shows what is invoiced.
• - **Subtract the billing from the costs: ** the gap is the unbilled work.
• - **Chase the oldest unbilled phases first: ** the longer they wait, the harder they are to collect.

How the month end close works

At month end, every job needs its phases added up. The costs for each phase pull together. The billing for each phase sits next to them. The gap is the unbilled work. When the phases sit on their own lines, the close is a matter of reading what is there.

We start with the bank. We match each payment to the invoice it paid. We pull the costs and tie each one to the right phase. We check the billing against what is done. We flag the phases that are done but not billed. We send you the profit and loss report, and the phase totals sit inside it. You can see what you earned and what is still waiting.

Here is a simple month end check.

• **Match each payment to the bank: ** every deposit cleared.
• - **Tie each cost to the right phase: ** not to one flat job line.
• - **Check each phase for billing: ** done but not billed needs an invoice.
• - **Flag the oldest unbilled phases: ** chase them before they get stale.
• - **Run the project report: ** see the costs, the billing and the gap per phase.

When the close runs every month, the unbilled work stays small. When it skips a month, the pile grows and the money sits on the shelf longer.

A situation we clean up

The trim that never got billed

An electrical contractor runs three crews. The books show one big job with all the costs piled together. The rough in is done and billed. The trim is done but not billed. The fixtures are half installed. The books show the job losing money, because all the costs are in but only the rough in billing shows. The owner thinks the job is going badly, but really the trim billing just never went out.

Here is how we handle it. We split the job into phases in QuickBooks Online. We move the rough in costs and the rough in billing to the rough in phase. We move the trim costs to the trim phase. We check the trim billing and find it was never invoiced. We send the trim invoice. We move the fixture costs to the fixture phase. When we are done, the owner can see that the rough in paid, the trim is done and now billed, and the fixtures are still open. The job is not losing money. It was just missing a billing. We set up a rule so the next phase gets billed the day it finishes.

Mistakes we fix

• All phases booked to one flat job line with no split
• One big invoice at the end instead of billing by phase
• Trim or fixtures done but never billed
• Change orders done but never invoiced
• No project or class tag on any phase
• No way to see what is done but not billed
• A job that looked like it was losing money because the billing waited
• Costs piling up for months while the income sat on the shelf
• No month end check of which phases need an invoice

Common questions

What is billing by phase? You invoice for each part of the job as it gets done. The rough in gets billed when the wire is pulled. The trim gets billed when the outlets go in. The fixtures get billed when the lights hang. Each phase has its own invoice, so the income shows when the work shows.

What is unbilled work? It is the cost of work you did but never invoiced. The crew finished the trim. The cost is on the books. But the invoice never went out, so the income does not show. The gap between done and billed is the unbilled work, and it is money sitting on the shelf.

How do I track billed and unbilled by phase? Set up a project for the job and a phase for each part. Book all costs to the right phase. Bill each phase to its own phase. At month end, the project report shows the costs, the billing and the gap per phase.

Do you handle bookkeeping for electrical contractors? Yes. We split your jobs into phases, tie the costs and the billing to the right phase, and flag the work that is done but not billed, so you do not lose money on finished work.