Non-Billable change orders and RFP don’t mix

One of the available options in Settings > Module Settings > Proposals > Sales Orders is to Allow Non-Billable Change Orders. This is a great way to track costs on a job that you do not want to pass along to your customers.

HOWEVER, this feature will wreak havoc on delivery invoices you create for the Request For Payment (RFP) billing method. Let’s take a look at what the problem is, and then we’ll look at solutions.

Let’s sell a Fancy Widget to your customer on a Sales Order. The Fancy Widget has a $100 cost and a $200 sale price.

So, you generate a $200 Request for Payment to your customer. So far, so good, right?

But wouldn’t you know it, the distributor is out of Fancy Widgets. So you decide to upgrade the customer to a Better Whatzit. The Better Whatzit has a cost of $150 and a sale price of $300.

The problem is, you don’t want to charge your customer for the additional $100, so you decide to create a Non-billable change order so that you reflect the accurate cost.

The change order removes the Fancy Widget and sells the Better Whatzit, but because you set this as a non-billable change order, the price of the return is set to $0 as well as the price of the sale.

Now, when it comes time to create a delivery invoice, the only thing that is delivered is the $0 Better Whatzit. You never deliver the $200 charge for the original Fancy Widget. So your delivery invoices will be $200 short of the original RFP. Your Sales Order will be out-of-balance!

Solutions

You actually have two separate methods of creating non-billable change orders for your jobs. It is just a bit more of a manual process.

1. Create a normal Change Order, leaving the prices alone. Then, you’ll need to manually add an adjustment line for each Change Order so that the balance is $0. This adjustment line should have parts and labor on it to adjust each section accordingly. This is the best solution as it keeps track of your adjustments, and you can report on those in QuickBooks to see how much you went over/under on your jobs. Just run a report for your adjustment “item.”
2. OPTIONALLY, you could continue using non-billable Change Orders. You’ll just need to enter a manual adjustment on your invoices to make sure the deliveries match the RFP total.