# How to bill customers, contractors and statements?



## pcplumber (Oct 12, 2008)

I would like to start a thread about the different ways and methods contractors bill contractors and customers. I am currently hiring (contracting) several contractors to build a home and the way the contractors are billing me is so screwed up the contractors don't even know how much money I owe them. For a grading contractor who has several million dollars worth of equipment on my job I spent about 5 hours teaching his wife how to create a statement, how to bill a customer, how to request a draw and the difference between a Change Order (debit) and a request for a draw. I am seeing the same billing problems with almost every contractor. The strangest thing about what I am seeing is virtually every contractor missed the boat many years ago and is trying to re-invent the wheel. If anyone needs help with creating or understanding how to do billing that is easy to understand then this should be the thread.

I attached some images for a contractor's wife who "invoiced" (billed) me by putting a line item in the same Debit column that she was putting Change Orders. A very high percent of people falsely use the term "INVOICE ME" meaning "BILL ME" because you cannot invoice a customer for an invoice. There is no such animal! 

Some of the major problem most contractors have is they think their wives are qualified to do the book keeping and they are not. Every time I hear a contractor say his wife does the books I cringe and vision the husband not having a clue about the errors and dangers. The second biggest problem with this contractor, like a high percent of others, is the wife was trying to use Quickbook for billing customers and Quickbooks either she does not know how to use Quickbook, or Quickbooks just won't do a good job where errors are eminent and where the books are not simple to understand. That is the reason I crerated my own software available in the link below.

For myself, it is super critical to have books that are simple to create, manage, accurate to the penny and books where I can know in a split-second exactly where I am at and whether or not I am being double-charged, over-charged and whether or not payments have been received and properly applied.


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## pcplumber (Oct 12, 2008)

I deleted this post since it has an error. Sorry!!!


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## Framer53 (Feb 23, 2008)

I was taught a long time ago that you do not pay on the statement you pay from the invoice,.
What you are doing is combining the two.
the statement is no more than an ongoing process which spells out the invoice amounts.

But then again what do I know?


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## pcplumber (Oct 12, 2008)

Framer53 said:


> I was taught a long time ago that you do not pay on the statement you pay from the invoice,.
> What you are doing is combining the two.
> the statement is no more than an ongoing process which spells out the invoice amounts.
> 
> But then again what do I know?


I can't think of one instance where you pay on the invoice. You purchase supplies every day at a supply house and you pay for the invoices when you get a statement. You pay your credit cards, mortgage, gasoline cards and everything I can think of when you get a statement. My plumbing customers pay me when they get their monthly statements. A statement is only a running total that tracks invoice payments.

As stated in the original post, I think most contractors use the term, "invoice me" when they really mean, "bill me". My question is; how can you track which invoices are paid and those that are not without a statement and a statement is really only the duplicate of a ledger card that is kept on file in your office. One thing that I make sure in my company is that we have all our account receivables on paper ledger cards that match exactly what is in our computer just in case something goes wrong with our computer and we back up our computers no less than every 4 weeks.

What prompted me to start this thread is I never had so many problems with the way contractors bill as I have had on this one job. The job is in Temecula California and it is like every contractor went to the same school, or I am wondering if I am going crazy. I have been going round and round with the grading contractor and every time I correct the contractor's invoice she creates an invoice entirely different than the sample I send her and every time she sends me something new the total is entirely different.

The Original Contract total was $21,450. If you look at one of the invoices she sent the total is only $21,075. Then, when I tell her that the total is wrong she sends me something entirely different.

This invoice the contractor sent does not show the $5,000 down payment I paid before the job was started and before this bill was created. Where is my running total where I can look at a piece of paper and say the total for the entire job, so far, is this much. I paid this much for this and that and this is my exact balance. 

After 2-1/2 years I just completed my underground utility job last week. That was the biggest nightmare as far as paperwork goes that I have ever had in my entire life and I am almost 100% positive that the general contractor screwed me out of no less than $9,000. The reason I suspect this is because about three days ago I was sitting at the accountant's desk and he was printing out an Unconditional Lien Release and Final Payment Form. He was thinking out loud and had a serious slip of the tongue when he said that I was paid $9,000 and then he retracted his statement and said that the $9,000 was paid by the hotel owner, but I clearly saw that the $9,000 was a line item for my company. I did not blow up and question him because next week I am going to do it in a more diplomatic way when I ask him for a complete accounting, but I am very positive that he will doctor the report because I he sort of laughs all the time and brags about how he doctors the amount owed for even the company he works for. My point for all this is; even as smart as I think I am I cannot tell whether or not I got the shaft for ten to twenty thousands dollars on the hotel job because the accounting for contractors is very complex.

I think the accountant lied to me about who paid the $9,000 for the pump. The hotel job was supposed to be completed in 9 months. I installed two pumps in a lift station and each pump cost $4500. The lift station is 11 feet deep and it was dry when we installed the pumps. My workers threw the electric cords in the lift station and the plumbers kept testing their drains and they filled the lift station with water several times while the electric was not connected. The plumbers also knew they were responsible for the water in the lift station and they frequently pumped the water out, but eventually the water weeped through 30 feet of electrical cord and went into the motors. Nobody ever told me that it was my fault and it was not my fault that the job dragged out two years longer than projected. The accountant told me that his company (the general contractor) was paying the $9,000, but after seeing the line item on his computer I think he stuck me with the bill. It is very difficult to track payments when trying to understand other people's systems. 

The reason I cannot understand how much is owed my company is because my ex-partner made all the deals in the beginning and I took control of the job too long after problems progresses. I asked a lot of questions about the accounting, but I will admit that I dropped the ball on this one.


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## Framer53 (Feb 23, 2008)

I understand what you are trying to say, but think of it this way, if you have a cash account you never receive a statement, hence you are paying on the invoice.
A statement is for the customer and companies convenience.
The fact is you are paying the invoice, not the statement.

I think we are having a disagreement on terms, not a big deal.
Do you not have a staff accountant to keep track of this?


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## pcplumber (Oct 12, 2008)

Framer53 said:


> I understand what you are trying to say, but think of it this way, if you have a cash account you never receive a statement, hence you are paying on the invoice.
> A statement is for the customer and companies convenience.
> The fact is you are paying the invoice, not the statement.
> 
> ...


I am the staff accountant. Hiring people to do accounting comes with some very serious problems. During my early years, I had secretaries and office girls who did excellent jobs during their early terms of employment. Then, for who knows why, after about six months I would check their work and find plus and minus errors that were always in the $30,000 range. It was really weird how they went from being good to screwing up my life. 

I will never forget how upset I was when the day before Christmas I was purchasing something for my wife that was less than $100 and the store told me that my check was no good. That was a very embarrassing and frustrating moment. I checked my office girl's accounting and she had $30,000 more on the books than was in the checking account. I had to scramble the day before Christmas to find money to cover the outstanding checks written to employees and vendors. Eventually, I started doing all the accounting myself and I will never hire nor trust someone with my books. 

Even I cannot do the accounting for my 2-1/2 year job and that is because my ex-partner was in charge of all the negotiations and changes.That job came to the point where I had to trust the general contractor's accountant and I am fairly positive that he screwed me out of $10,000 to $20,000.


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## Texas Wax (Jan 16, 2012)

Invoice-a list of goods sent or services provided, with a statement of the sum due for these; a bill. An invoice is usually a one time statement for monies to be collected/owed.

A statement is for summarizing monies due; multiple invoices, occurrences over a period of time for balances due on on an account. An account can be a past due invoice. Same thing as an invoice to the customer, but entierely different animal in the accounting system.

A good accounting system does not require an accountant to do the booking keeping of making sure things are accurate, billed correctly and received. As PCP is saying proper invoice and summary keeps it simple enough that anyone at a glance should be able to figure it out. But it is only as good as the imformation that is put in. Garbage in garbage out adn no accountant can figure out the garbage side.


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## pcplumber (Oct 12, 2008)

Attached, is a current invoice from my grading contractor. Can some rocket scientist please tell me how much I owe this contractor when this job is completed. The invoice has two sections and this is an identical copy of what I received. I know what the total is, but this contractor does not send me the correct balance when I request it.


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## TxElectrician (May 21, 2008)

Looks like $4,450.00 from the quote and what you've paid.


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## pcplumber (Oct 12, 2008)

View attachment 333961


TxElectrician said:


> Looks like $4,450.00 from the quote and what you've paid.


Keep trying?

To get the total that I owe you need to add the Original Contract (that the contractor is calling the ESTIMATE). Then add the two invoices for the extras and subtract the payments that I made. This is the same contractor I spent 4 hours on last week sending emails back and forth explaining how to create a statement. I don't have a clue why his wife is putting draw requests in the same column as Extras (Change Orders).

Below is a corrected statement.

Now, my wife is mad at me because the contractor sent me an email this morning and was arguing that I owed him $11,722.00. I called the contractor on the phone and he was angry, threw the phone to his wife and she was telling me that I was stupid in an undiplomatic way and how they have been in business for several years and never had problems with a customer like myself. Eventually, after I told the wife that I owed her $15,622.50. She calmed down and said she would go over her records. I sent a copy of the invoice below and she sent me an email stating that I owe only $15,100.

The purpose for this thread is for contractors who have their wives and inexperienced workers doing their billing. This is a classic case where Tarzan has Jane doing the books.


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## genco (Sep 8, 2016)

PC, I don't know much about much, but it seems pretty clear that this is an AP issue on your part.

If you're doing proper full-cycle bookkeeping, every invoice (not "Statement", because statements cause the problems you are having now) gets entered in to supplier's AP account, along with the invoice number. That way you have a nice record of exactly what you owe, and can vouch the totals back to specific invoice amounts. (Fun fact: IRS/CRA doesn't accept "Statement" summaries for tax purposes - They want to see the original receipts. If you don't have them, your expense claim is denied.)

Conversely, with regards to payments on the account, just follow the cash. Pretty easy to see that "X" amount of cash was paid to "X" supplier on "X" date. If supplier denies receiving the amount, then have your bank dig up the specific account to which the bank transferred the money. Pretty easy to snuff out any BS that way. 

As for your "missing" $9,000, you DO have some sort of paperwork on file that says "X" will pay you $9,000, yes? It also has some sort of reference number that you can show to the client and say "Hey, here's my invoice that you haven't paid. Show me records of when/where you paid me, because I never received payment." 

That's the great thing about cash - It's incredibly easy to track, if you have a good accounting system in place. From what I'm seeing here, the problem isn't with outside parties, it's with how you're handling your AP/AR systems. You aren't able to easily generate who-paid-whom-when statements, and that will **** you in this business.


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## jhark1234 (Aug 13, 2016)

PC, I am saying this with kindness, because I am the same way.

You have trouble delegating tasks. I finally hired a book keeper through my accountant a year ago and it has changed my life for the better!


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## 91782 (Sep 6, 2012)

pcplumber said:


> The purpose for this thread is for contractors who have their wives and inexperienced workers doing their billing. This is a classic case where Tarzan has Jane doing the books.


Ah. IOW, this is a pcplumber smart - everyone else dumb thread.

OK Tonto.


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## pcplumber (Oct 12, 2008)

jhark1234 said:


> PC, I am saying this with kindness, because I am the same way.
> 
> You have trouble delegating tasks. I finally hired a book keeper through my accountant a year ago and it has changed my life for the better!


You don't have to be kind. I don't know where you went wrong, but I am not the party having a problem with the accounting. My records are simple to understand and accurate to the penny. The problem is with the grading contractor that I hired. The contractor is the party who is telling me this morning that I owe him only $11,000 and I am literally arguing with him and telling him that I owe him $15,622.00. My wife has been mad at me all day over my telling the contractor that I owe him $5,000 more that he is asking and she is mad because I literally argued with the contractor to try to get it through his head (and his wife) that their accounting is wrong. And...I am sure my wife saw a Dooney Burke purse evaporate into thin air (whatever that means).

Honestly, I have never seen any bad billing like this in my life. I paid this contractor $17,000 so far and if you look at the invoice I posted this morning and the invoice below you will see that the contractor changed the payment for check 11814 from $6,000 to $2050 on her bottom chart, but the top chart still indicates that the check was for $6,000. The $6,000 amount is the correct amount and then the contractor's wife sends an email telling me that she found the $5,000 error and her error was because she applied too much credit to my account. Please tell me why she would change the $6,000 to $2050. Then even after I sent her a correct statement she still indicates that I owe $15,100 rather than the $15,622 that is indicated on the statement I created and sent to her.

The strangest thing about this escapade is; my numbers are 100% correct and I am embarrassing myself as I try to be kind and honest to this contractor. At the same time, the contractor and his wife are writing rude comments to me like, "It is not that difficult to understand" and "we know what we are doing and never had this type of problem with a customer before." Yes it is hard to understand! I can't understand why the contractor wants to argue with me and tell me that he owes $5,000 less than what I owe him.

From this point on, if the contractor sends me a statement for less than I owe I am not going to embarrass myself and will send the lessor amount that he requests.

Look at the two previous posts. I have never seen a company do something like change a payment from $6,000 to $2050 just so the balance owed would be the amount that the customer declares is the correct amount. The contractor seems to be a very nice hard-working person and does not appear to be a drug or alcohol abuser.


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## Framer53 (Feb 23, 2008)

She is using the 6000 payment dividing it up between what is the drw and the extras yuo have not paid.


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## Framer53 (Feb 23, 2008)

By the way I understand what you re trying t say, but this is why I pay my CPA to look over my accounts periodically to make sure I have not made mistakes.

The other thing is to tell you to relax, it all works out in the end.

One more thing, I do not pay on statements, but I pay invoices.


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## Britchippy (Aug 6, 2015)

I get what you're trying to do but what's the bigger problem with the way the contractor and his wife are handling their end- the fact they are invoicing you for less than you believe you owe or that they aren't kissing your a$$ for showing them the error and aren't converting to your way of doing things. Just pay what you think you owe them then and move on.


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