My client Kristen wants to get reimbursed for some of the costs she has had to outlay to complete job projects for some of her customers.

First there are different ways of deciding how you want to handle the ongoing cash outlays of job materials & labor costs; some very basic factors include:

  • Can your company handle the cash outflow requirements it takes to complete a job?
    • This takes good cash controls organization
  • The length of time it takes to complete the job
    • Typically a job lasting less than a month should be easy to manage for cash controls
  • How big is the job?
    • A really big job should require an up-front deposit, which means your estimating capabilities should be sophisticated and you should be engaging in progress-invoicing.

So, considering these factors, Kristen does not engage in very big and lengthy customer projects. But, she constantly has to purchase sporadic supplies in order to satisfy job requirements. In this case, I would suggest Kristen handle this dilemma in one of two ways:

  1. Tie in any associated expenditures, to actual customers in her bookkeeping system; being sure to also make these expenditures as billable. Then, when she creates a customer invoice, her bookkeeping software will alert her of any pending associated job costs she is needing a reimbursement for, including a markup of say, 10%, if she so chooses.
  2. The 2nd option is to skip the sophisticated billable system in her bookkeeping software, and just simply add a line item in the customer invoice for the reimbursed expenses (or just simply increase the dollar amount of the customer invoice altogether for say, 10% more). She will do this if she simply does not have time to keep up with a sophisticated billable system.

Overall, your cash flows for your business entirely depend on you as the business owner and how much of it you want to let go of at any one time.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your Certified Public Accountant for verification and clarification about the contents of this article.

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