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Job Costing with Purchase Orders

Purchase orders are a key part of job cost tracking, providing visibility into committed and actual costs.

How POs Affect Job Costs​

Committed Costs​

When a PO is created and sent:

  • The total becomes a committed cost on the project
  • Shows in job cost reports even before bills arrive
  • Helps predict final project costs

Actual Costs​

When vendor bills are linked to POs:

  • Costs move from committed to actual
  • Provides accurate comparison to budget
  • Enables variance tracking

Cost Code Assignment​

Each PO line item can be assigned a cost code:

  1. When adding items, select a Cost Code
  2. Items from estimates inherit the category's cost code
  3. Cost codes determine how costs are categorized in reports
Field PO Cost Codes

Field POs require a cost code at the PO level. This cost code applies to the entire PO total when no individual line items exist.

Linking POs to Bills​

Connect vendor invoices to POs for accurate tracking:

Creating a Bill from PO​

  1. Open a PO in Receiving or Received status
  2. Click Add New Bill
  3. A bill is created with:
    • Vendor information
    • Project reference
    • Line items from the PO
    • Cost codes from PO items

Bill Matching​

When processing vendor invoices:

  1. Compare invoice to PO
  2. Verify quantities and prices match
  3. Create or link the bill
  4. Process for payment

This ensures:

  • Three-way matching (PO → Receipt → Bill)
  • Accurate cost allocation
  • Clean accounts payable

Job Cost Reports​

PO data flows into financial reports:

Project Cost Summary​

  • Estimated: From project estimate
  • Committed: PO totals not yet billed
  • Actual: Bills linked to POs
  • Variance: Difference from estimate

Cost by Category​

  • Costs grouped by cost code
  • Compare estimate vs. actual by category
  • Identify over/under budget areas

Vendor Analysis​

  • Spending by vendor
  • PO history
  • Bill matching status

Variance Tracking​

Compare PO costs to estimates:

At Item Level​

When items are linked to estimate items:

  • Estimated Cost: From original estimate
  • PO Cost: What you're actually paying
  • Difference: Over or under estimate

At PO Level​

  • Quote Total: If PO created from quote
  • PO Total: Sum of all line items
  • Variance: Difference from quote

Best Practices​

Before Creating POs​

  • Review project estimate for budgeted amounts
  • Get vendor quotes to compare pricing
  • Ensure cost codes are set up correctly

When Creating POs​

  • Assign appropriate cost codes to each item
  • Link items to estimate entries when possible
  • Use descriptions that match estimate for easy comparison

After Receiving​

  • Create bills promptly
  • Match bill amounts to PO
  • Note any variances with reasons
  • Update project forecasts if significant changes

Regular Review​

  • Run job cost reports weekly
  • Compare committed vs. budget
  • Address variances early
  • Adjust project projections as needed

QuickBooks Integration​

If integrated with QuickBooks Desktop:

  • POs sync to QuickBooks when sent
  • Status updates sync automatically
  • Bills in QuickBooks link to synced POs
  • Cost tracking maintained across systems

Look for the sync icon on PO screens to see QuickBooks sync status.