Keep change orders separate from your original contract in your accounting system. When a customer approves additional work, create a new line item or sub-job rather than adjusting the original contract amount. This separation is essential because it lets you see how you actually performed against your original estimate versus what was added later.

Record a change order when it gets approved, not when the work is complete. At approval, you have a committed amount of additional revenue coming. Create an entry that increases your contract value for that job. If you wait until the work is done and billed, you lose visibility into pending scope changes that affect your overall project position.

Track costs against change orders just like you track them against the original scope. If that added coffered ceiling requires $800 in materials and 12 labor hours, those costs need to hit the change order, not the original interior finish budget. Otherwise your reports show the original scope running over budget when it was actually on track.

In QuickBooks, you can handle this a few ways. Some contractors create sub-customers for each change order under the main project. Others use classes or a separate project segment. The method matters less than consistency. Pick an approach and use it on every job so your reports mean something across projects.

The revenue side needs the same discipline. When you invoice for change order work, code it to the change order, not to the original contract billing. This lets you see collection status on additional work separately and ensures your job cost reports show true margins on both original scope and changes.

Pending change orders need tracking too. You’ve submitted a change order request for $4,500 but the owner hasn’t approved it yet. That’s not revenue until approval, but you need to know it’s out there. A simple spreadsheet or notes field tracking pending changes keeps you from being surprised when cash flow doesn’t match expectations.

The payoff from proper change order accounting shows up in your job costing reports. You can see whether you estimated the original work accurately or whether you only made money because of additions. You can identify which types of change orders are profitable and which ones you underpriced. That data makes your future estimates better.

Contractors who dump everything into one bucket learn nothing from their financial reports. They finish a job thinking they did great because total revenue exceeded total cost, but they have no idea whether the original bid was accurate. A construction bookkeeper in American Fork who understands job costing can set up your system to track change orders properly from the start so your numbers actually tell you something useful.