Reducing Costs Ideas & Distributing Complex Bills

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Handling Short Pays & Sales Tax Credits

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Loans, Leases, and Depreciation/Amortization Mistakes

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Check Your Company File Health

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Stop P&L Roller Coaster (Part 3)

 


In this month’s QuickBooks & Tricks we will finish the series on why many clients get frustrated about how their Profit and Loss each month moves up and down like a roller coaster, but the business by all indications is doing the same.
This last cause often has the greatest effect on the Financial Reports if not accounted for properly, but not all business types will need to consider it, Work in Process (WIP).
What is WIP ?
In accounting to get an accurate financial picture, the sales and costs associated with each job need to aligned in the same month, otherwise it causes an artifically higher or lower gross profit in a given month. Sales (Revenue) is normally booked when the job has been completed, and the customer accepts it as completed.  WIP is simply the jobs that are not completed at the end of the accounting period (month), and typically have costs that have been incurred. In some businesses this can be very minimal since the turn rate on their jobs do not span longer than a day.
However, in a collision shop, construction company, and really any business that completion of the typical jobs take more than a day, there are jobs in which labor (payroll), parts, supplies & materials, and even subcontracted services have been paid out, but the sale will not be taken until a later month. This requires WIP adjustments made to properly align the costs and sales of each job.
In some cases if the jobs are spread across many months there may be additional considereations, but for the sake of this month’s issue, we will be focusing on making standard WIP adjustments.
Before we begin, if you have not already read the last two month’s QuickBooks & Tips listing the other causes to this issue, you can do so by clicking the links below:
Determining WIP
At the end of each accounting period (typically month end) there needs to be a method of determining the costs already incurred for jobs that will not be taken as a “sale” that month. In some situations this can be thousands of dollars of already paid out costs. This can include employee direct labor payroll, parts, supplies, materials, and outside contracted services (towing, subcontractors, permits, licenses, etc). These will vary dramatically by business type and can also vary widely each month. These adjustments should be your actual costs for each, and include items purchased “on account” but not actually paid for yet.
If your business has a 3rd party management system, they generally have reports available for Work in Process. You will only utilize the costs listed on the report, but this report will not be accurate if all jobs have not been closed and sent into QuickBooks that will be included in the month’s sales. The WIP report on most systems is a very fluid report, so this report should be one of the last items performed during the month closing process. Again, your goal is to align the sales and costs for each job into the same month, so not having all the sales for the month in QuickBooks before running the WIP Report will be very inaccurate.
Attempting to determine the WIP manually can be very challenging unless detailed records of costs associated to each job are kept and can be combined for monthly totals. This is an area 3rd party management systems provide a great benefit.
WIP Adjustments
WIP adjustments are made using either the reports from 3rd party management systems, or by having a method of tracking all the costs manually.
At the end of the accounting period/month a memorized Journal Entry or Zero Dollar Check is created that will reduce the COGS expenses for the amount determined that were paid for jobs that are not going to be taken as a sale until a later period. For the offsetting entry at the same time, the WIP Accounts will increase that same amount.
WIP Accounts
WIP Accounts are Current Asset Accounts on the Balance Sheet, and will vary based on the business type. For this article, we will be providing examples based on a collision repair shop, but there will be many similarities to many other business types.

 

Figure 1 – Typical WIP General Ledger Accounts (Collision Repair Industry)
You may have noticed that even though industries such as Collision Repair have several COGS sub labor, parts, materials, and sublet accounts that are often tracked, the WIP Accounts only have main category accounts. This is because it is not necessary to have every COGS Account listed in the WIP section. The actual adjustments will include each COGS and Sub Account.
  
Figure 2 – Typical General Ledger Memorized WIP Adjustment Journal Entry (Collision Repair Industry)
You may also notice that there are no Supplies and/or Materials entries. This is because if a 3rd party management system is being used, the costs for these items are a calculated costs, not necessarily actual costs. During the setup of the management system, it is inputted what calculated costs of these items will be used for Job Costing purposes within the system.
If there are actual invoices that have been paid for supplies and/or materials for any job that will be part of WIP, they can be used as well. Another way is to utilize an agreed percentage for these costs each month. For example if the calculated costs of the supplies/materials on the WIP Report are $2030.00, you may elect to include 25% – 50% which would add an entry for 1330.00 WIP – Materials Total of $507.50 – $1015.00 and decrease the COGS for Materials and Supplies the same.
In most instances, the WIP adjustments will increase your Gross Profit and Net Profit.
Reversing Entries vs WIP Change
Once the monthly entry is made typically on the last day of the accounting period, there are two methods how to finish the process:
  • Reversing Entry on the first day of the following month
  • Entering Only WIP Change Each Month
Reversing Entries
These entries are made on the first day of the following month, and are the most common and easiest way clients finish the WIP Adjustment Process, but it has some downfalls. The reversing entry on the following month will transfer all the costs again into the COGS and out of the WIP Asset Accounts. This will return the WIP Accounts to zero balances on the first day of the following month, but increase all the COGS accounts as well, even though the jobs probably still have not been completed.
  

 

 

 Figure 3 – Typical General Ledger Memorized WIP Adjustment Journal Entry Reversal (Collision Repair Industry)
Special Tip:
In QuickBooks once you open the original WIP Journal Entry, there is a “Reverse” Button on the Tool Bar in the Main Tab. Just click it, and change the date of the entry to the first day of the following month.
This will as mentioned earlier zero out the WIP Accounts and transfer the costs back into the COS Accounts.
The key downside to this method is that if you wanted to just check your current month profitability before the next WIP Adjustment is made, it will generally report a much lower Gross Profit and Net Profit than actual, unless you also run the WIP Report and do WIP Adjustments to offset the current WIP costs.
Entering Only WIP Change
The most accurate method, if we are splitting hairs, is to only enter the “Change of WIP” each month. So, after the first month’s WIP Adjustment is made, you do not do a Reversing Entry the beginning of the following month.
This method however requires a spreadsheet created to make the math easier at the end of each month. Over the years, I have created these WIP Spreadsheets for many management systems since their reports are different. I have always tried to make the spreadsheet follow the management system’s report for easy entry, and provide the Journal Entry to match the memorized transaction in QuickBooks. It is possible to actually create an import file for QuickBooks, but I have never had a client request this feature.

 

 

 Figure 4 – WIP Change Spreadsheet (Collision Repair Industry CCCone Management System)
The spreadsheet follows the management system report and each month the entries are inputted. In this example materials are being included at 50% of the calculated costs.
The spreadsheet does the calculation of the “Change in WIP” each month and provides the Journal Entry needed each month.
  

 

 

Figure 5 – WIP Change Journal Entry (Collision Repair Industry CCCone Management System)
Whether you use the first or second method is up to you, but if your business type has jobs that carry over from one accounting period to another, you should include WIP Adjustments in your accounting process for closing the month.
The whole purpose of this three month series of QuickBooks Tips & Tricks is designed to improve your QuickBooks accuracy. Otherwise your P&L will move up and down like a roller coaster, and your financial information to run your business is simply inadequate.
Next month, we will look at another very common mistake made by QuickBooks clients … how to properly track loans, leases, and depreciation.

 


 

Well we have just begun our final quarter of the calendar year, and before you know it,  it will be year end time. Have you analyzed your year end profitability and tax liability yet ? If not, this is the time to do so, begin to get your QuickBooks in order for the year end closing, and getting ready for the new year to come.

 

There are many responsibilities you have to get ready for the year end, but there are many Holidays and personal events that will hinder your time as well. Year end closing normally requires a great deal of “Clean Up” to correct accounts and verify them for a good new year beginning, and certainly before you turn them over to your CPA for tax preparation. 
 
You may also consider benchmarking your financials against industry key performance indicators (KPI’s), and even consider what your budget should be for capital equipment expenses. Keep in mind, it may be best for your tax liability to get the needed purchases done before the end of the year, but it takes good information and analysis to determine this.
There are several resources you should consider to get assistance in this area… the first being our company AEII, QuickBooks R Us. We are here to assist any small business with these services, and provide the training and support needed to achieve their goals. We have assisted businesses worldwide … why not yours ?

 

Again, if you are thinking about upgrading your chart of accounts to reflect a better detail for your financials the best time to make the transition is at year end. However, to schedule this type of project, needs to be done now, and not wait until the end of November or December.

 

If you have missed our earlier issues of QuickBooks Tips & Tricks, you can catch up on past issues by Clicking Here.
Thank You and I look forward in sharing QuickBooks Tips and Tricks with you next month …

 


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Stop P&L Roller Coaster (Part 2)

 


In last month’s QuickBooks & Tricks we looked at two very common improper postings that will cause  your P&L to move each month like a roller coaster, and how to fix them. They are the most common cause, but the amounts they affect are normally much less than the two we will be looking at this month.
I can’t stress enough about the importance of “Closing Your Books” each month properly, but often this one lack of process can wreck havoc on the accuracy of financial statements.
Remember, it is a key point to always analyze your business in an Accrual Basis. Accrual Basis analysis allows for the expenses to be taken in the month they occurred, and not necessarily when they were paid. This is a key feature for creating a “Bill” in the month the expense was due as shown in last month’s information.
The next two include:
  • Other Accruals
  • Inventory Adjustment (Or actually the lack of each month)
Other Accruals
Accruals, or the lack of, can cause specific months to fluctuate, and many business owners don’t consider how much they do affect the monthly financials. So what are Accruals ? They are expenses to your business similar to the Pre-Payments we looked at in our last month’s QuickBooks Tips & Tricks, but almost in reverse.
Expenses that should be considered to accrue for the entire period include:
  • Vacation Pay
  • Sick Days/Personal Time Off Days
  • Holidays
  • Bonuses
  • IRA Employer Contributions
  • 401K Employer Match Contributions
 As an example, Year End Bonuses … Was the bonus actually just for December ? 
 
Or was it a bonus for the services performed for the entire time they worked during that year ?  These expenses when improperly posted hit the month’s financials for only that month when they should have been accruing for a longer period and spread over that period.
At the beginning of each year, you should determine your yearly “Budget” for your accruing expenses and divide it by the number of months it represents.
Then create a memorized transaction (either a Journal Entry or a Zero Dollar Check) to add it to the Accrual Account this amount and cost to the appropriate Expense Account.

 

 

When the payment is actually made, it is charged against the Accrual Account, not the expense account. This way the actual costs are distributed for the entire time it represented, and not all at once during a specific month. This can have a significant impact on specific months, especially often for December.

 

 

Even month end or quarterly bonuses should be accrued before the month is closed, so they can be paid accordingly in the following months.
Inventory Adjustment
In many businesses there is a large amount of inventory present to expedite the processing of the sale. In service businesses this is often a major reason why the P&L moves so much each month, if not accounted for properly.
It may be a wise decision to purchase fast moving products in larger quantities to get better pricing, but it does not mean the cost of these purchases should hit the P&L all at once either.
It is important to realize that it is not correct to “cost out” the purchases for products used in your business unless they are consumed during that accounting period. In other words, just because you bought it and paid for it doesn’t mean you should cost it out 100% unless it is fully consumed during that same month. This is the point for tracking inventory and managing it.
QuickBooks does have a rudimentary inventory program built in to QuickBooks Pro and Premier, and a more advanced program available in Enterprise. However, for most service businesses this program isn’t quite what is needed.
In service type businesses there are many 3rd party options that allow you to track and manage your inventory. Setting them up to manage “all” your inventory does take a little time and planning, but this is well worth it.
Many of these 3rd party systems are included with your vendor relationships of their products; some are part of an industry management system. They often have bar code scanning options that allow your staff to login what items they needed, when they got them, and what job they needed them for. They can often create an invoice for billing purposes as well. The key feature of a good system is that it will allow you to add different categories or departments, plus additional products not necessarily sold by that specific vendor. This allows you to use one system for your entire inventory.
 
So What Should be Considered Inventory ?
Businesses of different types will include items that other businesses may not have but here is a short list you may not be considering: boxes of copy paper, laser and inkjet cartridges, boxes of checks, stationary and other office supplies, cleaning supplies, and maintenance supplies are just a few examples.
Then for specific businesses there may be: antifreeze, oils, filters, tires, bulbs and fuses, nut bolt and clip assortments, preparation materials, refinish paints and clears, mixing toners, mixing cups, reducers and thinners … again but a few, but can cost thousands of dollars, and swing your P&L as much each month.
Depending on the business, you may be tracking costs for inventory in several General Ledger Accounts (GL). Cost Accounts may include Cost of Goods Accounts (COGS) for Parts, Materials and Supplies. They also may include other supply, safety items, and small expenses tools being tracked as an Expense.
Month End Inventory Adjustments
Setting up an inventory control system with categories for different types of inventory is important since the month adjustment may need to be performed on different GL accounts. Having different categories set up will make it much easy to distribute the adjustment to those different accounts.

 

 

There are two basic methods to handle inventory each month. Both require a way to evaluate your inventory value each month … again the easiest way to do this is with a software solution. However, periodically, a manual physical inventory will need to be done to confirm the inventory. This is often done either quarterly or year end. This process will identify areas of possible theft, or if not using the system properly is an issue.
Method 1:
During the month, the first method all your vendor invoices (Bills) for items included in your inventory that come in should be properly coded and distributed to the proper COGS and/or expense accounts. Then at the end of each month the “Change to Your Inventory Value” should be used to adjust your COGS and/or Expense Accounts.

 

 

 

Method 2:
The second method requires that all Vendor Invoices (Bills) of inventoried items during the month are distributed to an inventory account, rather than a COGS and/or expense account. Then at the end of each month the true cost of your expense purchases should be calculated and entries made to your COGS and/or expense accounts to the monthly costs.
To Determine Your True Cost:

 

 

As an example, your tire inventory at the beginning of the month was $17,500.00. During the month your purchases total to $10,000. Your ending inventory value was $16,500.00.
True Cost Month End Tire COGS would be $17,500.00 + $10,000.00 – $16,500.00 = $11,000.00
 Key to Managing Inventory:
 Evaluating the value at the end of each month is the key to properly managing your inventory, and the determining the adjustments needed to properly account for the fluctuations it causes. There are some items in each business type which provide challenges to do this, but they can be overcome if proper storage, distribution, and software are implemented.
From examining hundreds and hundreds of financials for small businesses worldwide, this is the second leading cause for roller coaster financials, but almost never accounted for properly. Isn’t it time to begin managing your Inventory ?

 

In our next month’s QuickBooks Tips & Tricks, we will conclude our look at what normally is greatest cause affecting the P&L leading to an out of control roller coaster.

 

Well we have just finished our Labor Day Holiday, and going to finish up the third calendar quarter before you know it. This is the time to begin planning for year end, and the new year as well, not in November or December.

 

Is your company file getting to large ? Are you getting close to the limits we have discussed in previous QuickBooks Tips & Tricks ? This is the time to assess the situation and make plans for year end and a new year. Waiting until your company file crashes, is not a very good business decision and can cost you a lot of frustration and extra money.

 

Are you thinking about upgrading your chart of accounts to reflect a better detail for your financials ? If so, the best time to make the transition is at year end. However, to schedule this type of project, needs to be done now, and not wait until November or December.

 

In addition, closing your QuickBooks at the end of the year needs to be a high priority for all small business owners. To do the year end normally requires a great deal of “Clean Up” to correct accounts and verify them for a good new year beginning, and certainly before you turn them over to your CPA for tax preparation.
There are several resources you should consider to get assistance in this area… the first being our company AEII, QuickBooks R Us. We are here to assist any small business with these services, and provide the training and support needed to achieve their goals. We have assisted businesses worldwide … why not yours ?

 

If you have missed our earlier issues of QuickBooks Tips & Tricks, you can catch up on past issues by Clicking Here.
Thank You and I look forward in sharing QuickBooks Tips and Tricks with you next month …

 


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Please Tell Us What You Think About This Information By Clicking The Image To the Right …….

 

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Stop P&L Roller Coaster (Part 1)

 

Does your P&L move each month like a roller coaster ? One month your profitability looks good and the next it is in the dumps, but you know your business is doing the same ?

This is often caused by not using a monthly closing process to identify distribution errors and properly allocating expenses to the correct month. This month will be Part 1 or what causes this, how to identify it happening, and how to fix.

I have written about the importance of “Closing Your Books” each month in many earlier articles, but we still see financials that have not been closed properly to account for many expenses that simply should not be included on the current P&L month, as well as expenses that have not been included as they should be. This is one of the key reasons our clients often do not trust the financial statements they get from QuickBooks… but they should be able to.

When you analyze your business it is important to do so in an Accrual Basis. You may elect to file taxes on a Cash Basis, but to get a true picture of your business, you should use Accrual. QuickBooks will default reports in Accrual Basis, but you can change them and memorize them so those reports to be on a Cash Basis.

Accrual Basis analysis allows for the expenses to be taken in the month they occurred, and not necessarily when they were paid. This is a key feature for creating a “Bill” in the month the expense was due, and not when it may have been later paid.

Multiple Payments in Same Month
One of the most common causes of P&Ls fluctuating month to month is when payments are made for expenses that are for more than the current month.
This usually occurs from two scenarios:

  • Payments are made to the same vendor monthly account not using “Bill Payment”
  • Payment made is for an expense that is for more than one month expense

Not Using Bill Payment
We often see this when there is a payment made for an expense at the beginning of the month, and another for the same vendor at the end of the month. This often means that the first one was possibly for the expense the month before, or the second one was for the expense for the next month, paid early.

The best way to identify these issues is to run a Preliminary P&L report for the last 3 – 4 months and Show Columns set to “Monthly”

Figure 1 – Preliminary P&L showing discrepancy month to month same expense

The Internet Fees in this example have a possible issue in the second month, and last month. This should prompt you to double click the amounts and review them. In this case once reviewed it was noted two payments were made on the second month in which one was actually for the third month, and one of the payments made for the third month was also actually for the fourth month. Finally it was also identified that not all of this vendor’s bills have been entered in the fourth month as well.

This is where using the “Enter Bill” function stops this. The Bill Date when entered will place the expense on that date, even if you don’t actually pay that bill for months later. Then using the “Pay Bills” process will generate a “Bill Payment” which can be from any bank account, or credit card.

This is why instead of leaving bills unopened until you plan to pay them, is an incorrect process in your daily accounting/bookkeeping day. Our advise is to open your bills received daily and enter them as a “Bill” using the information provided on the bill. You can also memorize the ones that are the same each month, and have them entered automatically. In fact even if the amounts vary, you can have them enter automatically in which you will make the amount change, or set the Bill to remind you to enter … this will keep the expenses in the correct month.

More Than One Month Expense
Another very common culprit is when expenses are paid for something that is actually for more than the month. Again run a Preliminary P&L Report for 3 – 4 months and the Show Columns set to Monthly.

Figure 2 – Report indicating expense may be for more than one month.

In this example there is an expense taken in the first month, but no additional costs for the three months after … this is a prime indicator the payment made in the first month was actually for multiple months. This is often common for expenses such as various insurance premiums.

In this case the expense paid was actually for six months, not just one month. To fix this the initial premium should be distributed to an “Other Current Asset” account as listed below 1630.00 Insurance Pre-Paid Premiums

Figure 3 – Other Current Asset Accounts for Pre-Payments You Have Made

Then the premium should be divided by the number of months it applies to, and a memorized transaction created to distribute from the 1630.00 Insurance Pre-Paid Premiums to the 6510.00 Liability Insurance Expense each month automatically.

In Part 2 next month, we will also look at what other transactions made, or not made, will also cause the P&L to become an out of control roller coaster.


Closing your QuickBooks monthly needs to be a high priority for all small business owners. You should have completed final monthly financial reports by no later that the 5th of every following month. I know most that are reading this, are no where close to this goal, but it can be done, and it is critical for the sustainability of your business.

But even if you do close by the 5th of each following month, do you spend adequate time to review what they are telling you about your business, your sustainability, and areas of improvement needed ?

In today’s business environment, this is a critical skill that needs to be mastered by all business owners, managers, and comptrollers. How is your business doing to your industry benchmarks ?

There are several resources you should consider to get assistance in this area… the first being our company AEII, QuickBooks R Us. We are here to assist any small business and provide the training and support needed to achieve their goals.

We have assisted businesses worldwide … why not yours ?

Thank You and I look forward in sharing QuickBooks Tips and Tricks with you next month …

Is Your Company File Healthy ?

 

July 2017
Is Your Company File Healthy ?
What you should know and do before you get a really  SICK File.

 

QuickBooks keeps all your data and most settings in a Company File which has an extension of “.QBW”. This file needs to be maintained to be healthy. If your Company File becomes corrupted depending of the severity, it could become unusable, or require some very expensive recovery.
This area most of my clients were not aware of to perform, and often I receive panic calls that their QuickBooks will not open, or they cannot add any more records, so please take the time to read this month’s QuickBooks Tips and Tricks.
To let you know upfront, most of the problems can be avoided by regular maintenance and review of key limitations. Most of these can be performed by you, and not require our services. However, we can assist you if you do not feel confident to do these on your own.
 
Once you log into your Company File, Press [F2] or {Ctrl] + 1 to open up the QuickBooks Product Information screen:
 

 

 

 

Figure 1 – QuickBooks Product Information screen provides very valuable information about your Company File.
There are several areas on this screen you should pay attention to. If you don’t you may be surprised with issues that can cause expensive services.
The first area to keep in mind is there are some different limitations between QuickBooks Pro/Premier compared to QuickBooks Enterprise. If the Top Product title included the word “Enterprise”, the product you are using would be Enterprise and not Pro/Premier. In the above case, the version in QuickBooks Premier (Accountant Edition) 2015.
There are suggested limitations for each version as far as database size, database fragmentation, and names.
Database Size
The size of the database is directly related to the number of transactions you have in QuickBooks. Some businesses grow their database faster than others. This is not only how many Customers or Jobs you do, but also how many transactions are within those jobs. If you order parts or materials for a job and they are billed to you on one bill, it counts as a single transaction. If you have multiple times these are ordered, each with its own bill, it multiplies the number of transactions.
As the database size grows, it may slow down the speed of operations. As an example, a report may take up to 20 – 30 seconds to open. In addition, as the database grows past general guidelines there is a higher risk for corruption.
General Database Size Guidelines:
  • Pro/Premier               200mb
  • Enterprise                  300mb
In the example Figure 1, the database assize is listed at 298332 K … that roughly translates to 298mb, almost 100mb larger than the general guidelines for Pro/Premier.
 
Database Fragmentation
This is also an important guideline that reveals how healthy your database is. This is much like fragmentation of your hard drive. Information is not stored efficiently and access to your data is being challenged. In all desktop versions the general guideline is to maintain this at 20 or below.
The example in Figure 1 is listed at 653 ! This can easily cause issues and corruption is possible.

 

 

 

Figure 2 – QuickBooks Product Information screen with file size and fragmentation okay
In Figure 2 the database size is at 196436 K, and the DB File Fragments is only at 4, so one would consider the file healthy at this point. However, pay attention to the box titled, List Information, on the right side. The Customer List is 13,776 and the Total Names are 14,200.
For Pro/Premier, the combined Total Names is limited at 14,500, and Customers, Vendors, Employees, and Other Names themselves are limited to 14,500. So in Figure 2, this company file can only add a total of 300 combined of new Customers, Vendors, Employees, or Other Names until the panic message appears from Intuit to, “You have reached the maximum list limitation, upgrade to Enterprise”. Enterprise basically has no practical list limits.
Now before you decide to upgrade to Enterprise there are several other options to consider. These are too lengthy to discuss in this article, but you can always contact us through our online scheduling portal at aeiiScheduling.com and select the Free 1 Hour New Client Session and then select the best time for you on our schedule to review the options and suggest the best one for your business.
 
What Else To Do ?
Database size is a very tough one to do much about other than the condensing processes, or doing a company divide. Both of these should be handled by an experienced QuickBooks service provider such as AEII, QuickBooks R Us.
In most cases we see clients with database sizes up to 400mb with Pro/Premier have few issues as long as they follow the maintenance steps listed in the next section.
Special Note:
If you use a management system to bring in Vendor Bills and Vendor Credits, you will notice that the Bill in QuickBooks includes two entries that really aren’t needed, but increases your database size and Name Lists unnecessarily. 
 

 

 

Figure 3 – Typical QuickBooks Vendor Bill from Management Systems using Items
 In Figure 3 the Customer/Job is listed on the Bill as well as the checkbox for “Billable” checked. Even though I have provided this to the major management system companies as ill advised, they have not fixed it, or at least make it an option during setup to turn off.
 
The “Billable” checkbox if activated causes QuickBooks to add the Bill Items to a database table tracking expenses for reimbursement. This is not used by 95% of businesses, because it tracks your reimbursed items by Job at cost, not retail. This is used by a profession that is billing a client for reimbursed expenses such a hotel, meals, transportation.  
 
Go to Reports > Jobs, Time & Mileage > Unbilled Costs by Job ... You may find that QuickBooks has millions of dollars listed as “Unbilled” depending how long you have used a management system with QuickBooks. These entries are increasing your database size unnecessarily.
 
Also the Customer/Job entry is designed for job costing individual jobs, but in most businesses, you can’t accurately job cost individual jobs without very detailed entry in your labor costs/payroll. Most businesses that have management systems utilize the management system for individual job costing and QuickBooks for month end total profitability. Hence the Customer/Job entry is not needed in QuickBooks, and also adds to the database size greatly.
 
Maintenance You Can Do

On a regular basis, monthly in most cases, you should not only look at the Database Fragmentation, but also check the integrity of your data, and rebuild it if needed.

Go to File > Utilities > Verify Data:

 

 

 

 

 

 

 

Figure 4 – QuickBooks Utility Menu for Verify and Rebuild Data
This process for verification will scan your file for data integrity issues. If there is a problem a Warning Message appears suggesting to “Rebuild” your data. The Rebuild Data is just below the Verify Data option in Utilities.
Before you Rebuild there are important steps to follow:
  • The QuickBooks File should be temporarily moved to your local computer.
    It IS NOT advised to rebuild your data on a Network Drive or mapped drive. 
  • The process will make an Automatic Backup before Rebuilding … put it on your desktop
  • If the process rebuilds and you get a “Rebuild has successfully completed” message, you should log out of QuickBooks, reopen your local company file, and verify again, and Rebuild again. Sometimes it may need multiple rebuilds.
  • Check your Database Fragmentation … it should be 20 or below
  • Don’t forget to put your QuickBooks Company File (.QBW) back on your network..
If your Database Fragmentation is still too high, or you continue to receive Rebuilding Errors, you should contact us. There are a few additional procedures that can be performed that may fix the issues without tougher and more expensive options.
Keep in mind, we are here to help in any way we can to assist you and keep your data safe and healthy. Keep your data from becoming sick just requires some basic maintenance in most cases.

 


 

One common issue today with many small business owners is that they are so busy working to complete their deadlines, they are too busy to really look at their business in a financial manner.

 

The key to business success is not just being busy … you can be busier than ever before, but still be forced to go out of business. If you are not watching your financial sustainability, who will ?

 

We have now finished half the year in 2017, how much time have you spent analyzing your business financial picture, your strengths and your weaknesses. How timely are you getting and looking carefully at your financial statements ? Keep in mind, Profit & Loss and Balance Sheet Reports are after-the-fact already… you can’t change what happened, but the longer after the period has ended, you look and create a plan for improvement, the less effective they are.

 

Closing your QuickBooks monthly needs to be a high priority for all small business owners. You should have completed final monthly financial reports by no later that the 5th of every following month. I know most that are reading this, are no where close to this goal, but it can be done, and it is critical for the sustainability of your business.
There are several resources you should consider to reach this goal … the first being our company AEII, QuickBooks R Us. We are here to assist any small business and provide the training and support needed to achieve their goals.
Thank You and I look forward in sharing QuickBooks Tips and Tricks with you next month …

 


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Protect Your Data Too !

 

How to Keep Your QuickBooks Data Safe
Its important your QuickBooks data is accurate… Make sure it’s safe, too !!
 
Your QuickBooks company file contains some of the most sensitive information on your computer. You may have customers’ credit card numbers and employees’ Social Security numbers, as well as your businesses accounting data. An intruder who captured all that data could create tremendous problems for you and a lot of other people.
That’s probably the worst-case scenario. But other situations could also spell disaster for your business, which  involve losing your company data through fraud, encryption viruses, hacking, or simple technical failures.
We can’t overstate the vital importance of protecting your QuickBooks company file, especially your accounting, customer and payroll information. Whether someone steals it or it’s inaccessible for another reason, it’s gone. Keeping your business going after such a loss would be very difficult – maybe even impossible.
Here’s what we suggest to prevent that.
Internal Safeguards
No business owner wants to believe that his or her employees could use their QuickBooks access to commit fraud. But it happens. Your company file contains credit card and checking account data that could be used for nefarious purposes. As we advocated in many ways, you can restrict user access to specific areas and actions of QuickBooks.
This example if for QuickBooks Pro and Premier. The limitations are very basic, but still should be helpful.

 

You can limit your employees who have QuickBooks access to certain areas and activities.

 

 

To get started, open the Company menu and select Set Up Users and Passwords Set Up Users. The User List window opens. It should have at least one entry there initially, (Admin).
We often see clients using the Admin Login for daily processing, but it SHOULD NOT BE. This user is designed to be only used for specific tasks:
  • Setting Up Users
  • Selecting Company Preferences
  • Importing and Exporting Lists
  • Setting Closing Dates
This is one the main reasons we emphasis the proper setup of QuickBooks, so once the Company File is setup, it is only used typically for monthly closing of the books.

 

Create Your User Accounts
Even if you are the only one that uses QuickBooks, it is still best practice to create a user for daily processing.The Admin password should only be known by the owner of the business, or their designated staff member.
To Begin … Click Add User and enter the employee’s name and password in the next window that opens, then click Next.
Tip: Your QuickBooks license limits you to a specified number of simultaneous users. If you’re not sure how many you’re allowed, click F2 to open the Product Information page. The number of user licenses you’ve paid for appears in the upper left.
[Special Note: This is the total number of logins to the company file at the same time. You can have many users more but only the number of licenses limit access at the same time.]
On the next page of this wizard, click the button in front of Selected Areas of QuickBooks. The following screens will let you define that employee’s access permissions in areas like Sales and Accounts Receivable, Inventory, and Payroll and Employees. When you’ve clicked through every screen and reviewed the summary displayed, click Finish. Your user will now be able to sign in and access the areas you specified.
You can-and should-take numerous other steps to keep your QuickBooks data safe.
QuickBooks has the ability to backup data to portable drives, and even though this should be done at times, it does not solve the loss do to total failure, fire, or encryption viruses. This should be done by an online backup solution.
We have worked with many options for this, and we concluded that what many offer is too complicated, and requires too much from the user in case of a loss. For this reason we highly recommend Critcical Backup Solutions

 

 

This solution not only protects your QuickBooks data, but all your company’s critical data and documents automatically with 10 versions for added protection.

 

Next Keep Your Operating System and Applications Updates
 

 

 

Don’t ignore this dialog box.

 

 

Software companies’ occasional updates offer more than just adding new features and fixing bugs. They sometimes refresh your software to ensure greater security based on new threats. Don’t forget about those all-important antivirus and anti-malware applications, as well as QuickBooks itself.
Keep Your Networks Safe
Just as a cold virus spreads around your office, so, too, can unwanted intrusions like computer viruses. Don’t allow an electronic epidemic to get started; take steps ahead of time to prevent it:
  • Discourage employees from excessive web browsing.
    This can be a hard rule to enforce, as some employees probably need internet access for research, and other work-related tasks. Create a firm policy legislating what workers can and can’t do on company-issued equipment (including tablets and smartphones) or any personal devices that use your wireless network.
  • Ask employees to refrain from using public networks on work equipment. Enforce the rules vigorously, and make compliance an element of performance evaluations.
  • Prohibit Online Radio and iTunes on business computers
    Online (free) music contains the highest virus and malware threats of just about any file accesses from the internet. iTunes dramatically affect Windows Based computers performance … stop them from doing this.
  • Minimize app installations on business smartphones.
    Employees should ask for approval. Viruses and malware get in that way, as well as through some websites and email attachments.
  • Use monitoring software.
    If you can’t afford to pay for “managed IT” (a la carte, third-party IT services), install an application that alerts you to problems.
Use Common Sense
You can fight data loss and theft by being cautious. Be diligent about backups, and if you create them on a local, portable device, don’t leave them in the office. Remember Cloud-based solutions such as Critical Backup Solutions are better and automatic. Shred papers that have sensitive information on them. Log out of QuickBooks when you’re not using it or when you leave your office. Be aware of who may be around you, looking over your shoulder.

 

 

We take data security very seriously in our own office, and we strongly encourage you to do the same. Contact us if you’re at all concerned with your own data safety, and we’ll come up with a plan together.

 

 

 

 


 

Regardless whether you are profit or non-profit organization … a service business, contractor, or church … you should always strive for best-in-class financial practices, and certainly take the time that is needed to “steer your ship” in the right direction by using accurate and timely information from QuickBooks.
We see many reasons businesses don’t get good timely financial information from QuickBooks:
  • The proper setup of QuickBooks was never done properly.
  • You and your staff haven’t been properly trained on how to use QuickBooks.
  • You haven’t made the commitment to get the timely and accurate information you need so to make good business decisions.
There are several resources you should consider … the first being our company AEII, QuickBooks R Us. We are here to assist any small business in achieving their goals and provide the training and support needed to achieve their goals.
Thank You and I look forward in sharing QuickBooks Tips and Tricks with you next month …

 


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Receiving Customer Payments: Your Options

 

It’s one of your more pleasant tasks as a QuickBooks user: receiving payments from customers. Here’s how it works …


QuickBooks was designed to make your daily accounting tasks easier, faster, and more accurate with built-in processes. If you’ve been using QuickBooks for a while, you’ve probably found that to be true, providing you are following the proper processes. Some chores, of course, aren’t so enjoyable; like paying bills, reconciling your bank account, or anything else that has the potential to reduce the balance in your checking accounts.
The process of receiving customer payments is one of your more enjoyable responsibilities. You have supplied a product or service that someone liked and purchased, and you’re now getting the money due you.
Depending on the situation, you’ll use one of multiple methods to record customer payments. If you use an industry specific management, you should always begin with receiving payments in it first, and allow the integration into QuickBooks bring the payments in as the below manual process is explained below.
Here’s a look at some of your options.
The Money Screen
If you’re like many businesses, you have invoices for customers showing what they owe and even when their payment is due. So one of the primary ways to record payments is by using the Receive Payments window. This is where management systems typically transfer payments you receive.
To manually receive payments for Jobs, click the Receive Payments icon on the home page, or Menu Bar if you have customized it as I have taught in classes, or click Customers | Receive Payments.

You’ll use QuickBooks’ Receive Payments screen when you record a payment made in response to an invoice only.
Do NOT use this to receive other payments such as rebates, or other non-earned revenue. These are handled directly on the Deposit Form.
The first thing you’ll do, of course, is choose the correct customer and Job by clicking the down arrow in the field to the right of RECEIVED FROM. The outstanding balance from that customer will appear in the upper right corner, and invoice information will be displayed in the table below.
Enter the PAYMENT AMOUNT and make sure the DATE is correct. (The next field, REFERENCE #, changes to CHECK # only if the CHECK option is selected.)
Next, you’ll need to ensure that the payment is applied to the right invoices. If it covers the whole amount due, there will be a checkmark in every row in the first column of the table automatically if your Preferences are set properly.
If not, QuickBooks will use the money received to pay off the oldest invoices first. To change this, click Un-Apply Payment in the icon bar and click in front of the correct rows to create checkmarks.
Special Note: If you are using a management system, this “applying” to an invoice does not automatically occur even if the Preference is set properly. From my research either the code for all the management systems is lacking, or Intuit does nor provide a way to handle this properly.
For this reason, you should run an Open Invoice Report at least weekly and go through all Jobs that do not show the Payments applied (They will show as an Invoice and a listing of Payments… you should only see an Invoice and a balance, if there is any, if they are properly applied).
Questions ? E-mail Me.
Several Payment Options
You’ll then want to tell QuickBooks what payment method the customer is using. Again, if you are using a management system, you must make sure the Payment Types exist in both the management system and QuickBooks.
Four options are initially displayed in QuickBooks. The possibilities that are visible here are:
  • CASH
  • CHECK
  • CREDIT DEBIT – A specific card type may be shown here if you’ve indicated the customer’s preferred payment method in his or her record.
  • e-CHECK
If the desired payment method isn’t included in those four, click the down arrow under MORE. This list includes all the other payment types you have setup in QuickBooks.
If it’s still not there, you also click Add New Payment Method. If it is there, you just need to select it and Click OK.

 

 

 

 

 

 

 

 

 

 

 

 

The Payment Method window

When you choose your payment method from the list that is listed as a credit card, a window opens containing fields for the card number and expiration date regardless whether you have Intuit Merchant Services or not.
If you don’t just click Done. If you do, after you’ve entered the credit card information (or if you have stored it), you’ll be returned to the Receive Payments screen. If you’re satisfied with your work there, click Save & Close or Save & New. At this point, if you do have Intuit Merchant Services, the credit card should process and you will be asked for additional information, and then a confirmation or decline message will follow.
Haven’t gotten set up to accept credit and debit cards yet, or are you looking for a better option? I know you receive calls almost daily about saving money on your credit card processing. They all say they save you money, but you may still spend thousands of dollars every year, and trying to figure out what you are really paying is almost impossible.
We have researched this for years, and are sure we have partnered with a provider that puts their money where their mouth is, and provides free terminals that are compliant to the current chip technology.
To take a look at their $500.00 guarantee … Click Here
Instant Sales
Depending on the type of business you have and its physical location, there may be times when customers will come in and buy something on the spot. You’ll always have the option to use a Sales Receipt instead of invoice.
In general, you use Invoices if they are going to be paid later than when you create them. Sales Receipts have the payment built in. However, you can still always use Invoices as well and if your QuickBooks version is new enough, just click Receive Payments from the Invoice Menu as well.
To Create Sales Receipts click on the Home Page or open the Customers menu and select Enter Sales Receipts to open this window:

The Enter Sales Receipts window

You’ll complete this form much like you entered data in the fields of the Receive Payments window. As you can see, you can print to mail to the customer and/or email it as well.
After all the hard work you’ve done to make your sales, the last thing you want to do is record a payment incorrectly so it isn’t processed and you don’t get paid. Though QuickBooks makes the mechanics of receiving payments simple enough, you still should understand the entire process involved in getting income into the correct accounts.
Maybe we will look at Deposit process next month. We see often this is not understood well and the usage of the Undeposited Funds process not processed correctly.

Regardless whether you are profit or non-profit organization … a service business, contractor, or church … you should always strive for best-in-class financial practices, and certainly take the time that is needed to “steer your ship” in the right direction by using accurate and timely information from QuickBooks.

We see many reasons businesses don’t get good timely financial information from QuickBooks:
  • The proper setup of QuickBooks was never done properly.
  • You and your staff haven’t been properly trained on how to use QuickBooks.
  • You haven’t made the commitment to get the timely and accurate information you need so to make good business decisions.
There are several resources you should consider … the first being our company AEII, QuickBooks R Us. We are here to assist any small business in achieving their goals and provide the training and support needed to achieve their goals.
Thank You and I look forward in sharing QuickBooks Tips and Tricks with you next month …
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