Quickbooks Reconciliations: Not Just for Banking

Most Quickbooks users are familiar with doing monthly bank reconciliations and the importance of doing so. Some reconcile credit cards on a regular basis as well (good job!). That’s where most reconciliations end, but don’t have to.  The bank reconciliation feature in Quickbooks (both Desktop and On-line) can be used to reconcile any balance sheet account, such as :

  1. Car and equipment loans
  2. Employee advances
  3. Customer deposits
  4. Retention
  5. Accrued expenses
  6. Prepaid expenses
  7. Fixed assets
  8. Prepaid revenue

Beginners/Moderate Users: I’d start using this for things like car or equipment loans (that you get a statement for or have an amortization schedule for. This way you can enter the interest at the same time.   After you master that, then I’d go to more complex accounts.

Advanced users: This can be used for the more complex reconciliations, for instance a prepaid expense account.  There are lots of entries and some of them have been amortized out, some haven’t and some are just errors. Finding what makes up that balance can take a day of spreadsheet work , but doesn’t have to if you regularly use this feature.

The most difficult part of the process will probably be finding a starting balance and clearing out any old transactions in there. After that, this can become part of your monthly close process and save all that scrambling at tax time.

To get started:

  1. Find a good starting balance. Let’s say you have one for 12/31/15.
  2. Go to the reconciliation screen and select the proper account .
  3. Enter the starting balance and the date (as our example) 12/31/15 as the account “ending” balance.
  4. Click “hide transactions after statement end date”.
  5. Clear all of the transactions to that date, the variance should be zero.
  6. Reconcile the account periodically just like a bank or credit card statement.

Using this feature on a regular basis can help save all of that spreadsheet work, hours of searching for errors and cumbersome tracking.


Top 7 Budgeting Pitfalls

“If you can’t measure it, you can’t improve it.” – Peter Drucker


A lot of businesses are starting their 2017 budgeting process right now. A budget is a critical tool for all successful businesses. However, many budgets fall short of providing the financial guidance that managers and owners desperately need. Having prepared numerous budgets, I’ve discovered first hand the pitfalls and key requirements of creating a viable budget. The budgeting mistakes most commonly made include:

  1. Underestimating the cost of expansion. So you own one auto repair shop, opening another should be twice the cost, right? Wrong, expansion frequently means that overhead must increase to handle the additional workload. Don’t forget the additional managerial time and resources required. I recommend a cash flow cushion to help cover any unforeseen costs.
  2. Overestimating revenue. Just because we desperately hope revenue will increase by 20% doesn’t make it a viable budget number. Revenue projections should be based on a combination of historical figures adjusted for inflation and current market and industry conditions. Additionally, if the company has sustained a major change such as a merger or substantial downsizing, you have to consider the ability of the company to meet previous revenue levels. Generally I advise to remain conservative as much of the budget is typically revenue dependent.
  3. Overly optimistic expense budgeting. It’s easy to forget about those once a year expenses but also easy to be overly optimistic about cost cutting. You have to review historical trends here and watch out for that “miscellaneous” category. Also make sure that you have a cushion for those unexpected expenses or any known upcoming changes.
  4. Not having multiple budgets. There are multiple scenarios that can occur and you should be prepared for most of them. Create several budgets based on what the foreseeable future brings. That way you have a map if things take a rough turn down the road.
  5. Not asking for help. The employees know more about revenue and costs than you may think. You can gain valuable information by asking your employees how to cut costs and improve sales, they’ll even give you new ideas. Additionally, they’ll feel valued and will be on board for making any changes that otherwise may be difficult to implement.
  6. Not using the budget. After the budget is done, don’t file it away. Use it to analyze results and improve the process. Constant monitoring is critical to being successful in these economic times. The budget is the first step in creating a strong financial reporting system.
  7. Not sharing the results. If you’ve experienced positive results due to an employee’s or manager’s suggestion, make sure you give credit where credit is due. On the flip side if results are not favorable, be sure to inform but not blame. This information can serve as extra motivation to continue or change behaviors depending on the desired outcome.

What if you don’t have a budget or even know where to start? Most financial software offer tool (Quickbooks has a good budget tool). Budgeting is a key component in our Business PLUS Program, click here for more details.

Not Just the Numbers

I believe that every decision a business owner makes affects the bottom line. Therefore I employ a holistic approach to finance. Everything in an organization is interrelated. Accounting is just the method to report how well (or poorly) the business is performing.

Understanding the relationship between management decisions and financial results is key to improving overall performance.

Using  financial and business analysis tools, business owners need to review how each person and process directly or indirectly effects the finances of the company. If the end goal is to maximize profits, then each business process and employee has to work together toward that goal. If a bad process hinders employee performance or an employee doesn’t follow a critical business process, a breakdown is sure to follow and profitability can suffer (it often does).

Questions I often ask when working with clients:

  1. What’s your marketing strategy? Aren’t you my accountant, you know, the numbers person, what’s marketing have to do with it? Poor marketing efforts often results in inadequate revenue. Or buying too much advertising in what I like to call “spray and pray” marketing can be a huge waste of cash with little or no return. A good marketing plan with strong execution and perhaps most importantly, results monitoring, is critical.
  2. Do you have happy employees? And this relates to accounting how, exactly? High turnover increases your training costs, unemployment costs and results in lower productivity. Every time you have to re-train someone you lose time and money. Further, unhappy employees many not be as productive and take more sick days. Unhappy employees may reduce overall morale which could come out as poor customer service. Poor customer service may mean lost customers, therefore reducing revenue.
  3. Do you have good operations policies and strong execution? Aren’t you supposed to be crunching numbers in the back office? By operating your business efficiently, you reduce costs. Efficiencies are gained by establishing clear protocols on how operations are handled. Overhead is usually a key expenditure for most businesses. By managing your overhead correctly you can maximize profits. This doesn’t always mean cutting costs though. Growing companies have to be careful when planning overhead, which is where having good operations comes into play. With too little infrastructure, your company may not be able handle any more growth. Too much infrastructure may sink your ship. Good analysis and planning can help determine where you need to be.
  4. Do you know your break even point or profit drivers? Ok this sounds like your job. This is when “crunching numbers” is critical. Unfortunately, many financial professionals are too backward looking. I use historical data coupled with reasonable growth forecasts to help business owners determine the best strategy for moving forward.

By employing this “holistic” approach I believe business owners can dramatically improve their bottom line, have happier employees and a more rewarding business.

Stop the Money Leaks in Your Business

It’s almost winter time. That means you have to be careful about frozen pipes and water leaks. What about “money leaks”?  They can be just as detrimental to your business as a water leak can be to your home.

Examples of money leaks include:

  1. Overpayments in insurance due to incorrect classifications
  2. Vendor overpayments
  3. Employee time overpayments or wage disputes
  4. Unclaimed property
  5. Uncollected receivables
  6. Auto renewing contracts or fees
  7. Out of control bank fees
  8. Late fees and interest
  9. Bank errors
  10. Inventory loss
  11. Vendor cost increases
  12. Employee theft
  13. Disorganization
  14. Sales tax errors
  15. Under bidding, loss on jobs or projects
  16. Poor staff training
  17. Old computer systems

So how do you stop these money leaks from causing your business serious financial loss?  The problem is, you’re busy and your staff is busy and not everyone is familiar with the hundreds of ways your business can lose money.

For example, I listed “poor staff training” as a money leak. If you staff takes longer to do a job because they are untrained, you are paying more for that task. Worse, if they make a mistake that can affect your customers, it can cost you out of pocket.  Another example, if your computer systems are outdated and it takes more time to process transactions, that’s a money leak.

Unfortunately, most business owners don’t look for the money leaks until either they’ve found one by accident, ie. employee theft, or their business is no longer profitable.  In my experience, by implementing sound processes and  in your business by  hiring the right people, you can reduce your exposure to these losses. Also just by paying close attention you can reduce your risk of loss.

We offer a cash flow management service that can help find those leaks and keep your hard earned money from walking out the door. We’ve helped hundreds of business owners and individuals recover “lost money” and stop the leaks in their business.

If you want  more information on how to stop money leaks in your business, download our free report here. 

For a Free, no obligation consultation on our cash flow management services, contact us at 775-747-5833 or send an email to info@quickbooks-academy.com 






Are you STILL doing data entry?

Data entry is so time consuming and let’s face it downright boring. With all of the tools available are you still doing it (or paying someone to) ? I stopped several years ago. Keying in mountains of receipts, bank debits and credit card charges is time better spent doing other things. Imagine how much time and money you could save by significantly reducing time spent doing data entry. So what are your choices?

If you’re using the Quickbooks desktop version, there are several options that don’t cost anything extra. The requirement is that your version of Quickbooks has to be currently supported and you need internet access.

Bank account transactions and credit card transactions are the most common transactions that can be downloaded directly from most bank websites.  All you have to to is download it in a format that Quickbooks can read. This is usually a QBO format. This can be set up a couple of different ways. One method is free and requires that you download the transactions manually. The other method requires that you sign up through your bank for automatic download. There is usually a monthly fee for this. I’ve never paid for this service because quite frankly, manually downloading is very simple and easy once you get the hang of it.

In Quickbooks On Line,  you just follow the prompts to connect your bank or credit cards and they automatically update, every single day.

Once you connect your accounts you still have to categorized the transactions before they are posted to your company file. This is called “matching”. Once they are downloaded, the transactions go to a download screen where they attempt to match with transactions that are already posted. This keeps the system from automatically posting transactions you may have already keyed in. Any transactions not matched need to be categorized and posted. Over time the system “learns” what transactions go to which vendors and general ledger accounts. You can also set rules that re-name transactions and classify them automatically.  While you still need to categorize the transactions, you can spend more time analyzing your data rather than keying it in.

Other ways to reduce data entry

Do you have a separate point of sale system and then manually key in the data to Quickbooks? It’s very likely they have bridge software to eliminate data entry.

Some vendor invoices can be directly imported into Quickbooks from their websites once you log in.  Most payroll companies also  offer a Quickbooks download link to post all payroll transactions.

Pay-pal and Square have a Quickbooks integration as well. If you have an e-commerce site there are other solutions such as ECC Webgulity that provides a highly functional third party software bridge between Quickbooks and shopping carts.

Even if the above options are not available, if you can get the data into a spreadsheet, there are several programs that can import directly into Quickbooks from Excel. I’ve used Transaction Pro Importer, Big Red Consulting’s IIF creator and Dynamic Ventures. All of these programs cost extra and require some configuration. However, if you have large amounts of data to import, for example if you are converting accounting software or are doing a lot of back bookkeeping, the price and time to configure are well worth it. You can also create templates that can be used for recurring data imports.

What if you have a lot of receipts that are a mix of many different credit cards, debit cards  or cash? Linking the individual accounts may be difficult, however there is still an option to eliminate data entry. Shoeboxed will scan envelopes of random receipts and then provide you with a link directly to Quickbooks on-line or you can import using a spreadsheet importer. You send them a “magic envelope” full of all of your receipts and they scan them in creating a PDF copy of each receipt (completely accepted by the IRS ) and spreadsheet or direct link for Quickbooks Online.  Not only do you eliminate data entry but as an added bonus all those shoeboxes of receipts are nicely categorized, archived and gone. I would definitely call that magic!

I’ve emphasized the time saved by using data import methods but I would like to mention  what is gained. Traditional data entry can be plagued by errors but by using electronic methods, you reduce data entry errors as well. This in turn gives you better information to run your business. And it’s likely to be more timely, because, let’s be honest, who doesn’t put off keying in receipts? Timely, more accurate data can be a huge benefit to your bottom line.

Need help or guidance? Please contact me, I’ve  performed many Quickbooks integrations from very basic to extremely complex including  E-commerce, EDI  and POS solutions.




20 Reasons your business will fail and 10 why it may not. Reason #2: Trying to do everything yourself.

Reason #2 Your small business will fail: Trying to do everything yourself.

What can you do about it?

Leverage your time: Sure you can do it all, but what are your opportunity costs? Let’s say you are spending 5 hours a week maintaining your website and social media, but if you hired someone they could do it in less time. This would free you up for those 5 hours a week to make MORE money. You might actually make money by hiring someone to do this for you.

For instance, let’s say you would pay $50 an hour for web maintenance and that person (being an expert) could do it in 3 hours week. In addition, they keep up on all the new technology that you now don’t have to worry about. Then, you take those 5 hours a week and generate $500 in income. Now, you’ve made $350 by hiring someone! Or look at it this way, you’re spending $350 to do something you aren’t very good at and don’t love!

Make a list of those tasks which actually may be costing you money and work on outsourcing them or finding a way to get them done in much less time. Time is so precious, as an entrepreneur, you have to guard it and use it wisely.

Admit it, you are not an expert in everything! Do what you do best and hire out the rest! I always tell my clients, you do what you are good at and let me do what I am good at. Together we’ll make a good team!

20 Reasons your business will fail and 10 why it may not: #1 Cash Flow

This is the first in a series of posts that are designed to help business owner’s make better decisions. I truly believe that everything decision you make impacts the company’s success.

Reason #1 Your small business will fail: Not having enough cash to make it through the start-up period, a downturn or to handle a surge in business. This is the number one reason most businesses fail. Cash is king as you’ve quickly learned or are about to. This can be especially tricky if you are starting a new business or have no credit.

What can you do about it?

  1. Start with a budget and a plan, you need to know what your cash needs are on a weekly, monthly and yearly basis. Does your business generate enough cash to operate or do you need additional funding. Too many entrepreneurs get in way over their heads without a good plan.
  2. Download my cash flow spreadsheet and use it daily. However, this doesn’t work if you don’t have an up to date check register. You have to know where your bank balance is at all times. And this doesn’t mean checking your on-line balance every day to see what bounced and what didn’t. You need a foolproof system to make sure you track every single dollar coming in or out of the bank account.
  3. Learn how to leverage cash. Even if you have no credit you can leverage your cash to make it last longer. For example, you may be able to stretch some things out like payroll. If you are paying your employees every week, you may get a reprieve by paying every two weeks. There are lots of strategies you can employ to use your cash wisely and keep moving ahead. See what you can stretch out.
  4. Consider getting a loan from non-traditional sources. Let’s face it banks aren’t giving out loans like they used to, this means you have to find other funding sources. Look into grants or private loans. Do the research and find the cash you need. There are lots of pitfalls here, when you find a source of funding, talk to an unbiased third-party to get another opinion. Loans or investments from family or friends can seem like your wishes have been answered, but can quickly sour the relationship.
  5. Stop buying “things” for your business. If something isn’t generating more business or required to service your clients, you do not need it, do not buy it. Be tough with yourself on this point. We all buy a LOT of things we don’t need, because it’s a write off, because it would be cool to have or because someone has convinced us we can’t live without it. Make this rule: Everything over $500 requires a night to sleep on it before purchase. Impulse buys account for much of our wasted money. Be brutal! If you are especially in financial straits stop the spending, period.
  6. No, don’t pay yourself first. Pay employees and taxes first, pay your vendors second then pay yourself when your company (and you) have earned it.  If you don’t have enough cash to cover employees and vendors you don’t have enough cash for you. This is all part of planning your business cash flow.

Manage cash like a beast and account for it all properly. Failure to get this under control can have detrimental consequences to your business and your personal life. Think you’re out of the woods because you got a loan? Now you have to be even more diligent about controlling costs and tracking it all.


Quicbooks for Mac

I get many phone calls about supporting QB for Mac users. Many have become disappointed with the service of consultants in the business arena because Macs are different and so is Quickbooks for Mac and not every consultant understands that.

First of all, an iMac just works differently than a PC.  I’ve been using iMacs for about 5 years and a wide range of Quickbooks usage on Macs. Some people just buy QB for Mac (which can be a very different product than QB for Windows). It’s getting closer in look and feel but it’s still a different product.  Some users I support have an iMac and access a Windows cloud server to run a QB Windows version. Some users run a Windows emulator and run the QB version right on their iMac in Windows (this is what I do).  Yet others use Quickbooks on Line. An iMac is actually quite flexible in terms of what product you can use. It’s also becoming very business friendly. In fact it’s integration ability and sheer amount of power I’ve found on an iMac is pretty impressive.

If you use QB for Mac or some hybrid above, we can support any version or access method you find works for your business. For more information, please go to the About page and contact us at https://qbmess.com/about/

Managing Customer Deposits or Retainers

I get frequent Quickbooks questions and I believe that many users have similar questions. I will start posting answers to these questions in my blog for everyone. This week I received the following question:

Hi Tirena,

Please tell me if you know how to manage this issue. Often times, I get a retainer for a job. We create an invoice and customer pays the invoice. So, QB considers it an invoice paid and the account balance is $0. But, the system should show it as a credit. So, the question is “how do we bill for a retainer and have it show up as a credit?”

Dear Client,

The best way to handle this issue in Quickbooks is one of the following:

First, simply do not issue an invoice. Enter the payment on the customer’s account and then let it show as a credit.

However, customers often need an official document to pay from so you can either;

Enter an estimate or sales order (depending on your version) and then the customer can pay off that document and you enter the payment on the customer’s account showing the credit.


Enter an invoice then void it or right-click on the invoice to mark it as “pending”.

Once you start billing the customer for work, you can enter “real” invoices, then just apply that payment to those invoices. This is the easiest way to handle it in Quickbooks for most users. This method also gives your customer a clear accounting if you printed a statement for them.

Technically, your accountant will tell you, a credit or customer deposit should show up as a liability and then you apply it later. Quickbooks just doesn’t have an easy way to do this. If the retainer will be used up prior to year-end, then using the method above should be just fine.

Otherwise if it carries over or for Financial Statements for outside users (like banks or loans) or tax purposes your accountant has to reclassify it. Again for practical use purposes, using the method above will help to make sure you don’t make a mistake.

The harder, more technically correct way is to issue an invoice and use an item called customer retainer”. That item should be linked to an “other current liability” in your chart of accounts called “customer retainers”. Because until you earn it, it’s not income and it’s definitely not an asset. As you invoice your client for real work or product you can reduce the invoice by the amount of the retainer by either issuing a credit memo or entering a negative line item on the invoice using that same item called “deposit”. Then continue until you use up the deposit.

The only problem with this is you have to somewhat manually track the deposit. It’s all sitting in QB as a lump sum in that “other current liability” called “Customer Retainers” so you have to make sure you review that account regularly.

Either way should get you where you want to be, one is just a little more straightforward than the other. For companies that do a lot of retainers or have construction retention, there are other methods that are more complex than can be covered in a blog post.

Do YOU have a Quickbooks question I can answer? I’ve used Quickbooks since 1995 so there is very little I haven’t seen or fixed.  Send me a question and I’ll post the answer.  Go to the about page and send me a message https://qbmess.com/about/.

Reducing Credit Card Bill Confusion in Quickbooks

One of the biggest Quickbooks mistakes that I’ve seen throughout the last 18 years is the way credit card bills are handled. Quickbooks has one of the best credit card functions that I’ve used; however, many users struggle with entering their credit card payments every month.  Some users enter a check for the payment and select an expense account. This method will work IF and only IF the entire bill is being paid in full.  If you’re only making payments, this can present a problem because the balance isn’t being tracked and the expenses are not complete.  

Some users enter a bill for the credit card and pay it through Accounts Payable.  This also can work but  is not convenient if you use the credit card to pay another bill that’s entered in Accounts Payable. 

The correct method:

  1. Make sure the credit card account is set up as a type “Credit Card” in the Chart of Accounts. 
  2. Make sure you only use one Quickbooks account per card or account.  Mixing them will cause a lot of confusion. To distinguish the cards, I recommend putting the last four digits of the account number in the Chart of Account name.  If you have a company account with several cards, I recommend using sub accounts to track them.
  3. Every month, enter the credit card charges by going to Banking ->Enter Credit card charges. You can enter these in bulk or enter each charge individually.
  4. To pay a bill using the credit card, go to Vendor -> Pay Bills and select the bill, change the “Method” to Credit card and select the credit card to use.
  5. When paying the credit card, either enter a “bill” or do “Write checks” and chose the credit card account.
  6. When a statement is received, reconcile it to Quickbooks by going to Banking->Reconcile, then select the credit card account.  Treat the credit card just like the bank statement; Every charge and payment should appear and be reconciled each month.

When the credit card feature is used in the the intended way, there is less room for error and more accuracy in reporting.

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