5 Fast Ways to See Key Reporting with QuickBooks

Posted on April 30, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

Let’s face it – you’re busy, you have information you need to see, but don’t want to spend all day getting it.  Especially during your busy season!

First, decide what information you want to see. Such as Accounts/Receivable, Accounts /Payable, bank balances, Profit and Loss, Balance Sheet, job costs, payroll…  If you customize, by all means memorize the report so you don’t have to keep customizing every time you run the report.

Second, how often do you need to see the report (s) – daily, weekly, monthly quarterly, after project, during project?

Here are 5 ways you can view multiple reports quickly.

  1. The Company Snapshot – Still one of my favorite features in QuickBooks. You can check on payables, receivables, account balances, see trends in income and expenses, reminders and much more – all in one You can choose from 12 possible reports, organize them any way you want and choose the time frame from the drop-down menu (no custom dates). Past due invoices and bills show up in red, making it easy to pick them out.  You can even print the snapshot.  Click here to see how to customize your snapshot
  2. Trackers – While I love the Company Snapshot, Intuit has been putting their energies into the trackers.
    1. Income Tracker – What I like about the Income Tracker is the ability to see open Estimates and Sales Orders in addition to Open Invoices and Overdue Invoices – all with total dollar amounts! Starting with 2015, they added unbilled time and expense. Seeing those numbers will get some people moving!
    2. Bill Tracker – New in 2016 was the Bill Tracker. Like the Income Tracker, you can do 1 action on multiple transactions at one time

Click here to see how you can customize the trackers.

  1. Put your report(s) on your toolbar. While I’m a firm believer that all QuickBooks users should have their own login information for security reasons, another benefit is that you can customize QuickBooks to suit your personal preferences – including what’s on the toolbar.  So if you have a report you want to see frequently, click on View>Add (and it will list the name of the report), then give it a name (I recommend keeping the name short). Next time you want to review that information, it’s simply a click away!

Click here to see how to work with reports on your toolbar

  1. Process Multiple Reports – Run several reports at one time. You can click on Reports>Process Multiple Reports then choose the reports and dates. Guaranteed this is faster than you doing these reports individually.

Click here if you’d like to see this in action.

  1. Run a Group of reports. This is definitely a very powerful timesaver in 2 ways. First you save time because you simply double-click on the Group to run a whole bunch of reports instead of individual reports one at a time (Reports>Memorized Report list)

Second, Groups help you organize your reports so you can find reports more easily. How many of you have a ton of reports, all with similar names and you don’t know which one you need to you use so you create another?!

When you run/create a report, save the report to a Group.  Some Group ideas could be weekly, monthly, quarterly, during a project/job, after a job, open orders… you get the idea

Click here to see how to create and use groups

  1. Bonus: If you have multiple companies and use QuickBooks Enterprise Solutions, Combine Reports from Multiple Company (Reports>Combine Reports from Multiple Companies). Then select the company files, the reports, date range, etc.  Your reports will appear in Excel with columns for each company.  Since the chart of accounts is often different between the two companies, having the software create the spreadsheet for you is a huge timesaver.

So don’t spend more time than you need to see your reporting.   Get the information you need so you stay on top of your business, sales, jobs and head out the door sooner, be it for work – or fun!

I’d love to hear which of these you implement and how it helps you.

Posted in Business Finance, Cash Flow, Features, Job Costing, Productivity Tips, QuickBooks | Tagged , , , , , , , | Leave a comment

TRACKING VEHICLE AND EQUIPMENT COSTS

Posted on April 26, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

If you’re a contractor, one of the important factors in estimating costs is recouping equipment & vehicle costs. It’s simpler when it’s used for only 1 job or one type of job, but when it’s used frequently for a variety of purposes, it can be tougher. I’ve seen a variety of techniques – some have worksheets, some ask their accountants or peers, some use QuickBooks classes, and some just guesstimate. There are 2 parts to equipment costs for jobs – what you need to cover for the cost of ownership for this piece of equipment (or vehicle or trailer) and how much it cost to use it on the job. Today let’s look at a way that might be useful in tracking the actual costs of you have a better idea in the future how to estimate.

Chances are, you have these costs in your books, but they’re scattered – depreciation in one place, insurance in another, maintenance & repairs somewhere else. That can make it tough to gather all that information to say here are your costs.

First, you can take advantage (if you haven’t already) of using the Fixed Asset Item List so at least you have 1 place where you can see all your individual fixed assets.

When purchasing the item, choose the Items tab on the check, credit card charge or bill and then type in the name of the equipment or vehicle.

When asked what type of item, select Fixed Asset and you’ll see this screen

Now to tracking costs. Here’s an idea that has worked for some of my clients.

1. Treat them as “jobs” (or sub-customer if you use QuickBooks Online) of a customer called Equipment or Vehicles. List each one you want to track.

2. As get bills, write checks or have credit card charges, use Account (or Item) you want (e.g. repairs & maintenance, registration, insurance, interest…) and select the specific vehicle or piece of equipment for the customer:job.

3. Then you can run reports like P & L by Job or Job Profitability Summary report for your equipment & vehicles.

a. Assuming you want to view more than one “job”,
i. Click on Customize
ii. Click on the Filters Tab
iii. Scroll down to Name and select Multiple names…

Either type the name you want or scroll down and select the “names” you want

Would love to hear if you decide to use this method, and if so, how you like it. Let me know if you have any questions or need assistance.

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Save Time with These Mobile Products

Posted on March 30, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

With today’s technology, we’re able to do so much more by web and smart devices.  You can save time (and not worry about forgetting), if you can jot down notes or handle details quickly.  And for many, QuickBooks is still in the office. So here are some task-specific products that work with QuickBooks you can use away from the office saving you time and sanity!

Mobile Lead Tracking (CRM)

Use your smartphone to enter new leads or to add notes when you’re meeting with them mobilewith Method CRM. This is a product I use, too. You can assign tasks to staff and have reminders sent out.  You can easily look at a list of leads and opportunities when away from the office.  If a lead becomes a customer, with a click of a button you can sync with QuickBooks!  – free 30-day trial

 

Mobile Invoicing

  • Method CRM – With Method CRM, you can also invoice from your phone, tablet. You can use the customized invoice templates you have in QuickBooks. You can also check on customer balances. free 30-day trial
  • Bill & Pay– I love Bill & Pay for many reasons (integration with QuickBooks is one), but it does so much more.  Besides giving customers a way to pay you online, help manage collections automatically, you can email an invoice from Bill & Pay to your customer and then sync this invoice with QuickBooks. This is great for when you’re not in your office or in QuickBooks but want to get an invoice out the door!  Click here for more information on this product and free trial.  Be sure to use my invitation code muirassoc.

Mobile Payments

Intuit Payments has the best integration with QuickBooks (making bank reconciliat

mobile

ions easier), no contract and has made lots of changes to their pricing so I always suggest tryingIntuit before going elsewhere.  Do reach out to us so we can help you get the best deal with Intuit.

With Intuit payments, you can process checks or credit cards.  And using their GoPayment (included with your payment account), you can swipe the card with your smartphone or tablet (no waiting for the “check is in the mail”) and you get the lower credit card processing rate. Click here to see how it works

Or you can access your merchant account online to charge a customer’s credit card or their check information.

As a ProAdvisor and Premier Reseller, we’re able to get our clients special deals with Intuit ‘s merchant services. We can also help you get it setup and show you how to use it if you need.

Mobile Time Tracking

There are lots of products out on the market nowadays that integrate with QuickBooks. Often industry specific works best because they understand you.  Industry specific often includes other features.  A few my clients use include CLIP, HindSite and LMN. If you’re not ready to sign up for industry specific, then at least for the short-term, take a look at TSheets – they have a 14-day free trial (let me know if you need that moved to 30 days) and you get a 10% discount off your first year.  I can tell you from first-hand experience that entering time sheets for payroll is very time-consuming (and hence costly).   Be sure to use my invitation code muirassoc if you decide to use it, so you save on your first year

If you have questions about these products or wish I discussed other mobile products, let me know!  So what are you doing out in the field that you have to wait to enter until you get to the office?  Perhaps there’s a solution for you.

Posted in Business Finance, Credit Card Processing, Productivity Tips, QuickBooks, Remote Access | Tagged , , , , , | Leave a comment

Going Mobile with QuickBooks

Posted on March 26, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

Do you need mobile access to estimates or customer payment information? Or do you have staff in multiple locations who need remote access to QuickBooks? I frequently get requests from clients who want or need to access their QuickBooks remotely. I thought I’d share some options with you..

Remote into your computer. GoToMyPC, LogMeIn and TeamViewer are the most popular. This way, you can use a desktop version of QuickBooks (Pro, Premier or Enterprise), while accessing remotely. You have access to your other software on the computer, so this is a popular option for those out of the office. Because you literally take control of a computer, the computer must be left on. If more than one person needs access to the same computer, this doesn’t always work well. If you are in an office environment, then you need to determine if there’s a risk of someone seeing you work on your computer remotely. If you still decide to use it, I recommend having a Windows password, logging out of Windows AND turning off your monitor!

QuickBooks Online (QBO) – This product is constantly evolving and definitely growing in popularity. As long as you have Internet access, you can work in the data file and have multiple users. You’re always in the most current version and someone else takes care of the backups. You pay a monthly fee. Still not nearly as feature-rich as the desktop and falls short for job costing (no job cost reports, no progress invoicing and can’t job cost labor) and inventory. For now, Intuit is keeping QBO accounting focused and relying on add-on products for other needs, so you might pay more. Also, the subscription is per company, so if you have more than one company, you’ll need more than one subscription. If you’re currently in a desktop version of QuickBooks, please note that the online version looks and acts very differently (2 different product development teams). Some have been okay with the transition, some have loved it and others hated it so much they moved back to desktop. If you use an add-on product (or plan to), find out which version of QuickBooks the product works with; if they work with both desktop and online, find out the differences.

Hosted Solution – Similar in some respects to QBO in that your QuickBooks software and data reside on a remote server, but the difference is that you can use a desktop version of QuickBooks. So, you get the flexibility of Online QuickBooks but the additional functionality of the desktop QuickBooks! If you already own QuickBooks, then your license is used. If you don’t have QuickBooks, there is an option to lease Pro or Premier or Enterprise. (Pro supports up to 3 users, Premier up to 5 users, and Enterprise up to 30 users.) You can also have access to Microsoft Office and other products if desired. Just like QBO, you don’t have the upkeep of another computer or server and the “host” makes the daily backups for you. You pay a monthly fee per user to have it hosted, which is different than QBO. If you are interested in a hosted solution, there are about 15 Intuit-authorized hosts (they have met the security and other requirements with Intuit), but you might also find that your local IT company offers these services as well. Not all hosts are equal in terms of price, customer service and 3rd party applications they support. So if you use (or want to use) a 3rd party software, you need to ask if they support that software. If not, sometimes they have options, albeit at a higher price point.

Enterprise Solutions – With Enterprise, you can access your data from anywhere you have Internet connection by taking advantage of Remote Desktop (aka RDP and formerly Windows Terminal Services) with a server that supports RDP. In essence, you access your server and both Enterprise and your data are there. This is different than the traditional method where the software is on your computer and you access the data on the server. Therefore, RDP requires a different (and “beefier”) server. Enterprise looks/acts like Premier but has additional features, including tighter security and more users (up to 30). Enterprise now comes in 3 levels (Silver, Gold & Platinum). With all 3 levels, you get unlimited US-based tech support, the new version when it comes out, Intuit Data Protect, access to 12 hours of QuickBooks training online, data recovery services, and preferred rates with Intuit Payments (credit card processing). The Gold level includes Intuit’s unlimited Enhanced Payroll and direct deposit so many save money with the gold subscription. Platinum includes the gold features plus additional inventory features (multiple locations, FIFO, lot/serial number tracking, quantity discounts, and more). As a QuickBooks ProAdvisor and an Intuit Premier Reseller, we stay up to date on promotions and get special deals, so let us know if you would like to know more about this option.

Add-ons: Do you need access to everything or just certain tasks? If you don’t need to access everything, then perhaps a web-based add-on product is the way to go. There are lots of add-ons that address certain needs, e.g. time tracking, CRM, and estimating.
If you look at industry specific add-ons, they typically address several areas, such as CRM (leads/opportunities), estimating, time tracking and project management. And because they’re industry-specific, they “understand” you :
Method is a web-based highly-customizable program that gives you a form of remote access to your QuickBooks – in real time! I use it mostly for CRM, but it can handle lead generation, assigning tasks, estimating, sales/work orders, invoicing, purchase orders, payables and much more so it can be a great way to get work done away from the office.

If remote access is important to you, then before you make the final jump, contact our office so we can help you choose the option best for your situation. In some cases, we can save you money depending on what we determine is best for you.

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Save Time with Payroll Templates

Posted on March 19, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

 For those of you with seasonal businesses, such as landscapers, painters, remodelers and other contractors, you may find this time of year you are doing lots of hiring, depending on the size of your business. And anyone who’s been involved with that process knows that it can be very time consuming! For those of you who are responsible for setting the employee up in QuickBooks, the payroll template could help you save some time.
payroll template

The simplest way is to go into the Employee Center and click on Manage Employee information >Change New Employee Default Settings (shown on the right). But you can also access the Employee payroll template from the Company Payroll Preferences (below).
payroll templateOnce in the the template,

  • You can choose the most common payroll items, such as hourly wage, overtime, holiday pay, health insurance, etc.; it’s up to you whether or not you enter any default rates.payroll template
  • You can select the Payroll Schedule or Pay Frequency
  • You can opt to have time data to create paychecks (I recommend that for job costing)
  • You can even set up some of the tax defaults. Some may leave Federal alone but most of you could set up some state defaults (shown below)

 

payroll template

 

 

 

 

And while we’re on the topic of employees, those of you in versions older than 2015 are missing out on all the additional fields now available to help you through the hiring and employment process.

payroll template

 payroll template

So check out the payroll templates and knock some time off the employee setup process. Let us know if we can be of any assistance.

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Are Your Workers Contractors or Employees?

Posted on March 15, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

If you have workers in your business, you likely made a decision when you hired them as to whether they should be an employee or a contractor.  If all you hire is employees, then you have nothing to worry about.  But if you hire contractors, there may be some financial risk you may be taking that you may not know about.

Any person that runs a business as a sole proprietor that you pay money to for services rendered is considered a contractor.  One difference between an employee and a contractor is that an employee receives a W-2 and a contractor that you have paid more than $600 per year by check receives a 1099.  There are many other paperwork differences, and that’s the major one.

One of the biggest mistakes when a business owner hires a worker is thinking that they can decide to classify the worker as a contractor if they simply want to.  Unfortunately, it’s the IRS that decides on the classification, not the worker or the business owner.

What’s the Risk?

There is no risk from an IRS standpoint to classify a worker as an employee instead of a contractor.  There is significant financial risk if you incorrectly classify a worker as a contractor when they should be classified as an employee.  You may be liable for back employment taxes plus penalties and interest if the IRS re-classifies a worker from contractor to employee, and this can go back many years.

To calculate your risk, take roughly 20 percent of the payments you made to contractors.  This amount plus late fees and penalties can add up to what you could owe the IRS if you are mis-classifying workers and the IRS finds out.

IRS’s Employee vs. Contractor Rules

The IRS focuses on three factors to determine whether a worker should be a contractor or an employee: behavioral control, financial control, and type of relationship.

If you control both what and how a task is to be done, you should probably classify your worker as an employee.  If you can control only the results you want, you may be able to classify the worker as a contractor.

There are many other rules about this classification, so be sure to check with your tax accountant for more information.  Also, for those of you that love tax research, here’s a link that gives the full details of the IRS rules:
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

Having a successful business is all about taking calculated risks; however, you may not have known the risk you’ve been taking with contractors that you’ve employed.  For the IRS, misclassifying workers is a “red flag” area, meaning they are paying extra attention to it.  If you aren’t sure, then contact your accountant or an HR professional or even the IRS to help you decide.

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4 Ways to Get Your Estimates Entered Quickly In QuickBooks

Posted on March 12, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

For those who job or project cost, it all starts with the estimate.  When the estimate is simple, then it’s often easy to create in QuickBooks. But for many of you, you either have many of the same types of estimates (such as maintenance jobs) or have more involved estimates such as construction, landscape design/build projects, etc.   So here are 4 ways to get your estimates entered faster.

  1. Use Item Groups – This is a fast way to pull multiple items onto an estimate. While you might select only 1 item (group), you will see all the items in the group listed on your estimate. Examples –  items in a display, components of an outdoor fountain, labor and materials for a shed, what’s included in a maintenance contract…   Item Groups are also a way for you to have the detail in QuickBooks while showing your customer only the summary.  Here are a couple screen captures. For more details on creating Item Groups, you can read this article we wrote).Estimating
  2. Duplicate – If you need to create an estimate similar to another one you’ve done, you can duplicate the estimate, change the customer and any other pertinent information. This is also useful when you have a customer wanting to see multiple estimates for pricing or other reasons. Right-click on the document to get the pop-up menu below

Estimating

  1. Memorize Estimate – Need to do this estimate (or type of estimate) frequently? Then memorize the entire estimate. This is especially helpful for construction jobs where numerous items/cost codes are used or for special types of project – such as office/home additions, backyard “kitchens”, patios, etc.   You can either click on Memorize on the ribbon bar or right-click to memorize.  Then to use this later, click on Lists>Memorized Transactions.   You might also want to memorize the estimate with $0 and/or 0 quantities so you will have to fill it in.  You don’t want to accidentally think it’s done when it’s not!Estimating
  2. Import – Many of you either do your estimating in a spreadsheet or 3rd party software, which often suggests some level of complexity to the Estimate.   Some 3rd party estimating/bidding or industry-specific software can integrate with QuickBooks so you can import the Estimate making this easy once it’s setup and a big time-saver.  Even if you use Excel, there are products out there you can use to import the estimate.  Usually the biggest issue is the items.  In Excel, many times people are inconsistent with how they reference their services, materials or subs, so importing could inflate your Items list.  However, if you can be consistent in your terminology, this can be a big timesaver.

You may find you use a combination of these options, but you will definitely save lots of time in entering your estimates.

If you want help with any of these ideas, let me know.  I would love to hear which method(s) you have found the most effective for you!

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Estimating in QuickBooks

Posted on March 9, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

Are your estimates in QuickBooks?  If you do job or project costing, then I believe some form of your estimate belongs in QuickBooks. Even if you just give your customer a fixed price.  All your other numbers are there – invoicing, job costs, payroll….  Chances are, you’re creating some form of those reports already, but you are probably pulling some numbers from QuickBooks, some from a stack of receipts for the project and then entering them either in a spreadsheet, on the back of a project folder and using a calculator. Doing that elsewhere can be very time consuming and double work.

If your estimate is in QuickBooks, with just a click or two, you can easily run the following reports:

Figure 1:  Estimated vs Actual

Estimate

Figure 2: Cost to Complete (Premier & Enterprise)

Estimate

Figure 3: Committed Costs (Enterprise)

Estimate

Figure 4: WIP Summary (Enterprise)

Estimate

If you enter estimated quantities (such as labor hours) and run payroll in QuickBooks, you can even get an Estimated vs Actual Hours report!

If your customer wants to make changes along the way, as so frequently happens, QuickBooks will let you do a change order and can keep track of the changes for you.  And, you can easily invoice off the estimate, order materials or even enter orders for work you will sub out, so once the estimate is in, often other tasks can be done with just a couple clicks.

If your estimating is fairly simple, then usually the regular estimate form in QuickBooks works. You can enter your anticipated costs for the various items, mark it up and arrive at a number you want to charge your customer.

I will admit that there are many times when the estimate form in QuickBooks can be inadequate so a spreadsheet or other estimating software often works better. But some form of the estimate still belongs in QuickBooks making it easier to review the job.  How much detail to have in QuickBooks depends on what you want to see in your reporting when you’re reviewing your job reports.

There are several ways to enter an estimate, including Memorized Estimates or importing using 3rd party software.

Let us know if you’d like help with getting your estimates in QuickBooks!

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Where Did All My Money Go? Understanding the Statement of Cash Flows

Posted on February 19, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

If you’re like most QuickBooks users, you rely on the Profit & Loss Standard report to monitor how your business is doing. However, you may have noticed that it rarely, if ever coincides with what’s in your bank account (hint: it’s not supposed to).  An overlooked, yet valuable report, is the Statement of Cash Flows. The Profit & Loss Standard (P&L), provides only partial insight into the health of your business – what you earned and spent. The Statement of Cash Flows explains your change in cash on hand.

Cash versus Accrual

Unlike some accounting packages, QuickBooks allows you to run most reports on either the cash or accrual basis. Cash-basis means that transactions don’t appear on your Profit & Loss statement until either your customer pays their invoice or you pay a vendor (or employee). So, if you enter a bill in QuickBooks to be paid later, the expense won’t immediately appear on a cash-basis P&L. Similarly, invoices that you send to customers won’t immediately appear on a cash-basis P&L. The expense appears when you write a check to the vendor, and the revenue appears when the customer pays their invoice. Consequently, cash-basis reports don’t necessarily report a company’s true financial performance. You could have a great-looking Profit & Loss Report, but a bunch of unpaid bills in QuickBooks.  For that reason, many accountants prefer that business owners use accrual-basis reports.

Cash flow, Profit, accrual, bank balance, QuickBooks reports, financials

Figure 1: Cash-basis reports only reflect paid transactions.

Accrual-basis reports recognize the effect of every transaction on your P&L immediately. Customer invoices appear on accrual- basis P&L reports as soon as you save the transaction, as do unpaid vendor bills. You can easily see the significance of these differences in Figures 1 and 2.

Cash flow, Profit, accrual, bank balance, QuickBooks reports, financials

Figure 2:Accrual-basis reports include all transactions–both paid and unpaid

Accrual-basis reports provide a much better picture of where the business stands, but can make it harder to understand your current cash position. However, a cash-basis P&L isn’t the answer for managing cash flow. Your business has many transactions that affect your Balance Sheet instead of the P&L, such as loan payments or owner distributions. (Remember, the Balance sheet tracks assets, liabilities, and equity.) The Statement of Cash Flows explains your change in actual cash on hand based on all your cash transactions – whether they affect the Balance Sheet or P & L, making it a great addition to Balance Sheet and P & L.  (Audited financial statements are required to show all 3 reports.)  So let’s take a closer look.

The Statement of Cash Flows

Suppose your cash balance at the beginning of your fiscal year was $100,000, and today it is $75,000. The net income figure on your P&L won’t give you the full details on why your cash balance decreased, but the Statement of Cash Flows will. To do so, choose Reports > Company & Financial > Statement of Cash Flows.

This report automatically defaults to This Fiscal Year-To-Date, but you can choose another time period if you wish.   If this is your first time, I recommend starting with 1 month, (no more than 1 quarter), until you are more comfortable with reading it.

Your Statement of Cash Flows report will include up to three major sections, as highlighted in Fig. 3. (Don’t worry if your report only includes one or two of these sections — sections appear only when you had relevant transactions during the report period.

  1. Operating Activities
  2. Investing Activities
  3. Financing Activities

Cash flow, Profit, accrual, bank balance, QuickBooks reports, financials

Figure 3:Statement of Cash Flows

 Operating Activities

The Operating Activities section of the Statement of Cash Flows recaps activities related to running your business. This section will always start with Net Income (comes from the bottom line of your accrual-based P & L), followed by an Adjustments section. The Adjustments add or deduct to your Net Income. For instance, Net income is $112,999 but the Net Cash from Operating Activities is $42,584. The Statement of Cash Flows identifies the $70,415 difference. Let’s take a look at a few of the items:

  • Accounts Receivable (-$71,759): During the report period we sent invoices to our customers, of which $71,759 remain unpaid.  Because we included these invoices as income in our P & L but have not actually received the payment, QuickBooks deducts them from the Net Income from the P & L.
  • Inventory Asset (-$17,354): Amounts that we spend on inventory don’t become part of Net Income on our P & L until we’ve sold the items. At that point QuickBooks posts the expense to Cost of Goods Sold, and reduces our inventory account accordingly.  But in this instance, we paid cash to purchase our inventory, so we deduct that amount is deducted on our Statement of Cash Flows.
  • Remember: The purpose of the Statement of Cash Flows is to reconcile Net Income with the actual change in cash account(s). Thus non-cash activities, such as unpaid customer invoices or prepaid expenses get subtracted or added from Net Income, so that you can get a clear picture of where cash went during the report period.
  • Accounts Payable ($13,537): We’ve entered bills into QuickBooks totaling $13,537 that we haven’t paid yet. While we deduct it on the accrual P & L, because we have not actually spent the money to pay those bills, we add that cash back in.
  • Federal Withholding: ($1,364): We’ve withheld income tax from employee paychecks in QuickBooks totaling $1,364 but we haven’t paid it yet, so we add that unpaid “deduction/liability” to our cash.

Want to know where QuickBooks got these numbers? Simply double-click the number in question to get a more detailed report.  You can even choose to total by week or month if that makes it easier for you to follow.

Cash flow, Profit, accrual, bank balance, QuickBooks reports, financials

Figure 4: A detailed report appears when you double-click on an amount within a QuickBooks report

Investing and Financing Activities.

As you look at the Statement of Cash Flows, you will most likely see one or two other sections:

  • Investing activities may include owner contributions as a source of cash, or in the case of the report in Figure 3, the purchase of $11,500 in furniture as a use of cash.
  • Financing activities will show borrowing on a line of credit or other loan as a source of cash, while loan repayments (excluding interest) will appear as uses of cash. It’s a nice way to see all your loan payments in one place. In the end, you’ll see exactly what caused your cash balance to increase or decrease during the report period.

Organizing the Statement of Cash Flows

QuickBooks makes an educated guess at what accounts in your Chart of Accounts should appear on the Statement of Cash Flows. Unless you are an accountant, I recommend letting your accountant review this report to see if you need to change what accounts appear and in which section on the report.  If there needs to be any change(s), simply click the Classify Cash button then enter a checkmark in the appropriate column for the account(s) in question.

Cash flow, Profit, accrual, bank balance, QuickBooks reports, financials

Figure 5: QuickBooks allows you to classify accounts as operating, financing, or investing activities

So next time you want to figure out why your bank balance and cash-based P & L don’t seem to agree, take a look at your Statement of Cash Flows.   I will admit, to those who don’t have accounting backgrounds, this may look a little confusing the first time or two (or three) that you look at it, but hopefully this article will help you understand it and you can get a better handle on your cash flow. And the more often you review it, the more comfortable you’ll be.  If you have questions, feel free to contact us or your accountant.

 

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Two Helpful Cash Flow Products

Posted on February 16, 2018 by Monica Mitchell Muir, Advanced Certified QuickBooks ProAdvisor

Get paid quickly and easily – A product that you may find very helpful in getting customer payments is Bill and Pay.  Features that I like include:

  • Customers can pay you online – with or without an account
  • With customer permission, you can get paid automatically even when the invoice amount varies
  • Customers can pay from a statement (especially useful if you send a statement out instead of multiple invoices)
  • You can have reminders & past due notices AUTOMATICALLY sent out to your customers – for some of you, that would be a huge timesaver
  • Integration with QuickBooks – I don’t even have to have QuickBooks open! It’s nice to see that there’s money to deposit J
  • You can even get a report showing the emails sent (I haven’t figured out how to do that in QuickBooks except for 1 at a time)

Click here to see a short demo.  If you’re interested in signing up, be sure to use my invitation code MUIRASSOC.

Need a loan – and quickly?  Try FundBox.  FundBox works off of your open invoices.  Let’s say you have an invoice for $5000 that hasn’t been paid yet.  You simply log into FundBox, click the invoice you want paid (in this case the $5000 invoice) and the $5000 goes into your bank account the next business day (that’s fast!!) – and NO loan application. Before you click submit, FundBox will tell you the maximum amount this loan will cost, so there are no hidden fees. Then over a period of 12 or 24 weeks (or faster if you want – and with NO prepayment penalty), FundBox will take the 1/12th (or 1/24th) of the $5000 back plus their interest.  It syncs with your QuickBooks and is simple to use.  You can set up FundBox any time – it’s free until you need to borrow money so you just pay the interest on what you borrow and for the length of time you borrow (can’t be longer than 24 weeks).   It’s great for those who sometimes get into cash flow crunches (as so many businesses do) – especially during your slower times of year. 93% of businesses who try FundBox use it again. If you’re interested in taking a closer look, click here.  It’s quick and easy to sign up, and then connect your QuickBooks.  You can see what it would look like, how much you could be advanced, what it would cost without actually committing

If you try either of these, I’d love to hear which one(s) and how it works out for you!

Posted in Business Finance, Cash Flow | Tagged , , , , , , , | Leave a comment