Settle Up Fast with Quickbooks’ Bill Paying Tools

Do you have a business plan? If you don’t, even if you’re a sole proprietor, you should. Business plans can be a good barometer for the health of your finances as a way to gauge whether or not you’re on the right path. If you don’t have a business path (or if yours is less than organized or polished), you can use QuickBooks’ tools to create or fine-tune one. We’ll show you how to use these tools to get the job done quickly and easily.

The game plan
To get started, select Company > Planning & Budgeting > Use Business Plan Tool and you’ll see what’s displayed in Figure 1. QuickBooks’ business plan tool uses a convention that other Intuit products use frequently: a lengthy wizard that walks you through the entire process. This tool supplies information and asks questions about what’s needed on each screen. You fill in the answers (or select from options) and the business plan wizard works in the background to place the data in the correct place.

The first topic you’ll be asked about is your company.  If you’re a new business, you’ll have to estimate in some areas, like the percentage of your sales that will come through credit. In other cases, you’ll be better able to answer in concrete terms. For example, what will your customer payment terms be? When do you want your business plan and financial projection to start?

Figure 1: QuickBooks walks you through the process of creating a business plan with an easy-to-use interface.

What’s coming in?
Your income is up next, and this will take some figure-pulling (and maybe some hair-pulling). You can either fill in a spreadsheet manually, adding up to 20 categories, or use the Income Projection Wizard, as pictured in Figure 2. If you’ve already been working with your data in QuickBooks, the latter is certainly recommended. These numbers will be scrutinized very carefully, perhaps put under the microscope more than any other element of your business plan. Make sure you can back them up.

Figure 2: The QuickBooks Income Projection Wizard.
If you’re projecting manually, be prepared to calculate the Cost of Goods Sold (COGS).  This number contains three pieces:

• Material: What percentage of each dollar pays for the cost of product(s)? If you’re a service company, enter the associated materials costs.

• Labor: What percentage of each dollar is tied to the employee costs associated with goods production?

• Other: What percentage of each dollar goes into other costs?

Business expenses and more
You have the same two choices when you’re entering your expenses. You can enter them manually or use the Expenses Projection Wizard. If you do the latter, your projections can be based on either the last 12 months of history or an average from the last 12 months.

In the Interview section, you’ll need to have numbers available, including:

• Beginning account balances
• Assets you own or need to buy
• Cash available to invest (if applicable)
• Amortization and depreciation

As in other areas of the business planning tool, existing data in QuickBooks will be automatically filled, such in Figure 3.

You’ll also answer questions here about inventory (i.e., fixed or variable, minimum balance), vendor financing,  lines of credit, and your total credit limit.

Figure 3: The business planning tool pulls in existing data from QuickBooks.

Writing your plan
Now it’s time to write, but don’t panic thinking you’ll face a blank screen. The Plan section is divided into three sections, and you can toggle between them. You can view the actual plan outline tree, which is a window that provides tips and examples, as well as a text entry window, as shown in Figure 4.

Though this is primarily a text-based section including information about things like your company background, products and services, and the competition, you’ll supply some numbers, too, and the rationale for arriving at them.

Figure 4: The Plan section is divided into three main sections.

Once you’ve completed all of the sections, you simply preview and print your plan. QuickBooks assembles it with all of the text, tables, graphs, and charts in the right place, and presents you with a professional business plan that you can take to the bank, or simply revisit from time to time to make sure you’re on course.

Unfortunately, your work with QuickBooks doesn’t end just because it’s summer, the weather’s great, and school’s out. But there are ways to minimize your time spent managing your money and maximize your time at the beach. Memorizing transactions is one such way. When you memorize a transaction, QuickBooks remembers all of the relevant details and either processes it automatically or reminds you that it’s due.

A memorized transaction could be bills that show up in the same amount every month, like your Web-hosting payment, or obligations that change regularly, like your utility bill. You can specify the amount due if it’s static, or leave the amount open if it regularly changes, making this feature very flexible and easy to set up.

Jog your memory
Once you start teaching Quickbooks to memorize transactions, you’ll wonder why you didn’t use this handy feature before.  Say you want to automate your electric bill. First, create a transaction without an amount, like the one shown in Figure 1. Click the Edit menu, and then click Memorize Bill. The dialog box shown in Figure 2 opens.

Figure 1: To memorize a bill payment that changes regularly, fill out the transaction form minus the amount.

Figure 2:  When you click Edit/Memorize Bill, this dialog box opens.

The vendor’s name appears in the Name field. If you want a more descriptive name so you’ll recognize it in a list, change it here. You have a few decisions to make in order to set up the repetitive transaction:

• Do you want QuickBooks to remind you in advance of the bill’s due date? Click Remind Me.  If not, click Don’t Remind Me. And if it’s a bill whose amount remains the same every time, you can click Automatically Enter. If the transaction is a part of a group you’ve created, click the With Transactions in Group button.

• How often do you pay this bill? Generally, it will be monthly, but QuickBooks gives you several options.

• Check the Number Remaining box if you have a transaction with a finite number of payments, such as paying off a company vehicle.

• How much warning do you want? Enter a number in the Days In Advance To Enter field.

• If you’ve created a group and you want this transaction to be a part of it, select the name from the drop-down list.

When you want to use a memorized transaction, click the Lists menu, then Memorized Transactions List to open the dialog box shown in Figure 3. You can also “memorize” repetitive reports. Open the report you want to work with by clicking, for example, Reports/Company & Financial/Profit & Loss YTD Comparison. A dialog box like the one in Figure 4 opens. Accept the name presented, or change it to one that you’ll more easily recognize. If you want to save reports in groups you’ve created, like Accountant, select the group from the drop-down list.

Figure 3: The Memorized Transactions List allows you to customize to your preference.

Figure 4: The Memorize Report dialog box…

Thanks for the memories
Memorized transactions and reports can not only save you time for more summer adventures: They provide another way for QuickBooks to give you a quick look at what you owe and are owed, and how your company is performing overall.

Day-to-day transactions like receiving payments from customers or paying vendors occur so frequently that most QuickBooks users do them automatically. However, from time to time you may encounter an infrequent transaction that will stop you in your tracks. In this article we'll discuss several common tricky transactions and offer advice on how to handle them.

Security Deposits

Security deposits, such as for a rental space or to a utility company, require special tracking so that you can be sure to get the money back later. It's best to maintain a separate account for each security deposit so that you can track each individually. If you have numerous security deposits, consider creating individual subaccounts for each deposit:

1. Choose Lists, and then Chart of Accounts (or press Ctrl-A).

2. Click the Account button, and then choose New (or press Ctrl-N).

3. As shown in Figure 1, choose Other Account Type, Other Current Asset, and then click Continue.

4. Assign an Account Name such as Contributions from Owner, (and account number if applicable). If necessary, click Subaccount Of, and specify the Deposits account. Click Save and Close to save the new account.



Figure 1: An easy way to manage security deposits is to post them to a new Other Current Asset account.

Refunds from utility companies, insurance companies, or other sources

Choose Banking, and then Make Deposits. Specify the vendor, and then choose the account. In the case of deposit refunds, you should have an asset account that you'll apply the money against, as shown in Figure 2. For other types of refunds, use the expense account from which you originally paid the money.



Figure 2: Apply utility deposit refunds back to the deposit account on your balance sheet.

Owner Contributions

This is a situation where an owner of the company invests money into the firm. The owner does so in hopes of making a return on their investment, but does not have a specific timetable in mind for repayment of the loan.  If you don't already have a Contributions from Owner account, follow these steps described previously for creating a new account, but choose Equity and name the account Contributions from Owner.

Distributions to Owner

Distributions allow an owner to take profits out of the company on a non-salary basis. Distributions can be paid through payroll or on a separate check. Your chart of accounts should already include a Distributions to Owner account, but if it doesn't, you can establish this new Equity account, which you can then use in either of these types of transactions.

• Payroll: Distributions require special treatment in payroll because they're not subject to income or payroll taxes in QuickBooks. The owner settles the income tax due when filing their annual return. Before you can pay distributions through payroll you must establish a payroll item. To do so, follow these steps:

1. Choose Employees, Manage Payroll Items, and then New Payroll Item.

2. Choose Custom Setup, and then click Next.

3. Choose Addition, and then click Next.

4. Enter the word Distribution and then click Next.

5. Choose the Distributions to Owner account from your chart of accounts, and then click Next.

6. Choose None for the Tax Tracking type, and then click Next.

7. Leave all of the taxes unselected, and then click Next.

8. Choose Calculate This Item Based on Quantity and then click Next when the Calculate Based on Quantity screen appears.

9. Accept the default choice of Gross Pay and then click Next.

10. Leave the Default Rate and Limit fields at zero and then click Finish.

Next, select the employee in the Employee Center, and then choose Edit Employee. Choose Payroll and Compensation Info from the Change Tabs list, and then add Distributions to the Additions, Deductions, and Company Contributions list, as shown in Figure 3. You can fill in the distribution amount now if you know the ongoing amount, or you can fill it in on the fly during the payroll process. Simply display the Paycheck Detail during the payroll process to access this field and enter the distribution amount.



Figure 3: Add Distributions to the Additions, Deductions, and Company Contributions section.

• Separate check: A much simpler approach is to write a separate check to the owner. To do so, choose Banking, and then Write Checks. Choose the Distributions to Owner account and fill in the amount.

Loans to the Company

From time to time the owner may need to make a loan to the company. If the owner expects this money to be repaid, establish a Loan account on the chart of accounts and record the deposit of the loan to this new account.

Company Loans Money to Others

Sometimes your company may make a salary advance to an employee, or the firm may loan money to an affiliate. In such cases it's important to always establish a separate Current Asset account for such transactions so that you can easily track the outstanding balance. Such accounts can be a subaccount of a general Loans Receivable account, as shown in Figure 4.  As shown in Figure 5, you'll code the check to that subaccount.



Figure 4: Make sure to create individual subaccounts for loans to employees or other parties.



Figure 5: Be sure to use the proper subaccount when issuing an employee loan.

Loan Payments

Many users struggle with loan payments because there are usually three different scenarios:

• Interest only payment: In this case there's only one account to charge, which will be Interest Expense, as shown in Figure 6.

• Interest and principal payment: If you're amortizing the loan over time—your payments include principal and interest— then you'll have to charge two accounts on the transaction, both the Interest Expense and the Loan account itself, as shown in Figure 7. These amounts will be different each month. Your lender can provide an amortization table, or you can search for one for free on the Internet. Simply use the search term "amortization table" to uncover a variety of free resources, or use this search term to locate an Excel-based solution:  "amortization table site:microsoft.com"

• Extra principal payment: Extra principal payments being submitted on a separate check should be applied directly to the Loan account.



Figure 6: Interest-only loan payments post directly to the Interest Expense account.



Figure 7: Make sure to break out principal and interest when a loan payment reduces the outstanding balance.

Expert tip: You can use the QuickBooks Account Reconciliation feature to reconcile your loan balance with the periodic statement that you receive from your lender. This ensures that your financial statements are correct, and helps you confirm that the lender is applying your principal payments correctly.

Petty Cash

Many offices keep a small amount of cash on hand to simply accounting for activities like running to the post office to buy stamps or make small purchases for the office. To establish a petty cash fund, you first write a check to Cash, which you then exchange for money at your bank. Let's say that you establish a $100 petty cash account, and need to replenish it to cover three purchases:

• Lunch for the office: $24.72
• Postage stamps: $44.00
• Office supplies: $23.18

In QuickBooks, you would choose Banking, Write Checks, and then write another check to Cash, and code it to the corresponding expense accounts for the three purchases.

Expert tip: Petty cash is easily subjected to abuse, so be sure to require receipts for all petty cash transactions.

You're accustomed to using your mouse to navigate your way through QuickBooks, but you may not realize that there are faster ways to get your work done in QuickBooks. Typically your hands are already on the keyboard, so take advantage of the shortcuts built into the application to save you time. Using this technique might also help minimize wear-and-tear on your wrists. In this article we'll explore a variety of ways that you can quickly carry out tasks in QuickBooks.

Shortcut #1: Edit fields in a flash

Typically you use the Tab key to move between fields, but it might be more efficient to change the setting and use the Enter key instead. To do so, choose Edit, Preferences, and then General. Select Pressing Enter Moves Between Fields, as shown in Figure 1. Keep in mind that if you change this setting, you'll have to either press Ctrl-Enter to save a record, or navigate to the Save & New button and then press the Enter. While setting that option, make sure to also choose Automatically Open Drop-Down Lists When Typing. This will allow you to type the first couple letters of a list item, and then use the arrow keys and Enter key to choose the desired item.



Figure 1: You can set QuickBooks to use the Enter key to move between fields.

Sometimes you may need to make revisions in within a field, such as a description. You can navigate from word to word within a field by using Ctrl-Left Arrow or Ctrl-Right Arrow. You can also press the End key to jump to the end of a field, or the Home key to jump to the beginning.

Most other shortcut keys that you'll use with fields are contained on the Edit menu, as shown in Figure 2.



Figure 2: The Edit menu contains a veritable treasure trove of keyboard shortcuts.

Shortcut #2: Speed up everyday tasks

Press Ctrl-W to display the Write Checks window, or Ctrl-I to display the Invoice window. Within a transaction window, press Ctrl-N to create a new transaction, or Ctrl-P to print. Ctrl-Q allows you to create a QuickReport on a selected transaction or list item. Ctrl-J will display the Customer Center, although for some reason the Vendor and Employee centers don't currently warrant their own keyboard shortcuts. As you work in QuickBooks, you may encounter a stack of open transaction, list, and report windows, as shown in Figure 3—simply press Esc repeatedly to clear the decks.



Figure 3: Overrun with QuickBooks windows? Press the Esc key as needed to close extraneous windows.

Shortcut #3: Try these Register tricks

Press Ctrl-R to display the Use Register window, and then press Alt-Down Arrow to display the full list. If you simply press the Down Arrow, then your cursor will jump to the OK button. Within a register, press Ctrl-PgUp to move to the first previous month in the register, or Ctrl-PgDn to move to the next month in the register. Press Ctrl-O to copy an entire transaction within a register, and then press Ctrl-V to paste a duplicate of copy. Or, press Ctrl-E to edit a transaction in the register. Conversely, Ctrl-D allows you to delete transactions.

You can also press Ctrl-G for certain transfer transactions to view the register of the corresponding account. QuickBooks doesn't maintain a register for income and expense accounts, but you can use this to follow transfers between bank accounts, for instance. Similarly, you can press Ctrl-H on certain transactions to view their transaction history, as shown in Figure 4, or press Ctrl-Y to display a transaction journal. This is a report that shows you the debits and credits that comprise the transaction, as shown in Figure 5.



Figure 4: Press Ctrl-H within a register to view transaction history.



Figure 5: The Transaction Journal displays the debits and credits that make up a transaction.

Shortcut #5: Level your lists

Only two lists have their own shortcuts: Ctrl-A for the Chart of Accounts, and Ctrl-T for the Memorized Transaction List. You can use Ctrl-PgUp and Ctrl-PgDn to navigate to the top or bottom of a list. Press Ctrl-E to edit a record within a list, or Ctrl-P to print the entire list. As with transactions, Ctrl-D will delete a list item—you'll receive the warning shown in Figure 6 if you attempt to delete an account that has a balance, though.



Figure 6: Accounts with open balances cannot be deleted.

Shortcut #5: Make a date

Incremental dates (and check or invoice numbers, too) can be moved up or down by pressing the and – keys. Even better, laptop users can press the = key, instead of Shift-Equal to access the sign. Navigate forward and backward in time by keeping these three words in mind: week, month, and year. Press W to move back one week, or K to move forward one week. Do the same with M or H and Y or R to move forward or back one month or year at a time. Within a date field, press Alt-Down Arrow to display the calendar without having to click with your mouse. Other date tricks you may find helpful are pressing [ or ] (the square bracket keys) to move to the same date in the previous or next week, or ; and ' (the semicolon and apostrophe keys) to move to the same date in the previous or next month. If all of these date tricks are making your head spin, just press T in a date field to return to today's date.

Shortcut #6: Customize your start-up

Usually QuickBooks automatically opens the last company that you accessed, but it won't do so if you hold down the Ctrl key while you open QuickBooks. Also, if you share a computer with a coworker that frequently leaves many windows open, hold down the Alt key while you open QuickBooks to start with a clean desktop. You can also press the F2 key to display a dizzying array of data about your QuickBooks company, as shown in Figure 7.



Figure 7: Press F2 to display a wide array of technical details regarding your QuickBooks company.

Do you know how to detect and protect yourself from fraud? Most of us want to naively believe it will never happen to us. In reality, fraud impacts small and mid-size businesses far more often than large corporations. Why? Smaller businesses tend to take fewer precautionary measures to prevent fraudulent behavior. Also, fraud is often perpetrated by a family member, long time employee, or friend that’s been given too much freedom with too few controls. However, you must not be naïve when it comes to your business. Fraud is very much a reality that can happen in your business. In this article we’ll discuss how fraud happens, how to identify if fraud is happening, and what to do if you discover fraud has happened. We’ll also discuss some measures that you can take within QuickBooks to limit your exposure.

Why does fraud happen?

A combination of three aspects usually set the stage for fraud:

Opportunity: Companies often unknowingly present opportunities for fraud. In particular, small businesses are more prone to these because it’s harder to separate duties when you have a small staff.

Pressure: Personal pressures can put people over the edge and cause irrational thinking. Someone you know may be under duress due to medical and/or financial issues, or any of a number of other personal situations that influence their judgment.

Rationalization: The perpetrator believes they can rationalize their behavior, i.e. they need the money more then the company, the company won’t ever notice, or other insidious thoughts. Indeed, fraud often starts as a “loan”, with the perpetrator fully intending to “pay it back”.

Fraudsters will go to extreme measures to cover their tracks. Many small business owners believe it could never happen to them, as their employees are like family. However, it is critical that you separate your thoughts with regard to what happens at work versus what happens outside the four walls of your business. No business is 100% safe.

What are five popular types of fraud?

1. Claiming additional payroll hours or falsifying an employee.
2. Stealing merchandise or cash.
3. Giving unauthorized discounts to friends and family.
4. Selling private business information to outsiders.
5. Exaggerating on expense reports.

Although it’s often enticing to delegate tasks to subordinates, you should keep a hand in as many of your business practices as you can, even if it’s on a random basis. Fortunately there are some simple ways you can do so:

Payroll: Hand-deliver the paychecks, and use this as an opportunity to thank your employees for their work. This will help identify any “false” employees, as well as foster good will among your team. Further, a process for tracking hours will help to minimize extra hours appearing on anyone’s time card. You might have a manager sign off on subordinate’s time sheets, or install a modern time clock that uses swipe cards or biometric identification.

Theft of cash or merchandise: Separate duties to the extent possible. Ideally those who receive money should be different than those who that generate invoices. You should also try to separate inventory duties, and implement checks and balances for purchase orders, receiving and invoicing. Don’t rule out video surveillance of warehouse areas, even if it feels like “Big Brother.”

Unauthorized discounts: Track discounts given to customers. In QuickBooks:

a. Choose Reports, Sales, and then Sales By Item Detail.
b.  Click the Modify Report button, and then click the Filters tab.
c. As shown in Figure 1, choose Items from the Choose Filter List.
d. Select Multiple Items from the Item list, and then choose all discount and bad debt items.
e. Click OK twice to view your report. If you find this report helpful, click the Memorize button and assign a benign name, such as Accounting Review.

Figure 2 demonstrates another filtering technique for the Sales by Item report. Clear the Item filter, and specify Amount, and then >=0. This will display any negative or zero amounts listed on a customer invoice, as well as credit memo items. It may seem counterintuitive to look for amounts that are greater than or equal to zero, but in accounting jargon, invoice amounts should always be credits to an account, which means they’ll be less than zero. Negative items or discounts on an invoice post to your books post as debits, or positive amounts, which will be greater than zero.
 


Figure 1: You can filter the Sales by Item report to track discounts and other write-offs.
 


Figure 2: It’s also helpful to search for amounts that are equal to or greater than zero.

Selling private information: This is particularly difficult to guard against. One level of defense to require employees to sign confidentiality agreements at the time of hire that discuss what the company considers confidential and the consequences of violating said agreement. Computer systems and paper work should also be protected with passwords, lock and key and whatever other measures may be warranted to minimize unnecessary access.

In QuickBooks, choose Company, Users, and then Set Up Users and Roles to assign unique log in names and passwords. As shown in Figure 3, QuickBooks offers predefined roles that automatically limit access to specified areas, but you can easily tweak a user’s role to meet their exact needs. You should also require users to change their passwords periodically, and whenever possible, have your IT specialist restrict access to the folder where your QuickBooks data resides. However, do be aware that anyone can purchase a password recovery tool for $45 from www.lostpassword.com.
 


Figure 3: Use passwords in QuickBooks to limit employee access on a need-to-know basis.

Expense Reports: Always require receipts on all reports for reimbursement with no exceptions. You should also establish guidelines so that employees know when to seek approval so that they avoid the risk of unreimbursed expenses.

Unfortunately there’s no magic cloak that you can place over your business to protect it from fraud. Your best defense is to limit opportunities and remain vigilant. Fraud perpetrators have seemingly limitless imagination, so be sure that you’re always keeping a hand on the tiller of your business.

In these trying economic times it’s more important than ever to keep a close rein on your accounts receivable. Seemingly no one is immune to sudden changes in financial circumstances, so be sure to monitor your outstanding invoices closely. There’s an inverse relationship between the age of an invoice and your ability to collect on it, but fortunately QuickBooks can help you manage your credit risk:

#1: Set Reminders

As shown in Figure 1, QuickBooks can display a reminder window when you open your QuickBooks company:

Choose Company, Reminders, and then click the Set Preferences button.

Choose the My Preferences tab, and then click the Show Reminders List When Opening a Company File on the My Preferences tab.

Click the Company Preferences tab, and choose Show List for Overdue Invoices. As shown in Figure 2, you can enter a negative number to be notified of overdue invoices before they reach their due date. Click OK to save your changes.




Figure 1: QuickBooks can show you a list of overdue invoices whenever you open your company.




Figure 2: Enter -3 in the Days after Due Date field to be notified when invoices are within 3 days of their due date or later.

#2: Monitor Customer Balances

In addition to tracking overdue invoices, you should also stay abreast of how much credit you’ve extended to each of your customers. One way to do this is to use the Customer Center whenever you create new invoices:

Choose Customers, and then Customer Center (you can also click the Customer Center toolbar icon or press Ctrl-J).

As shown in Figure 3, the customer center lists the Balance total for each customer. You can use this information to determine whether you want to sell additional products or services. You can quickly create an invoice from the Customer Center: select a customer name, and then press Ctrl-I (as in I for invoice).

As also shown in Figure 3, you can add an Open Balance column to the transaction list. To do so, right-click on the transaction list, and then choose Customize Columns. Choose Open Balance from the Available Columns list, and then click the Add button.




Figure 3:  The Customer Center makes it easy to monitor open invoices.

Expert trick: To sort customer open balances in descending order, click twice on the Balance Total column.

#3: Create an Overdue Watermark

An attention getting messages, such as “OVERDUE!” or “PLEASE PAY!” can add impact to follow-up copies of invoices that you send out. It’s easy to add a watermark to your invoices:

Choose Customers, and then Create Invoices to display the Create Invoices window.

Click the Customize button on the toobar, and then click the Manage Templates button.

Select an existing invoice, such as Intuit Product Invoice, and then click the Copy button.

Use the Template name field shown in Figure 4 to assign a name like Overdue Intuit Product Invoice, instead of Copy of: Intuit Product Invoice.

Click OK to close the Manage Templates window, and then click the Layout Designer button in the Basic Customization window.

Click the Add button on the toolbar, and then choose Text Box.

Enter the message you want to add in the Text field, such as OVERDUE!

Click the Font button, and then make these changes:

• Set the Font Name to Arial Black
• Set the Font Style to Bold
• Set the Font Size to 60
• Change the Font Color to Silver

Once you’ve set the font settings, click OK to close the Font dialog box, and then click the Border tab. Unclick Top, Left, Right, and Bottom, and then click OK.

Resize and reposition the text box on your invoice, such as in the center of the body section, as shown in Figure 5.

Right-click on the text box and choose Order, and then Send Backward.




Figure 4: Assign a meaningful name to your new template.




Figure 5: You can add an OVERDUE! Watermark to a customized QuickBooks invoice template.

Going forward, you can choose this template from the list anytime you wish to follow-up on an overdue invoice.

#4: Send e-mail follow-ups

A friendly note can sometimes shake a payment loose on an overdue invoice. For instance, you can choose Reports, Customers & Receivables, and then A/R Aging Detail. Double-click on the invoice in question to display it onscreen, and then click the Send button on the toolbar, which looks like an envelope with a green arrow. As shown in Figure 6, you can change customize the body of the e-mail to your liking. If you typically mail print copies of your original invoices, then consider changing the default text of the e-mail to make your collections easier. To do so, click the Edit Default Text button and then make any changes that you like. Do note that these changes won’t appear in the Send Invoice window until you close it and click the Send button again. Click the Send Now button to e-mail the invoice copy to your customer.




Figure 6: Customize the default e-mail text to simplify invoice follow-ups.

#5: Use Statements

QuickBooks makes it easy to send statements to one or more customers. Choose Customers, and then Create Statements. Set the desired options, including which customer or customers to contact, and then choose Print or Email to generate the statements.

#6: Tweak the Collections Report

When calling on an overdue invoice, it’s helpful to make sure that your customer is aware of all pending invoices. You can easily tweak this report so that it lists all open invoices:

Choose Reports, Customers & Receivables, and then Collections Report.

Click the Modify Report button, and then click on the Filters tab.

As shown in Figure 7, click on the Date filter, and then choose Remove Selected Filter. Do the same for the Aging and Due Date filters, and then click OK.

As shown in Figure 8, the Collections Report now displays all open invoices. You can click the Memorize button to save this report for future use.




Figure 7: Modify the Collections Report filters to add helpful information to this report.




Figure 8: The resulting report shows all open invoices, as well as contact names and telephone numbers.

#7: Accept credit cards

Many business owners avoid accepting credit cards due to the fees involved, which can top 3%. However, 97% of an overdue invoice is far better than 0%, or having to wait even longer to collect. You can learn about QuickBooks Merchant Services by choosing Add Credit Card Processing on the Customers menu in QuickBooks. Or, consider a payment service like PayPal (www.paypal.com), which offers a free Request Money with QuickBooks wizard. Look under the Merchant Services section of your PayPal business account.

You’ll likely be closing the books on 2008 soon and your records will become the basis for your tax return. It’s critical that your QuickBooks records for a given year match the corresponding tax return, so consider setting a closing date in QuickBooks so that no one inadvertently changes the supporting documents for your tax return:

1. Choose Edit, and then Preferences.

2. Choose Accounting, and then click on the Company Preferences tab.  As shown in Figure 1, you can use this window to determine if a closing date has been set.

3. Click Set Date/Password, and then enter a closing date. Although optional, you should then set a password. If you set a date without a password, then the prompt shown in Figure 2 will appear when someone attempts to enter or modify a transaction dated on or before the closing date. Conversely, the prompt shown in Figure 3 asks for the closing date password.




Figure 1: The Company Preferences Accounting tab displays the current closing date for your company.




Figure 2:  Users can bypass this warning prompt if you don’t set a closing date password.




Figure 3:  Set a closing date password to ensure that users can’t modify prior year transactions without permission.

It’s generally best to set the closing date once you’ve completed all of your year-end reconciliations, printed W-2s and 1099s, and other year-end tasks. In fact, an ideal time is when you send the books out to have your tax return prepared.

Eliminating Uncategorized Income and Expenses

Unless you set a specific preference, users can enter transactions without specifying a revenue or expense account. Such transactions appear on the Profit & Loss Statement as Uncategorized Income or Uncategorized Expenses, as shown in Figure 4. If these items appear on your Profit & Loss Statement its an easy fix. Simply double-click on the amount, and then double-click on each of the transactions in the resulting transaction report. Assign accounts to each of the underlying transactions, and then click the Refresh button to see the effect on your report.

Fortunately you can set a preference in QuickBooks to ensure that no uncategorized transactions will ever slip through:

1. Choose Edit, and then Preferences.

2. Choose Accounting, and then click on the Company Preferences tab.

3. As shown in Figure 5, ensure that Require Accounts is checked, and then click OK to save the preference.



Figure 4: QuickBooks places transactions that don’t have account numbers into Uncategorized Income and Expenses.




Figure 5: The Require Accounts preference prevents uncategorized income and expense transactions.

Note: Setting this preference won’t clear up existing uncategorized transactions, but will prevent them from occurring in the future.

How to Print W-2s and 1099s from QuickBooks

If you process payroll in QuickBooks, you’ll soon need to print W-2 for your employees. The recipient copies of these forms must be postmarked by January 31, 2009, while you’ll need to submit the government copies by February 28, 2009. QuickBooks can print on blank perforated W-2 forms or preprinted W-2 forms.  But before you embark on printing W-2 forms, make sure that you have the latest payroll update:

1. Choose Employees, and then Get Payroll Updates.

2. Click the Update button, and then follow the on-screen prompts to download the latest payroll updates and forms for your version of QuickBooks.

Once you’ve installed the payroll updates, you’re now ready to print your W-2 forms:

1. Choose Employees, Payroll Tax Forms & W-2s, and then Process Payroll Forms.

2. Choose Federal Form, and then click OK.

3. As shown in Figure 6, choose Annual Form W-2/W-3 – Wage and Tax Statement/Transmittal, and then specify the year for which you’re printing W-2s.




Figure 6: You can print W-2 forms directly from QuickBooks on preprinted or blank forms.

4. When the Select Employees for Form W-2/W-3 window appears, click Review/Edit to display a preview of each form to be printed. You’ll walk through an interview, copies of the W-2 forms, the summary W-3 form, and then printing instructions.

5. Click Submit Form to display the dialog box shown in Figure 7. You then use this window to print the various copies of forms W-2 and W-3.




Figure 7: QuickBooks makes it simple to generate W-2 forms at the end of the year.

It’s just as easy to print Form 1099 from QuickBooks. You may not realize that there are over a dozen different versions of the ignoble 1099 form. However, most users only need Form 1099-MISC, which QuickBooks allows you to generate, as well as the transmittal Form 1096. 1099 must be postmarked by the same dates discussed previously for W-2s. Here’s how to print 1099s in QuickBooks:

1.  Choose Vendors, and then Print 1099s/1096. If this option does not appear, choose Edit, Preferences, and then Tax: 1099. Choose Yes on the Company Preferences tab, and then click OK.

2. When the 1099 and 1096 Wizard appears, click the Run Report button for step 1. When the Vendor 1099 Review report appears, carry out these steps:

• Scroll down and ensure that all vendors that require a 1099 have a Yes in the Eligible for 1099 field. Check with your tax advisor if you’re unclear as to whether any of your vendors should receive a 1099 form.

•  If you find any misclassified vendors, double-click on the vendor name, and then choose the Additional Info tab, and then set or clear the Vendor Eligible for 1099 checkbox. Filter the report to show only 1099 vendors, so that you can confirm that every 1099 vendor has a proper address and tax ID number entered in QuickBooks. To do so, click the Modify Report button, and then click the Filters tab. Scroll down to the Eligible for 1099, and then choose Yes, as shown in Figure 8. Click OK, and then confirm that all vendors have tax IDs and addresses.




Figure 8: Simplify your 1099 review by displaying only vendors that require 1099s. Ensure that each vendor has a proper tax ID and address lists.

3. Return to the 1099 and 1096 wizard, and then click the Map Accounts button. Most 1099 vendors are classified as subcontractors, so ensure that Box 7 matches the account where you posted subcontractor income.

4. Click the Run Report button on the 1099 wizard. As shown in Figure 9, the report shows amounts that will appear on a 1099, as well as amounts you paid that won’t be included. Be sure to double-click each amount in the Uncategorized column. QuickBooks only allows you to map a single account to a given box on Form 1099, so you may need to change the account on one or more uncategorized transactions to ensure that the 1099 reports the proper amount. Keep in mind that reimbursed expenses are not typically included on Form 1099.




Figure 9: Double-click on uncategorized amounts to determine whether they should be included on Form 1099.

5. Once you’ve reviewed the summary report, click Print 1099s. Confirm the date range to use, and then use the Select 1099s to Print window shown in Figure 10 to preview and then print your forms.




Figure 10: This window allows you to print copies of Forms 1099 and 1096.

QuickBooks 2009 has just been released and you’ll find a number of improvements that are sure to be helpful. Of course, the introduction of a new release also means the discontinuation of support for an old release—QuickBooks will end support for QuickBooks 2006 as of May 31, 2009. This means that after that date you’ll no longer able to request technical assistance from Intuit, and services such as payroll, merchant service, online banking, and so on will no longer be accessible. With that background in mind, let’s explore what’s new!

Three long awaited improvements

Some users have been stymied by the fact that QuickBooks would not allow numbers of $100 million or above to be entered. QuickBooks 2009 extends this limit to numbers just shy of $100 billion. So, instead of being limited to 8-figure numbers, you’re now limited to 11-figure numbers. This increased limit is particularly helpful now that QuickBooks supports multiple currencies. As shown in Figure 1, you can configure QuickBooks to process transactions in just about any currency. Records will show both the foreign and converted amounts, plus Intuit now offers an international payment service that allows you to initiate wires and drafts for more than 100 foreign currencies from within QuickBooks.

 

Figure 1: QuickBooks 2009 supports multiple currencies.

A more universal improvement that you’ll appreciate involves the Bank Reconciliation window. Until now you couldn’t sort transactions, which meant you could spend a lot of time looking for a specific item when combined with the seemingly arbitrary grouping of transactions. As shown in Figure 2, you can now click on any column heading and sort the bank reconciliation columns any way you wish.



Figure 2: You can click and sort based on any column heading in the Bank Reconciliation window.

Multiple User Improvements

You may also have been frustrated in the past that you had to switch QuickBooks into single-user mode in order to back-up your company. For many offices, this involves tracking everyone down, getting them to log out of QuickBooks, and then letting them know when to get back in. Or, because of the hassle, some users just wouldn’t get around to backing up their data. QuickBooks 2009 addresses both of these issues:

• You’re now able to back-up QuickBooks while other users are logged into the company.

• The new Messenger feature allows you to instantly communicate with other users currently logged into the software.

The multi-user improvements don’t stop there: now one user can create an invoice while another is running a report. 

Accountants Copy Improvements

You’ll also be glad to know that you can now reconcile your bank account at any time while the accountant’s copy is out. Previously you couldn’t carryout reconciliations after the dividing date until the accountant’s copy had been returned. In addition, accountant’s copy users can now map Form 1099 fields, as well as modify and merge classes. Further, accountant’s copy users can access both QuickBooks 2008 and 2009 companies, which simplifies the review process.

Other new features

QuickBooks 2009 also includes a potpourri of other new features:

• The new Company Snapshot provides an instant overview of your business, as shown in Figure 3.



Figure 3: The new Company Snapshot serves as an executive dashboard.

• Online banking has been improved, meaning that QuickBooks should automatically match more transactions, resulting in less work for you to do by hand.

• The Item List window has a new search feature that makes it easier to find inventory items, as shown in Figure 4.

• A new Duplicate command allows you to replicate existing inventory items and certain transactions. As shown in Figure 4, this command appears when you right-click on an inventory item. It also appears when you right-click anywhere in a transaction window, as shown in Figure 5. Although QuickBooks enables you to duplicate existing transactions, the Memorized Transaction feature is a much safer way to do so. Duplicating a transaction means an exact duplicate, including invoice or check numbers and dates.



Figure 4: A new search feature helps locate items, while the new Duplicate command eliminates redundant keying.



Figure 5: It’s possible to duplicate transactions, but use this feature with care.

• QuickBooks 2009 users can have a free business web site—comprised of three pages—hosted for twelve months.

• QuickBooks 2009 is Windows Vista-certified by Microsoft, although previous versions should also work within without issue in Windows Vista.

• Converting from Peachtree 2008 and Microsoft Office Accounting 2008 to QuickBooks is easy via the free QuickBooks Conversion Tool available at www.quickbooks.com/converttoquickbooks.

• Adobe Acrobat Form templates can be imported into QuickBooks. Keep in mind that this requires that you purchase Adobe Acrobat Pro in order to do so, but this allows other employees or sales reps to generate invoices, sales orders, or estimates that can be imported into QuickBooks. This allows you to push accounting tasks out to the field, without granting direct access to QuickBooks.

• QuickBooks Enterprise Edition now supports up to 30 users, so you can stay with QuickBooks as your business grows.

• The Administrator password now uses stronger, 2048-bit encryption. Make sure that you don’t lose this password, as you’ll have a much tougher time revealing it through password recovery tools.

• A new Live Community feature allows you to see questions and answers posted by other QuickBooks users, as shown in Figure 6. You can even post questions on your own for free, but keep in mind that there’s no guarantee of a response to your question. If you find that Live Community takes up too much screen space, you can turn off the feature by choosing Edit, Preferences, and then clear the checkbox for Show Live Community in the Desktop view, as shown in
Figure 7. You can then activate Live Community at any time by choosing Help, and then Live Community.



Figure 6: The Live Community feature allows you to see what questions others are asking about QuickBooks.



Figure 7: You can disable Live Community if you don’t find it helpful.

A worthy upgrade

Quickbooks 2009 offers solid improvement over previous versions. With new features like 11-digit number support, multiple currency support, and advanced sorting options, you’re sure to increase your productivity enough to more than offset the cost of the upgrade. Add usability features like enhanced security and multi-user support and Quickbooks 2009 looks like a winner.

Although it may seem like drudgery, reconciling your bank account is a critical accounting task that you should carry out each month. Doing so helps ensure the integrity of your financial reports, since most of your accounting transactions ultimately affect cash in some fashion. Further, QuickBooks is a much more powerful tool for your business if you use it to its fullest extent.  Most likely you’ve been reconciling your bank account all along, so in this article we’ll discuss the tricks and techniques you need to know to streamline the process.

If you’re new to QuickBooks, you start the bank reconciliation process by having your bank statement in hand, and then choose Banking, and then Reconcile. The Reconciliation screen shown in Figure 1 appears. In most cases, you enter the ending balance from your bank statement, add any interest or fees, and then click Continue. You mark transactions as cleared, as shown in Figure 2, and then click Reconcile Now. However, it’s not always that simple, so read on to learn how to sail over any hurdles that may appear.

Figure 1: The QuickBooks Begin Reconciliation window.

Figure 2: The QuickBooks Reconcile window.

1. Locate discrepancies
As shown in Figure 1, click the Locate Discrepancies button to display the Locate Discrepancies window shown in Figure 3. From there, click the Discrepancy Report button to display the report, as shown in Figure 4. This identifies any edited or deleted transactions that may affect your reconciliation.

Figure 3: QuickBooks can help you identify edited transactions that may disrupt your reconciliation.

Figure 4: Ideally your discrepancy report should never have any transactions listed.


 
2. Confirm your beginning balance
Your beginning balance should always tie to your bank statement, but if it doesn’t, click the Undo Last Reconciliation button until you reach a point where the beginning balance matches your bank statement. You must then redo the reconciliations to bring your books current and resolve the discrepancy.

3. Don't forget interest and fees
Be sure to record any interest and fees in the window shown in Figure 1. Alternatively you can record deposit and check transactions to record interest and fees, or the very savvy can use journal entries. If you go this route, be sure to debit cash and credit interest income for interest earnings or credit cash and debit bank charges for any fees incurred. 

4. Double-check your ending balance
Always double-check your ending balance input when you start the reconciliation. A simple transposition or other error here can make it appear that you’ve missed a transaction.

5. Look for transpositions
Sometimes you’ll mark all transactions as cleared, but still have a difference. In such cases, divide the difference by 9—if it divides out evenly, then there's a good chance that you transposed a number on a transaction. For instance, a $63 dollar difference divided by 9 returns 7 could mean that a transaction was entered incorrectly. As shown in Figure 5, you can right-click on an amount, and then choose Edit Transaction to fix the error.

Figure 5: Right-click on an amount and choose Edit Transaction to correct a mistake.

6. Pick a side, any side
Don’t mix and match deposits and withdrawals. Reconcile your Deposits and Other Credits first, and then confirm that the total items you marked cleared ties to the amount shown on the Reconcile window. Then reconcile Checks and Payments — doing one side a time limits your search area for missing or misposted transactions.
 
7. Clear the decks
If you get tangled up in a reconciliation, click the Unmark All button shown in Figure 2 to start over.
 
8. Enter missing transactions
You can add missing transactions without closing the reconciliation window. Simply choose a command from the menu across the top or from the Home screen. Saved transactions will instantly appear in the reconciliation window.
 
9. Check undeposited funds
Choose Banking, and then Make Deposits. If the window shown in Figure 6 appears, you must complete the deposit process for these transactions.

Figure 6: Undeposited funds can pose problems with your reconciliation.

10. Hide unnecessary transactions
Click the Hide Transactions after the Statement’s End Date check box shown in Figure 2 to have fewer transactions to sift through.

11. Void old transactions
Old, uncleared transactions can linger on forever—locate such transactions within your register, choose Edit, and then Void. The banking system generally considers checks to be stale after six months. Such lingering transactions are often duplicates of a transaction that cleared.

12. Clear voided transactions
Always clear transactions with a zero balance as these won’t affect your reconciliation, but do clutter up the Reconcile window.

13. Bank online
Some institutions allow you to synchronize your records with your online statement. This involves a matching process that automatically clears transactions that match, and makes it easy to quickly post new transactions.

14. Use your keyboard
Rather than using your mouse to click on each transaction that you wish to clear, use the arrow keys on your keyboard to move up and down. Press the spacebar to toggle a transaction as cleared or uncleared.

15. Walk away and come back later
If you just can't seem to get the unreconciled difference down to zero, the best thing to do is click the Leave button shown in Figure 2, and then resume the reconciliation tomorrow. A fresh eye can do wonders.

16. Reconcile More Frequently
If you can access your bank account online, you can reconcile your bank statement as often as you wish. Consider reconciling accounts with heavy volume weekly or twice a month.

Over time, your QuickBooks company can grow in size to the point that it becomes difficult to find specific transactions. For instance, let’s say that you hire a new employee, and want to order another desk to match the ones in your office. You vaguely remember the last time that you ordered a desk, but can’t remember which vendor, or how much you paid. In this article we’ll discuss seven ways that you can search QuickBooks to find transactions such as this, or when necessary, determine if a transaction was deleted.

#1: Registers

QuickBooks maintains a register for each account on your balance sheet, which includes bank accounts, inventory, accounts receivable, and other assets. There are also registers for accounts payable, loan accounts, and owners’ equity. Depending upon what you’re looking for, a register might be a fast way to find what you’re looking for, such as that desk we mentioned at the start:

1. Choose Edit, and then Use Register (or press Ctrl-R). Alternatively, you can choose Banking, and then Use Register.

2. As shown in Figure 1, choose your Furniture account from the list, and then click OK. QuickBooks will then present a window similar to Figure 2.



Figure 1: Every balance sheet account—not just cash accounts—has a register.

3. As also shown in Figure 2, you can use the Go To button to search the register. This can help you narrow your search within a register that contains many transactions.





Figure 2: The register displays a searchable listing of all transactions within a balance sheet account.

Keep in mind that registers are just one way to find transactions in QuickBooks, and won’t always be appropriate for every situation. For instance, income and expense accounts don’t have a register—in those cases you need to take another approach.

#2: Simple Find

Think of the Simple Find feature as an expanded version of the Go To feature within a QuickBooks register. Choose Edit, and then Find (or press Ctrl-F) to display the window shown in Figure 3. If necessary, click the Simple tab at the top of the window. You can then carry out searches based on transaction type, such as Invoice, Estimate, Bill, Check, and so on:

1. Choose a transaction type from the list.

2. Optionally limit your search by completing the Customer/Job, Date, Transaction #, and Amount. It’s not necessary to complete these additional fields, however without doing so you’ll return a list of all transactions of a given type, which may or may not be helpful.



Figure 3: Simple Find allows you to search within a single transaction type.

Once your list of transactions appears on the screen, you have several options:

• Double-click on a transaction to view it, or click once on the transaction and then click the Go To button.

• Click the Report button to display a Find report onscreen. As we’ll discuss later in this article, you can then click the Modify Report button to further refine the results of the Find report.

• Click the Export button to export the results to a comma-separated values (CSV) file or Excel spreadsheet.

#3: Advanced Find

This feature, shown in Figure 4, is akin to the Simple Find on steroids. You can search QuickBooks based on any combination of dozens of criteria. For instance, Figure 4 shows a search on customers in the city of Middlefield who bought appliances costing $500 or more. To use Advanced Filter, simply choose a field from the Filter column, and then set the desired criteria. Your input choices will vary based on the field that you choose.

For instance, if you click on Name City, you can enter a single city. Conversely, you can make multiple selections when you choose a field like Item or Account. Keep adding new filters as needed. You can craft some very elaborate searches in this fashion. To eliminate a filter, click once on the item within the list on the right, and then hit the Delete key. Alternatively, the Reset button will also clear the decks for you.




Figure 4: Advanced Find allows you to specify criteria for dozens of available fields.

#4: Search

Current versions of QuickBooks feature a Search command on the Edit menu. You may be prompted to enable Google Desktop the first time that you choose this command. Doing so will allow you to use the same search terms and conventions that you use on the Internet to locate transactions within QuickBooks. As shown in Figure 5, this feature is not automatically enabled, and doing so may cause minor performance degradation on your computer. As shown in Figure 6, Google Desktop automatically groups transactions by type, and you can choose to sort by date.



Figure 5: You must enable Google Desktop Search within QuickBooks.




Figure 6: Google Desktop search automatically groups transactions by type.

Indexing required: Google Desktop initially runs an indexing process on your QuickBooks data. The length of time required for this varies, based upon the size of your QuickBooks company. You’ll get the best results from your search if you wait until Google Desktop has completed its initial index. New transactions will automatically be indexed after this one-time process completes.

#5: Customized Lists

By default, QuickBooks customer and vendor lists only display names and balance totals. You may not realize that you can add additional columns, such as phone number, and that each column is sortable:

1. Choose Customers, and then Customer Center (or press Ctrl-J).

2. Right-click on the customer list, and then choose Customize Columns.

3. As shown in Figure 7, you can add as many additional fields as you wish to the list, as well as move fields up and down within the list. Click OK once you’ve made your changes.



Figure 7: You can add or remove columns from list windows in QuickBooks.

4. As shown in Figure 8, you can resize the columns within the list. Place your mouse between field names, and then drag to the left or right to resize the field.




Figure 8: QuickBooks list columns are resizable and sortable.

5. Click the name of a field within the list to sort based on that column. As shown in Figure 8, you can use this technique to search for a customer simply based on telephone number.

#6: Report Filters

Some QuickBooks reports are like a fire hose of data, giving you far more information than you really need. Fortunately, every report has a Modify Report button in the upper-left-hand corner of the screen, which enables you to pare down the results of the report. As shown in Figure 9, you can click the Filters tab of the Modify Report window and make the same choices that we discussed previously in the Advanced Filter dialog box.



Figure 9: Most QuickBooks reports allow you to apply filters to limit the amount of data shown.

#7: Audit Trail: If you’ve exhausted all of the previous methods to find a transaction in QuickBooks, one final place to look is the audit trail. Someone could have deleted the transaction, either on purpose, or accidentally. The audit trail formerly was an optional feature in QuickBooks, but starting with the 2006 versions and onward, it’s always on, so you’ll always have a searchable record of every transaction ever entered in QuickBooks. You cannot view the details of deleted transactions in the audit trail, but at least you’ll know why it didn’t appear through any of the other search methods:

1. Choose Reports, Accountant & Taxes, and then Audit Trail.

2. Once the report appears on screen, you can change the date range to pick a broader range if necessary. You can also click the Modify Report button and apply any filters that you wish. As shown in Figure 10, any deleted transactions will be marked as such.

Summary

Hopefully you now have at least a couple of new ways to retrieve transactions or contact information from QuickBooks. Not every technique is appropriate for every search, but understanding these seven ways to search QuickBooks can broaden your skills, and help you retrieve information about anything within your accounting records.

Did You Know?

There are hundreds of add-on products available for QuickBooks that may be able to help you streamline business processes that you currently carry out by hand. Visit http://marketplace.intuit.com to search the list of available products by industry or business need. Many applications are certified by QuickBooks, and most products include customer product ratings. Free trials are often available, so you can try products before you buy. The web site also includes a list of developers, so you can have a custom application written for you if can’t find an existing tool to meet your needs.

Does the mere mention of accounting ratios put your teeth on edge, and bring back bad memories of Accounting 101?  It shouldn’t as ratios can help your quickly determine how your business compares against others. Banks often use ratios to analyze your financial statements as part of the loan approval process, so it’s helpful to know in advance how you’ll be measured. Even better, ratios allow you to compare your business against your peers since many trade groups publish lists of average ratios within an industry. Although ratios may have made you drowsy during accounting class, they can be a fascinating way to measure your company’s financial performance.

Gross Profit Margin

Simply put, gross profit margin—sometimes referred to as gross margin—is your revenues less your cost of sales. For some industries, this is a very meaningful metric, while it won’t mean as much to others. For instance, manufacturers, restaurants, and retailers often treat gross profit as a key performance indicator.  In such environments, one typically purchases inventory at one price, and ideally sells it to someone else at a higher price. The spread between these two numbers is the gross profit margin. Let’s say that you buy $40 of pine straw (we’re trying to avoid the accounting class term widget) and sell it for $60. In this case, $20 of gross margin divided by $60 of sales yields a gross margin percentage of 33%. Thus one-third of your sales are available to put toward overhead items, such as office supplies, payroll, rent, taxes, and so on. Ideally your gross margin is high enough to cover your overhead and leave you with a profit. With that example in mind, let’s see how you can calculate your own gross profit margin.

Caveat: Gross profit margin isn’t meaningful to everyone. For instance, if you’re a self-employed service provider, you may not have any cost of sales. Your salary is arguably all or most of your profit. You can certainly count your salary as cost of sales and compute a gross profit margin, but you might not find much value in the result.

To begin, choose Reports, Company and Financial, and then Profit & Loss Standard. As shown in Figure 1, look for the Gross Profit amount, and then divide this by Total Income. 

 

Figure 1: The Profit and Loss Standard report provides the figures you need to calculate gross profit.

In this case, $30,953.20/$51,241.16 shows a gross profit margin of 60.4%. Is that good? Is it bad? Very often the answer is “it depends”, which is why you should try to compare yourself to similar companies in your industry. However, let’s consider the restaurant industry. Many owners strive to keep their gross margin at around 63%, which means a cost of goods sold percentage of 37%.  The gross profit ratio enables you to track this key measurement, but you must ensure that your transactions are being recorded in the proper accounts. The percentages can skew if, let’s say a telephone bill, is miscoded to Food Costs, instead of Telephone. Similarly, your cost of goods sold might look great only because someone miscoded food costs into an overhead account, such as Supplies.

Profit Margin

Profit margin is another commonly used ratio that you can derive from the Profit & Loss Standard report by dividing Net Income by Total Income. In essence, this is the percentage of sales that the owner of a business gets to keep—before Uncle Sam gets his share. Profit margins vary widely by industry. For example, a grocery store chain may have profits of $2 billion, but a profit margin of just 2.6%. An oil company may have staggering profits in dollars, but their profit margin is often just 10%. Conversely, some software companies have a profit margin of 28% or more. As with gross profit, the best way to determine whether a profit margin is reasonable is by comparing the result to one’s peers. The construction company shown in Figure 1 has Net Income for the period of $13,123.48, which when divided by Total Income of $51,241.16 returns a profit margin of 25.6%.

Inventory Turnover Ratio

This ratio illustrates how many times a year that you’re selling your entire inventory. This can help you gauge whether you may be holding too much inventory, or not enough. This ratio is based on cost of goods sold divided by average inventory. As you’ve seen, cost of goods sold appears on the Profit and Loss Standard report—look for Total COGS—but you’ll have to perform a quick calculation to determine average inventory. To do so, divide the sum of your beginning inventory plus ending inventory by 2. Although you can use several different reports in QuickBooks to determine the beginning and ending balance of your inventory, try this first: choose Reports, Company and Financial, and then Balance Sheet Prev Year Comparison. Change the report date to This Fiscal Year, and then look for the inventory account balance, as shown in Figure 2. The ending balance for last year is also the beginning balance for this year.

If you need beginning and ending balances for a shorter period, such as a quarter, choose Reports, Accountant and Taxes, and then General Ledger. Set the report dates to the period of your choice, and then use the beginning and ending balances for your inventory account.
 


Figure 2: The Balance Sheet Prev Year Comparison can provide beginning and ending inventory balances.

Average Collection Period

This ratio helps you determine how long it takes your customers to pay their invoices. The formula is a little more complex than some of the other ratios: number of days multiplied by average accounts receivable balance, divided by credit sales. For instance, let’s say that your average accounts receivable balance is $30,000, and you had total sales of$400,000 for the year.  365 multiplied by 30,000 is 10,950,000. This amount divided by our total sales of $400,000 is 27.38, meaning that on average your customers pay their invoice in just under 30 days. Be sure to monitor your average collection period, as your cash flow can tighten quickly if that ratio increases. If you typically invoice your customers, then you can use the Total Income figure from your Profit & Loss Standard report.

Keep in mind: Average collection period won’t be of interest if your customers pay on the spot, such as in a retail store or restaurant.

Although QuickBooks doesn’t directly provide a figure for average accounts receivable, you can quickly customize a report to aid in this calculation:

1. Choose Reports, Company and Financial, and then Balance Sheet Standard.

2. Click the Modify report button, and then set the From and To dates to match the period shown on your Profit & Loss report. As shown in Figure 3, change the Display Columns By to Months, and then click OK.
 


Figure 3: Change Display Columns By to Months when you want a month-by-month report.

When QuickBooks displays the 12-month report, as shown in Figure 4, click the Export button, and then click OK to send the report to Microsoft Excel.


 
Figure 4: You can convert the Balance Sheet Standard report into a twelve-month format.

As shown in Figure 5, row 9 contains the Accounts Receivable figures. In cell R9, enter this formula to calculate your average accounts receivable balance:  =AVERAGE(F9:R9).


 
Figure 5: Use the Accounts Receivable figures to calculate your average accounts receivable balance.

As you can see, the average collection period ratio enables you to determine how long it takes your customers to honor your invoices, which in turn has a direct impact on your cash flow.

Other Common Ratios

Current Ratio: Divide current assets by current liabilities to determine a firm’s liquidity.

Quick Ratio: Subtract inventory from current assets, and then divide by current liabilities to apply a more severe liquidity measurement.

Debt Ratio: Divide total debt by total assets to determine how much of the company is financed by debt.

Return On Assets: Banks often add net income plus interest expense together, and then divide this by total assets to determine the firm’s return on assets. This figure typically needs to exceed the interest rate of a loan that you may be contemplating.

Compare Yourself to Others

Now that you understand how to calculate ratios based on your financial results, the next step is to compare yourself to your peers. You may belong to a trade group that makes benchmarks available to its members. If not, a good first step is the BizStats web site, at www.bizstats.com. Your line of business may be included in their free offerings, but even more information is available on a subscription basis. You can find even more resources by searching the Internet search for the term “industry benchmarks”.

Did You Know?

You can send your thoughts about QuickBooks to Intuit directly from within QuickBooks. To do so, choose Help, Send Feedback Online, and then one of these choices:

• Product Suggestion, as shown in Figure 6

• Bug Report

• Help System Suggestion

Any of these links will display an online from in your web browser so that you can submit your thoughts directly to the QuickBooks development team. QuickBooks frequently updates its’ products, so before you send a bug report, choose Help, and then Update QuickBooks. Click the Update Now button to ensure that you have the latest patches and fixes for your version of QuickBooks.
 


Figure 6: Submit your wish-list items directly to the development team from within QuickBooks.

The price of gasoline is just one of many factors putting pressure on our economy as a whole. Now it’s more important than ever to keep a close eye on your company’s performance. Many business owners compare financial results to an annual budget. If you don’t have your budget in place yet, we’ll show you how to get started. Even if you have, we’ll show you how to use last year’s results as a measuring stick with comparative financial reports. Once you understand these techniques, we’ll explain why you should create a monthly appointment with yourself to ensure that your results continue to measure up—and take action if they don’t.

TIP: Keep in mind that tough financial years do have a silver lining—you’ll likely pay less in income taxes. If revenues are down or expenses are up, don’t forget to trim your withholding or estimated tax payments accordingly. Doing so enables you to boost your cash flow now, rather than waiting around on a tax refund next spring.

Budget Basics
The QuickBooks Planning & Budgeting menu gives you the ability to create budgets and forecasts. In reality, both features work the same way, so we’ll use creating a budget as our example. But which one should you use? You might find it helpful to use the Forecast feature as an alternate budget and as a best-case scenario, while the Budget feature offers a better expectation of reality. Either way, here’s how to create a budget in QuickBooks:

1. Choose Company, Planning & Budgeting, and then Set Up Budgets.

2. When the Set Up Budgets window appears, click the Create New Budget button in the upper right-hand corner.

3. Select the year that you’d like to create a budget for (such as 2008 or 2009), select Profit and Loss, and then click Next.

Balance sheet budgeting: QuickBooks offers the ability to create a budget for balance sheet accounts, such as planning for expected levels of cash, inventory, accounts receivable, liabilities, and so on. However, most small business owners find that just a Profit and Loss budget is sufficient for their needs.

4. Most users will choose No Additional Criteria on the next screen. However, QuickBooks does provide the option for a more granular budget that you break down to the customer, job, or class level. Click Next once you make a selection.

5. The next screen asks if you want to start with a blank budget from scratch or if you want to use last year’s actual data as a starting point. Most users will find it helpful to use the previous year as a starting point. Click Finish after you make a choice.

6. At this point you’re presented with a screen similar to Figure 1. You won’t see any numbers if you chose the From Scratch option in step 5.

Figure 1: Starting with prior-year actual numbers can jumpstart your budget process.

7. Proceed with entering or updating your budget. Click the Save button as needed to preserve your work as you go, and then click the OK button when you’re finished.

Budget Tips: The Copy Across button enables you to copy the same amount across all twelve months. As shown in Figure 2, the Adjust Row Amounts button provides a quick way to adjust existing numbers up or down by either a percentage or dollar amount. You can edit your budget at any time: choose Company, Planning & Budgeting, and then Set Up Budgets. Choose your budget from the Budget list, and then make changes as needed.



Figure 2: The Adjust Row button makes it easy to quickly increase or decrease budget figures by a dollar amount or percentage.

Budget Reports
QuickBooks offers four budget and two forecast reports. You’ll use these steps to run most of these reports:

1. Choose Reports, Budget & Forecasts, and then the report of your choice.

2. A three-screen wizard appears, asking you first which budget or forecast you wish to use. Once you’ve made a selection, click Next.

3. The next screen asks which report layout to use — you may only one choice, Account by Month — click Next after you confirm your choice.

4. Click Finish to display your report:
• Budget Overview – As shown in Figure 3, this report provides a twelve-month view of your budget.
• Budget vs. Actual – This 52 column report can be tricky to navigate, as the default format shows these columns for each month, as well as a 12-month total.




Figure 3: Budget overview gives you a birds-eye view of your 12-month budget.

Report Taming Tips: There are a couple of ways to bring this report down to size. First, most users can eliminate the % of Budget column. To do so, click the Modify Report button, and then deselect % of Budget in the Add Subcolumns For section. Next, you can shrink the width of the columns. To do so, drag the diamond between the first actual and budget columns to the left, as shown in Figure 4. When you release the left mouse button, choose Yes when asked if you want to resize all of the columns. Alternatively, click the Export button to send the report to Excel.



Figure 4: Narrow column widths can condense particularly wide reports.

• Profit & Loss Budget Performance – This report compares your month and year-to-date actuals to the budgeted amounts, and also displays the 12-month budget. Although this report doesn’t display dollar or percentage variances, you can easily add these columns. Click the Modify Report button, and then select $ Difference and/or % Of Budget in the Add Subcolumns For section, as shown in Figure 5.



Figure 5: It’s easy to add or remove columns on any QuickBooks report.

• Budget vs. Actual Graph – This report doesn’t enable you to choose a budget — the current year budget is displayed automatically. As shown in Figure 4, this report enables you to get a graphic view of how your results measure up to your budget. You can choose between different budget views:

o P&L By Accounts – This view compares your Profit & Loss accounts, also known as income and expense, to the corresponding budgets. The report automatically sorts variances by difference, and you can view up to six accounts at a time.

o P&L By Accounts and Jobs – This view compares your P&L accounts on a job-by-job basis. Jobs with the largest total variance from budget will be presented first, and as with accounts, you can view six at a time.

o P&L By Accounts and Classes – This view compares your P&L accounts on a class basis. As with the other views, you can view up to six classes at a time. This button appears even if you haven’t set the Enable Class Tracking preference.

Class Tracking: Classes allow you to you track costs by department, project, or other categories. To enable class tracking, choose Edit, Preferences, and then Accounting. On the Company tab, select Enable Class Tracking.

Graph Printing limitation: You cannot print more than one page of the budget graphs at a time, so you’ll have to click Next Group and then click Print to create a hard copy of each report group. QuickBooks doesn’t provide a way to print all of the graphs in one fell swoop. You also can’t modify the graph format, other than to choose a different date range.

Comparative Reports
Regardless of whether you use budgets in QuickBooks or not, it’s always helpful to compare this year’s results to last year. Doing so enables you to see trends in your data, such as how automobile expenses have increased. Such a report is just a couple clicks away:

1. Choose Reports, Company and Financial, and then Profit & Loss Prev Year Comparison.

2. By default you’ll see this year compared to last year. However, you can easily create a multi-year comparison:

a. Click the Modify Report button.

b. In the Columns section, choose Year from the Display Columns By drop-down list, and then click OK.

c. On the report screen, choose a date range, such as 1/1/04 through 12/31/08, and then click the Refresh button. As shown in Figure 6, a multi-year comparison will appear onscreen. If you find this format helpful, click the Memorize button to save this report for later use.



Figure 6: You can convert the Profit & Loss Prev Year Comparison into a multi-year report.

Summary
In this article we discussed how you can use the budget and forecast feature in QuickBooks to plan the future of your business. As each month rolls by, you can compare your plan to actual results. In addition, you can compare this year’s results to last year, or even the last several years.

Did you know?
Did you know that an accountant’s copy of a QuickBooks file can be converted to a normal QuickBooks company, i.e. a .QBW file? There are limited circumstances where you’d want to do so, because it’s not possible to merge two .QBW data files together. However, let’s say that you lose access to your QuickBooks company because your hard drive crashes or someone steals your laptop. These are situations where a converted accountant’s copy would be better than starting from scratch. If you need to do this, ask your accountant to carry out these steps in their version of QuickBooks:

1. Choose File, Utilities, and then Convert Accountant’s Copy to Company File (QBW).

2. Choose the Accountant’s Copy to convert.

3. Click OK on the prompt shown in Figure 7.

4. Assign a name to the new company file, and then click Save.

A final warning prompt will appear to confirm that this copy will overwrite any existing client copy of the books.



Figure 7: Converting an accountant’s copy to a working QuickBooks company can serve as a disaster recovery method.

Of course, the best defense is to make frequent back-ups of your QuickBooks data on removable media, such as the USB flash drives that often cost less than $10. These easily allow you to carry your QuickBooks back-up offsite, such as in your purse or briefcase. But, it’s good to know that your accountant might be able to provide a working QuickBooks company —as long as you recently sent your accountant’s copy along to them.

This feature is available in QuickBooks 2004 and later, and enables you to generate numerous payroll reports in Excel with just a couple of mouse clicks.  Keep in mind that the mix of reports that you see may vary, based on your version of QuickBooks.  In addition, the Excel-based reports take two different formats:

• Pivot table-based:  Excel's pivot tables feature summarizes rows of date into a concise format.  In this case, the rows of data are in QuickBooks, so the resulting spreadsheet becomes an extension of QuickBooks.  In general, pivot tables offer several special benefits:
  
  - You can rearrange the pivot table by dragging and dropping fields.
  
  - You can double-click on any number within the pivot table to drill down to the underlying detail.
  
  - Certain fields in the pivot table include drop-down lists, from which you can exclude certain items or employees.
  
  - You can set the pivot table to put a page break between each employee or item, which enables you to easily print a separate report to share with each person on your team.
  
  
• Worksheet-based:  The worksheet-based reports that QuickBooks generates are static in nature, meaning you can't double-click on any numbers to view the underlying detail.  These reports are similar in nature to reports that are generated when you use the Send to Excel feature to analyze any of QuickBooks built-in reports.  You can, however, copy and paste portions of the reports into other workbooks, or modify the reports to meet your needs.

You don't have to return to QuickBooks if you decide that you want to generate a different tax form worksheet, or perhaps change the report dates.  The steps differ slightly, depending upon your Excel version:

• Excel 2003 or earlier: Choose Get QuickBooks Data or Update Tax Worksheet from the floating QuickBooks Link or QuickBooks Tax Link toolbars, respectively.  These toolbars are easy to restore if you inadvertently close them: right-click on any of your Excel toolbars, and then choose QuickBooks link or QuickBooks Tax link.
  
  
• Excel 2007: Click on the Add-Ins tab of the ribbon, choose QB Payroll Summary Reports in the Custom Toolbars section, and then choose either Get QuickBooks Data to update the payroll summary, or Update Tax Worksheet to update a tax form.

Note: If you simply change the dates for the payroll summary or a tax form, your existing worksheet will be overwritten.  However, if you choose a different tax form, an additional worksheet will appear within your workbook.

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 overlooked an even more valuable report: the Statement of Cash Flows. The Profit & Loss Standard (P&L) report is important in its own right, but it only provides partial insight into the health of your business. While the P&L shows what you earned and spent, the Statement of Cash Flows shows you where the cash came from and went to, also known as sources and uses. As you’ll see in this article, you can use the Statement of Cash Flows to determine the how various activities increased or decreased your cash balance during a given report period.

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 honors their invoice. Accordingly, cash-basis reports don’t necessarily report a company’s true financial performance. You could have a stellar looking Profit & Loss Report, but a list full of unpaid bills in QuickBooks. Accordingly, many accountants prefer that business owners use accrual-basis reports.

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.

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

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 a panacea for managing cash flow, as your business has many transactions that don’t affect the P&L. For instance, loan payments, owner distributions, and owner contributions affect your balance sheet, which tracks assets, liabilities, and equity. Fortunately, the Statement of Cash Flows reflects these types of transactions and more, so it’s a great companion to both cash-basis and accrual-basis P&L reports.

Set Your Preference
You can instruct QuickBooks to always display your reports on either cash or accrual basis:

1. Choose Edit, and then Preferences.

2. Choose Reports & Graphs, and then Company
Preferences.

As shown in Figure 3, specify either Cash or Accrual, and then click OK.


Figure 3: You can set either cash or accrual as your default report format.

Of course, at any time you can change a report to the other format. For instance, if your preference is set to accrual, but you may sometimes want to view a cash basis P&L:

1. Choose Reports, Company & Financial, and then Profit & Loss Standard.

2. Click the Modify Report button, and then choose Cash in the Report Basis section, as shown in Figure 4.

Figure 4: You can change the accounting method for your P&L on the fly.

NOTE: Most, but not all, reports in QuickBooks allow you to change between cash and accrual. When a report is onscreen, choose Modify Report. If you don’t see the Report Basis section, shown in Figure 5, then you’ll know that you can’t toggle the report basis. Now that you understand the ins-and-outs of running cash and accrual basis reports, let’s explore the Statement of Cash Flows.

The Statement of Cash Flows
Let’s say that 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, and then Statement of Cash Flows.

Report periods: As shown in Figure 5, this report automatically defaults to This Fiscal Year-To-Date, but you can choose another time period if you wish. To do so, make a choice from the Dates drop-down list, or modify the From and To dates, and then click the Refresh button.

Figure 5: The Statement of Cash Flows defaults to the current fiscal year.

Your Statement of Cash Flows report will include up to three major sections:

• Operating Activities
• Investing Activities
• Financing Activities

Don’t worry if your report only includes one or two of these sections — sections only appear when you had relevant transactions during the report period. Let’s explore each of these sections individually.

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, followed by an adjustments section. The adjustments reconcile your net income with the net cash provided by the operating activities. For instance, refer to Figure 5. Net income s $112,999 but the Net Cash Provided by Operating Activities is $42,584. Accordingly, the statement of cash flows identifies the $70,415 difference. Let’s investigate a couple of the items:

Accounts Receivable (-$71,759): During the report period we sent invoices to our customers, of which $31,503.08 remain unpaid. These unpaid invoices are reflected in the Net Income figure, so QuickBooks deducts these because we haven’t received this cash yet.

Inventory Asset (-$17,354): Amounts that we spend on inventory don’t become part of Net Income until we’ve sold the items. At that point QuickBooks posts the expense to cost of good sold, and reduces our inventory account accordingly. Purchasing inventory is a use of cash, so it appears as a negative amount on our Statement of Cash Flows.

Remember: The purpose of the Statement of Cash Flows is to reconcile our net income with the actual change in our cash account. Thus non-cash activities, such as unpaid customer invoices or amortized 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.

Employee Advances (-$62): We paid $62 to an employee as an advance, which has not yet been repaid. This amount isn’t included in Net Income, but is a use of cash, so the amount is deducted. When our employee repays the advance, our Statement of Cash Flows will reflect a positive amount, since at that point we’ll have a $100 source of cash.

Prepaid Insurance ($893): During the report period we amortized, or used up, $893 of prepaid insurance. This expense is included in our Net Income figure, but we didn’t write a check for it during this report period, so QuickBooks adds this expense back.

Accounts Payable ($13,537): We’ve entered bills into QuickBooks totaling $13,537 that we haven’t paid yet. In effect, we’re temporarily borrowing this money from our vendors, so it’s a source of cash. Later, our Statement of Cash Flows will show a use of cash when we pay the vendor bills. This same treatment applies to credit cards and other liabilities.

As you look through the Statement of Cash Flows, you may also see Investing and Financing activities. Investing activities may include owner contributions as a source of cash, or in the case of the report in Figure 5, 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 (net of interest) will appear as uses of cash. In the end, you’ll see exactly what caused your cash balance to increase or decrease during the report period.

Research: You can easily investigate why amounts appear on your Statement of Cash Flows. As shown in Figure 6, the QuickZoom icon appears when you hover over an amount. Double-click to display a detailed report, as shown in Figure 7.

Figure 6: The QuickZoom icon indicates that you can drill-down within a QuickBooks report.

Figure 7: A detailed report appears when you double-click on an amount within a QuickBooks report.

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. However, you may encounter instances where activities appear in the wrong section, or don’t appear at all on the report. You can easily remedy such situations:

1. Choose Edit, and then Preferences.

2. Choose Reports & Graphs, and then Company Preferences.

3. Click the Classify Cash button, shown in Figure 3.

As shown in Figure 8, place a checkbox in the appropriate column. You cannot remove balance sheet accounts from the statement, but you can optionally include income and expense accounts. However, keep in mind that this is not a typical need, and you should only proceed under the guidance of your accountant or tax advisor.

Figure 8: QuickBooks allows you to classify accounts as operating, financing, or investing activities.

Did You Know?
QuickBooks has a Product Information window that can provide a dizzying array of information. Press Ctrl-1 to display the window shown in Figure 9. Some key elements on this screen include the product number shown at the top. Each QuickBooks user in your office should have the same release number. The size and location of your QuickBooks file is shown in the File Information section, while you can use the List Information section to determine how many customers and vendors you have in QuickBooks.

Figure 9: Press Ctrl-1 to view the Product Information window.

Just about every QuickBooks user relies on the Report Center and Reports menu, but if you’re like most, you have a small handful of reports that you tend to rely on. In this article we’ll go off the beaten path and explore ten reports that many users overlook. Even if you are using some of these reports, we’re sure you’ll find a few more to add to your repertoire.

1. Profit & Loss Summary Prev Year Comparison:  To access this report, choose Reports, Company and Financial, and then Profit & Loss Summary Prev Year Comparison. Most business owners rely on the Profit & Loss Summary report, but comparing your results to last year can provide quick insight into whether your revenue is growing or contracting—as well as how fast expenses are rising.

2. Balance Sheet Prev Year Comparison: You’ll find this report also within the Company and Financial section of the Reports menu.  As with your income statement, it’s important to compare where certain balances stand now versus last year:
• Cash
• Accounts Receivable
• Inventory
• Accounts Payable
• Other Liabilities, such as lines of credit or short term loans

3. Statement of Cash Flows: As with the two preceding reports, you’ll find the Statement of Cash Flows in the Company & Financial section of the Reports menu. Profit & Loss reports enable you to see what you earned, while Balance Sheet reports help you determine what you have—as well as what you owe. However, neither report necessarily provides a clear picture of where cash is coming from, or going to. As shown in Figure 1, you’ll be able to see:

• How much cash you’ve taken in from sales and spent on expenses

• Cash inflows or outflows from borrowing, repayment, or investing activities
In short, this report shows you exactly what caused your bank balance to increase or decrease during a given report period.



Figure 1: The Statement of Cash Flows report explains changes in your bank account balance.

4. Collections Report: Tricky economic times mean it is more important than ever to keep track of your collections.  Fortunately QuickBooks makes it easy to contact customers with overdue invoices: choose Reports, Customers & Receivables, and then Collections Report. As shown in Figure 2, the report provides a phone list and shows all overdue invoices. However, you can also use this report to quickly e-mail copies of overdue invoices to your customers.  To do so, double-click on a transaction within the Collections report to view the invoice, and then click the Send button at the top of the invoice form to display the Send Invoice form shown in Figure 3. You can modify the wording shown to be more direct, such as a subject line of “Overdue Invoice”or perhaps e-mail text along the lines of “I’ve attached a copy of your overdue invoice. If there’s a problem with our products or services, please let me know immediately, otherwise I trust that you’ll remit payment promptly.” To change the default e-mail text, choose Edit, Preferences, and then choose Send Forms. Select Invoice from the Change Default For list, make your changes, and then click OK.




Figure 2: The Collections Report gives you a jump start on dunning overdue customers.




Figure 3: You can adjust the wording of an overdue invoice e-mail for one customer at a time or change the default text.

5. A/P Aging Summary: Although it’s key to make sure that your customers are paying in a timely fashion, it’s just as important to pay your vendors, too. Unpaid bills can result in phone calls, e-mails, and other unnecessary interruptions. Choose Reports, Vendors & Payables, and then A/P Aging Summary to display the report shown in Figure 4. As with most reports in QuickBooks, you double-click on amounts to ultimately drill down to the original transaction.



Figure 4: The A/P Aging Summary helps you determine when bills are slipping into overdue status.

6. Trial Balance: Many business owners overlook the Trial Balance report, since it’s one of the few reports in QuickBooks that uses the terms Debit and Credit. However, it’s a helpful report, as it shows you all account balances in a concise format. If anything looks out of order, simply double-click on the amount to view the underlying detail. Choose Reports, Accountant  & Taxes, and then Trial Balance to view this report.

7. Voided/Deleted Transactions Summary: It’s no surprise that small businesses are much more prone to fraud than large businesses. Small business employees usually wear multiple hats, so it’s often impossible to separate financial duties (bigger businesses can do this with ease). Fortunately QuickBooks makes it hard for perpetrators to cover their tracks: choose Reports, Accountant & Taxes, and then Voided/Deleted Transactions Summary. As shown in Figure 5, you’ll be able quickly identify any transactions that have been deleted from QuickBooks. Granted, this isn’t an end-all solution by any means, but it is a helpful management tool. Plus, if a transaction ends up “vanishing” from QuickBooks, you can use this report to see who deleted it!



Figure 5: The Voided/Deleted Transactions Summary enables you to find transactions that appear to have vanished.

8. Audit Trail: The audit trail was an optional feature in earlier versions of QuickBooks, but is permanently enabled in recent versions of QuickBooks. This provides a complete record of every entry made in QuickBooks, as shown in Figure 6. The downside to that is that you can end up with a massive report. Don’t worry, as it’s easy to filter this report and narrow your search. To do so, choose Reports, Accountant & Taxes, and then Audit Trail. Once the report appears, click the Modify button, and then click on the Filters tab. You can filter by date range, amount, or dozens more fields.



Figure 6: The audit trail shows every transaction—including modifications—in QuickBooks.

9. Previous Reconciliation: It’s a good practice to always print at least the summary report once you’ve reconciled a bank or credit card account. Someone else could edit a reconciled transaction, which could cause the reconciliation to be out of balance. A printed copy of the report shows that the account reconciled as of the report date, although you will still have to untangle the edited transaction. However, if you close out the reconciliation screen, you have a second chance to print your report: choose Reports, Banking, and then Previous Reconciliation. As shown in Figure 7, you can choose from multiple reports.




Figure 7: The Previous Reconciliation report option allows you to reprint missing account reconciliation reports.

10. Transaction History: Think of this as a “report within a report”, as you can only run it in certain circumstances. As shown in Figure 6, you must have a transaction open on the screen or single-click on a transaction within a report. You can then choose Reports, and then Transaction History. As shown in Figure 8, QuickBooks will display a report that shows the entire history for a given transaction.




Figure 8: The Transaction History report provides shows all activity related to a given transaction.

Did You Know?

The Microsoft web site offers hundreds of free spreadsheet and word processing templates. Options range from timesheets to analysis tools to contract documents. Visit http://office.microsoft.com/templates, and then search for a template by use (home, office, school), collection (real estate, small business, wedding), or keyword. Indeed, if you’ve created a template that you rely on, you can submit it to the site and share your work with others!