You have your Quickbooks file set up, and someone is updating them, either yourself, someone inhouse, or an outside bookkeeper. The day-to-day bookkeeping is getting done, but how can you really tell if your books are in good shape?
- Do the numbers seem right? I know it sounds obvious, but you’d be surprised. Trust your gut. If something doesn’t feel right (when you look at your reports,) it probably isn’t. I once had a client say: “My bank register (in Quickbooks) is off by $10k. But I know about it.”
I mean. D’oh. But for real – if you’re off, you’re off. You can’t just assume that because you are aware of the “problem” and can manually back it out, that it’s”okay.” If you’re off, you’re off. And I don’t care if it’s $0.01 cent or $10,000. Being “off” is a symptom – and you need to find and fix the problem. Whatever it is that clues you in, pull at it, and keep pulling until you find the issue. And then fix it. (And if you need help, I know a great bookkeeper. The World’s Best actually :))
- Is your bookkeeper asking you the right questions? Not getting any questions might feel like everything is running smoothly, but in my experience it usually means there’s a problem. Set aside some time to review detailed reports – go line by line, or spot check. Pick out your biggest customers or biggest vendors, and do a review of their balances. Pull your reports and compare them month to month. See what jumps out to you. Did you get any cash or “other income” recently that shouldn’t be included in your operating income (Loans, insurance proceeds, deposits on future products/services?) Do you have any expenses that should be capitalized? Did you put down a security deposit on your rental space and your rent expense is now (incorrectly) inflated? Do some poking around and see what questions you come up with. I bet you will find things that need more research.
- Does your bookkeeper have the answers or know how to find them? Ever asked your bookkeeper a question and they look at you blankly and say something like “I don’t think that’s possible.” “Quickbooks can’t do that.” “That’s just how it works.” If your books are not getting you the answers you need, figure out what you have to do to make sure that they do. Do you need to add more detail to your invoicing? Do you need to start using multiple items where in the past you used just one? Do you need to review your uncleared checks more often, because you’re ending up with doubles? Do you need to consider using an outside app to get better results on one particular report? Do you need to pull your reports to excel and tweak them there, for better flexibility? There are workarounds to everything, so take the time to make sure it’s getting done right, that you are entering the right level of detail to ensure the best possible reporting. And on the flip side, let’s make sure you’re not wasting time entering too much detail where you don’t need it.
- Transfers and Credit Card payments: I’d be remiss if I didn’t mention these. This is one of the most common errors I see bookkeepers making in Quickbooks. You end up with duplicates, and duplicates means over-reporting, under-reporting, and incorrect cash balances. And we don’t want that. So grab your most recent bank statement and find a transfer to another account, and a couple credit card payments. Search those amounts in Quickbooks – do you have one transaction for each one, or two? If you’ve got two, well, you’ve got dupes. Let’s clean that up, and see what we need to do to avoid this in the future.
- Check your bank recs. Don’t know what those are? Email me and I’ll explain. Bank recs not done since 2009? That’s not usually a good sign. Hard stop. Do not pass Go, do not collect $200. Stop everything, and get those recs done before you move on.
Lastly, get a file-review done by a professional bookkeeper or accountant every so often. Think of it like a tune-up for your car, or a check-up at the doctor. Hopefully everything is fine, but just in case there are any concerns, it’s better to catch them as early as possible.
Questions? Comments? I’d love to hear from you – pop them in the comments, shoot me an email, or find me on Instagram!