Me vs. the robots (a QuickBooks Online story)

I’m continually taken aback by the way QuickBooks Online does my thinking for me. As a self-taught bookkeeper/accounting person* who’s still learning, I prefer to do everything by hand and avoid shortcuts. QBO automates certain transactions, taking care of them behind the scenes in a way that makes the process invisible. This is something it’s always done, of course: I’m sure the first accountants to use it were horrified by all the tasks it automated (posting to journals?!). That’s always been the bargain with QB and QBO: give up control (autonomy, privacy, your own thought process) and let your life be made easier. In fact, it’s the bargain we make with every digital device and platform we use now.

For example, here’s how QBO writes off invoices: It applies a 100% discount to the invoice, decreasing Accounts Receivable and increasing Bad Debt. Although this is the end result that I, too, would arrive at, I would do it by means of a journal entry, not invisibly. It took me some time to puzzle out what QBO was doing.

Today I noticed another “advance” in this area. A customer, Suzie, who is billed monthly, always in the same amount of $135, made a $405 payment in September. Not having gotten a chance to put my hands in the books properly until today, I planned to sort through her account to find out why she overpaid, contact her, and apply the remainder as she desired. But QBO had already done everything for me. Although the deposit was made in September, the payment record shows that payment has been applied to October and November’s invoices as well. Thus, there is a temporal impossibility in the books: Suzie’s payment of September 4th paid her invoices of October 1st and November 1st as well.

What would I have done? I would have looked at the record, realized that Suzie was paying three months in advance, verified this with her, and applied the credit on her account to October’s invoice with an October date, then to November’s invoice with a November date. That’s two payment transactions plus a phone call. Am I glad I was saved all that time so that I could write this blog entry instead? I can’t decide.

* Yeah, I’m really not just a bookkeeper anymore, I’ve realized.

“You cannot say yes or no until you touch the books”

A very wise woman said this to me last week. It’s a great reminder that, as freelancers, we have the power to turn down gigs. Awesome little org doing terrific work, with a QuickBooks file that hasn’t been updated since 2015? You can say no. People you dig, a mission you love and a balance sheet so messy it makes your heart sink? You don’t have to say yes. Reflect on your personal capacity and your stress level. Do you want to be a hero, or do you want to have a personal life? It’s all up to you.

I also liked the tactile image she used—”until you touch the books.” I’ve said to clients, “I can’t answer that question because I haven’t really had my hands in the books.” Sometimes I wiggle my fingers for added effect.

How to pull cash-flow actuals

I like to do a monthly cash-flow projection for every client. (I don’t always, but I like to.) It’s really important to keep an eye on cash in small organizations, because a cash emergency can creep up and jump out at you like in a horror movie, except without any warning music. I’m sure that very soon you’ll be able to read all about that on my Cash Vs. Accrual page. Meanwhile, here’s how to pull cash actuals out of QuickBooks.

  1. Run a balance sheet for the closing month.
  2. Double-click on the bank total to drill down to a transaction report.
  3. Export that report to Excel.
  4. Copy the existing tab into a new one and format the data in the way that’s most comfortable for you (I’m Calibri 12 point, no bolds, 125% zoom). Delete the balance colum. Then sort it by transaction type.
  5. Delete all transfers, as long as they total zero.
  6. Open up the Cash Categories document you have previously prepared. As the name suggests, this lists the categories you want to show on your cash-flow report/projection. For example, under Cash In you might have Contributions, Program Service Revenue, and Grants; under Cash Out, Payroll first followed by all the expenses you want to differentiate.
  7. Proceeding from top to bottom down your list of transactions, copy and paste the appropriate cash category over the split field. You’re probably going to have to go back to QuickBooks to investigate individual deposits or anything that actually says “Split” in that column. If your organization does bill payments (instead, that is, of just recording expenses or checks), you’ll need to go back to QuickBooks to find the original expense account for those, too. Unless you know it off the top of your head!
  8. Sort and subtotal the finished list by Split.
  9. Hand-populate these totals in your cash flow.

Bonus tip. If you’re anything like me, you’re going to end up cutting-and-pasting over one of your Cash Category lines in a frenzy of categorizing actuals one day. Protect the sheet to avoid this!