My dermatologist, whom I see every December, is a soft-spoken, businesslike man in his middle years. His sole concession to conviviality is usually a Warner Bros. holiday necktie. Today, however, in his usual low-key manner, he asked several questions about what I do for a living. Looking at my back, he said, “What do the debit and credit mean?”
Me: “That’s the basic transaction in accounting. You debit something and credit something else, whenever you do anything.”
He: “And what made you decide to tattoo those on your back?”
Me, honestly: “I love bookkeeping, Doctor. I really, really do.”
I had had some coffee.
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.
I have a documentation compulsion and always have. When I started out as a bookkeeper, I wrote my own manual for every job and kept them in binders. (I called them Econo-Manuals, in honor of the first such manual I created—on green index cards, if memory serves—for a college job.) After losing one of those binders in a coffee shop, I was sufficiently spooked to move online. I used Wikispaces, a site which is now closing, for a number of years; on being informed of their closure, I was plunged into a panicked search for another wiki-like site on which to store my stream of instructions, thoughts, queries and other self-talk. I tried Zoho Wiki but was frustrated by its hit-or-miss formatting and homely appearance. Did I mention that I also have a formatting compulsion?
Then I lucked on Nuclino, which I am loving. It’s super-easy to use, easy to organize information on (with?), and handsome to look at. And they just came out with a Mac OS app! I’m so happy! Try it and let me know what you think. Then we’ll talk about Trello.
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.
- Run a balance sheet for the closing month.
- Double-click on the bank total to drill down to a transaction report.
- Export that report to Excel.
- 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.
- Delete all transfers, as long as they total zero.
- 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.
- 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!
- Sort and subtotal the finished list by Split.
- 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!