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QuickBooks Best Practices: 7 Tips to Maximize Your Financial Management

quickbooks best practices

If you’re running a green industry business, financial management software is a must-have to account for revenue for work completed, record daily expenses, and take inventory to properly allocate material costs.

From all the software options available, the majority of small business owners have opted for QuickBooks: As of 2015, QuickBooks enjoyed an 80 percent market share of U.S. small businesses that use financial management software.

But many have only scratched the surface of the tool’s capabilities: For even the most seasoned QuickBooks users, there’s always plenty to learn about using the software efficiently.

Spring-Green Franchise Business Consultant Tom Warfel spoke to Franchise Owners at this year’s Spring-Green National Training Conference about how to maximize the benefits of QuickBooks for their businesses. Here are some of the tips he offered — plus a few more best practices to help you be smarter about your QuickBooks use.

Quickbooks Best Practices For Financial Management

“QuickBooks’ main benefit for Franchise Owners is the ability to help them stay on top of their numbers,” Warfel said. “The software also allows bookkeepers to explain the numbers to the professional they’ve hired, and accountants can ensure they’re paying the right amount of taxes each year.
But leveraging that ability requires diligence and consistency in inputting data.”

Here are four QuickBooks best practices to ensure you’re getting the most out of the software, along with mistakes to avoid.

Regularly Input Data

“Small business owners have a habit of managing the finances of their business in their head and by looking at the bank balance,” Warfel said. “Managing your business with the limitation of what you can remember limits your ability to grow. And if all you see is the current bank balance, then you only see a portion of the financial position of the business.”

“Your bank balance won’t reflect factors like outstanding checks that will cut into your balance once they clear. It also won’t track what customers owe or help you plan for future cash flow,” Warfel added.

Set Memorized Transactions

Instead of spending time on entering the same transactions, QuickBooks allows users to create “memorized transactions.” The software can remember billing, invoicing, monthly adjusting journal entries, and other recurring events.

This feature can make you more efficient with your time, keep you from forgetting something and also improve cash flow. To set a transaction as memorized, you can click “edit” (or right click) and “memorize.” You can then personalize the event with a schedule and other details.

Track Job Costs

Knowing how to price jobs accurately is what sets owners apart from their competition, and QuickBooks can help with that task. It has job-costing features where you can enter the estimated costs and income for each job. Then, you can post the costs by the job or stage.

To fine-tune your costing, you can use the software’s Estimate vs. Actual Job Cost reports. That allows you to make adjustments during the project and also learn how to improve your estimates for future jobs.

Use Ask My Accountant (AMA)

The AMA placeholder account allows you to save any transactions or questions you have for your accountant. For example, if you aren’t positive about how to categorize a project expense, you could mark it for this account to check with an expert later.

Be sure to review what’s in your AMA account monthly to correctly categorize your expenses. It’s better to ask your accountant about anything you’re unsure of instead of incorrectly filing it — this will only cause problems down the line.

QuickBooks Mistakes to Avoid

QuickBooks can be a powerful and effective tool when used correctly. But there are a few common mistakes that trip business owners up — and create issues in reporting (or even tax payments) down the road.

To get the most from the software and ensure your data is correct, avoid these common mistakes.

Uploading Bank Statements

Too often, small businesses simply upload their bank statements into QuickBooks as a way to enter their expenses.

“This is done once per month, meaning the rest of the month is managed only by looking at bank account balances,” Warfel said. That can cause a major accounting problem: Your bank account isn’t being reconciled, meaning there are no checks and balances taking place.

QuickBooks allows users to reconcile all of their accounts — such as credit cards, checking, savings, and loans — using its reconciliation module. It’s best to start reconciling the smallest account and then move up to the larger ones from there. Owners need to reconcile their accounts at least monthly, ensuring every transaction went to the correct account, cleared the bank, and that nothing was missed.

Not Applying Payments

Another mistake owners make when it comes to QuickBooks is forgetting to apply payments to open receivables. Your accounts receivable aging report shouldn’t show customer balances with negatives or amounts that shouldn’t be there.

Each customer payment should correspond to an open invoice, so make sure the payments are applied properly. For example, if one of your maintenance customers makes a payment, ensure you’ve attributed it to a specific invoice. Have a system in place to record the payments, whether you do so as they are received, weekly, or monthly.

Failing to Back Up QuickBooks

Any business owner who relies on technology has experienced the horror of data loss at some point in the life of their business.

While you hope your computer will never crash, it’s best to be prepared in case it does — including backing up your QuickBooks data. Make it a habit to periodically back up your files, on an external drive or in the cloud.

Explore Resources for Franchise Owners

QuickBooks is one of the many tools available to help you run your business more efficiently. Better decision-making leads to better cash management and bottom-line profit.

Hundreds of Spring-Green Franchise Owners benefit from the knowledge of business consultants like Tom Warfel, who provide insight on everything from QuickBooks optimization to sales forecasting and business planning.

For more than 40 years, Spring-Green has offered its Franchise Owners countless resources: a proven business model, marketing, and technology expertise, and other support and training to help grow their green industry businesses.

Learn more about how Spring-Green can expand your lawn care services. Call 1-800-777-8608, or visit www.growmygreenindustrybusiness.com.