Recently, Intuit sent out an email stating that 93% of business owners want to work with “Real Time Accountants,” meaning they prefer working closely with an accounting professional who offers proactive, forward-looking advice based on “real time” financial information.
How can we as bookkeepers and accountants provide true real time financial information? With today’s technology, it is not only a possibility but a must in order to keep pace with client demands. Being proactive by implementing workflows that free up resources through automation and standardized processes will give you a big advantage.
The key areas for automation opportunities are revenues, expense processing and reconciliation. This article will focus on the automation of revenues and related reconciliation.
Take the example of retail or ecommerce businesses (they are very similar), there is typically a front end system such as point of sale like Square or Shopify where sales transactions are initiated, sales tax collected and credit card transactions sent to the payment processor. These all occur outside of accounting software like QuickBooks. In order to get this data into QB, one can either enter it manually or automate the entry by using a third party software app.
The manual process usually involves downloading reports from the POS into Excel, maneuvering that data into journal entry format. This can take up to hours and most likely done once a month. It definitely falls short of the “real time” accountant that business owners want.
Another option is to automate the data entry by using a third party app that integrates with QB. These apps do the job of getting the data in but can make a real mess in QB by bringing in every single transaction.
Here’s an example to bring things into perspective. If a store sells 200 orders a day and each entry is at least two lines of data in the format of double entry accounting system, this totals up to 400 lines per day, and adds up to 12,000 lines of data per month! You can quickly see how cluttered QB can get. Reports are slow to run and reconciliations to payouts are impossible.
The better solution is to choose apps that can summarize data into one entry per day. Data can be viewed in “real time” or at least daily, without all the clutter. Cleaner QB means faster reporting, real time information for business owners.
Another piece to the automation is reconciliation to accounts in your QuickBooks chart of accounts like clearing accounts, sales tax liability, gift card liability and fees. Reconciling these accounts is essential to ensure all of these elements are recorded properly. Payouts from payment processors are usually batched in a way that includes one or more day’s sales, sales taxes and with processing fees netted out. It becomes quite impossible to reconcile a payout to the particular sales transactions and the related pieces when there are numerous orders per day. It gets even more impossible if the payouts cover multiple days of sales.
In choosing a third party integration app, choose one that has the reconciliation done and summarized into one entry into QB for each payout. The entry should properly record each of the elements to respective clearing accounts with fees separated out. The net deposit should be in a position to be “matched” in the banking feed.
When this reconciliation is done on a daily basis and automated, it can save many hours of work and frustration. Bank reconciliations are a breeze at month end.
With the automated sales entries and payouts reconciled daily, you would have solved two of the main pieces of being a “Real Time Accountant.”