Cutting Expenses

Cutting Expenses Key To Profitability, But How? Some Tips

It may seem like a no-brainer – cut expenses to make more money – but many small changes can result in significant savings.

It looks like the economy may finally be looking up. Still, this is no time to loosen the purse strings in terms of your business expenses. Rather, why not re-double your efforts to cut costs and boost your profitability?

Excessive expenses cause debt, which in itself can be very costly. So any money-saving actions you take will be doubly rewarding.

More Effective Money Management

To cut expenses significantly, poke into every corner of your company's finances. Inventory is a good place to start. If you sell multiple units of the same item and reorder regularly, you should be using QuickBooks' inventory-tracking tools. Go to Edit | Preferences | Items & Inventory | Company Preferences.

You should be stocking your inventory to match the pace of sales. You don't want to be caught short, nor do you want to be sitting on too much and tying up money unnecessarily. QuickBooks can help, but you'll need to calculate the sweet spot for each item. Several built-in reports can help, including:

·         Inventory Valuation Summary. Displays the current asset and retail value of each item and inventory as a whole

·         Inventory Valuation Detail. Shows how individual transactions have affected the value of your inventory

·         Inventory Stock Status By Item. Helps you set up smart reordering procedures

·         Open Purchase Orders. Outlines each purchase order and its expected delivery date

To maintain profitable inventory levels and minimize expenses, you'll need to study QuickBooks' related reports regularly. When you're making buying decisions, consider factors like reorder turnaround time and seasonal sales upticks. 

Ratio reports, like profit over sales, can also be very telling. QuickBooks does not supply these, but we can help you create them in Excel.

Using Available Tools

The efforts you make toward reducing expenses in other ways can result in more savings than you might think. Here are some actions you can take that will accelerate your cash flow:

Use QuickBooks' budgeting tools. This doesn't need to be as onerous as you might expect – you can start by pulling in your real data from the previous year as a base. Build in line items for ongoing accounting support like QuickBooks maintenance. Click on Company | Planning & Budgeting | Set Up Budgets.

Minimize your April 15 obligation with year-round tax planning. Work with us throughout the year on the next year's taxes to, for example, make smarter quarterly payments, and we'll help you reduce your tax bill by making better decisions every day.

Get discounts by paying invoices early. Set up a custom field in vendor records to track this.

Analyze the cost-effectiveness of your transportation. Can you replace some in-person sales calls with web-based communication? Make sure that your delivery routes and sales call paths are efficient.

Change product/service prices to build in your own cost increases. Do it across the board, in small increments. It may not even be that noticeable to customers.

Talk to us about establishing a line of credit. We'll help you determine if this is a viable option for emergencies. It's cheaper than using credit cards.

Cross-train employees. Have employees train each other on their tasks where it makes sense. You can avoid costly temp help and relieve overworked departments.

Don't try to change everything at once. Establishing these new procedures will require some extra work. And you may not notice a reduction in expenses immediately. But over time, you will see a positive change – one that will give you extra dollars and hours to invest in making your company flourish.

Year-end adjustments QuickBooks makes automatically

QuickBooks adjusts your income and expense accounts at year-end to zero. Your new fiscal year will start with a zero net income.

QuickBooks makes an adjusting entry to your net income. Say your profit for the year was $9,000, you will see this balance in the equity section of your Balance Sheet as net income of $9,000.

QuickBooks increases your Retained Earnings equity account on the first day of the next fiscal year by the previous year's net income ($9,000 in this example) and decreases your net income by the same amount. This way, you start the fiscal year with a net income of zero.

Modifying QuickBooks Reports Gives You Better Insight Into Past, Future

If you make one resolution about improving your accounting procedures in 2012, it should be this: Make extensive use of the tools that QuickBooks offers for report modification. Comprehensive, meticulously-shaped reports that flow out of your carefully-constructed records and transactions are your reward for pounding on the keys every day, conscientiously recording income and expenses.

QuickBooks supplies you with a wide variety of pre-formatted reports whose modification options can help you do focused, critical analysis of your financial data. The right set of numbers will help you understand your history and plan for the future more effectively.

Check your preferences

When you created your company file in QuickBooks, you chose between reporting on a cash (income and expenses are recorded when money changes hands) or accrual (recorded when you invoice or receive a bill) basis. This affects summary reports, but not those that break out individual transactions or are simply lists.

If you want to change this, click Edit | Preferences | Reports & Graphs | Company Preferences and click the desired button:

You can set other preferences in this window that will affect your report output here.

Altering the display

Open the Income by Customer Summary report (Reports | Company & Financial). Change the dates to reflect a range you'd like to see. Want the data displayed by different time increments – like week or quarter – instead of just the total? Click the arrow next to Columns and select Four week. 

By default, your report rows display alphabetically. If you want to view a column by total in ascending or descending order, select the column by hovering over the top number until the magnifying glass appears, and click on it. Click the arrow next to Sort by and choose Total, then click the AZ [down arrow] icon (in some reports, there will be other options here).

Additional options in this toolbar let you:

·         Memorize the report

·         Print, email or export it to Excel

·         Hide or Show the Header

·         Collapse or Expand the columns

·         Refresh the report if you've made changes that will alter data

More display options

Click Customize Report:

Some of the options here duplicate what you saw in the toolbar. In addition, you can switch between Accrual and Cash for just this report, and add sub columns in some. The latter is a complicated operation, one that you must understand well in order to glean any insight from it. We can help you with this.

Sometimes the sub columns are generic, as shown in the screen above. In other reports, they're very specific to that group of data.

Clicking on Revert takes you back to the default format, and Advanced opens additional options specific to the current report.

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More customization = more insightful results = more informed financial choices

Transaction reports have many similarities and two major differences: You can change the column order by hovering your cursor over the column label until a hand appears. Click, hold and drag the column to the desired spot and let go. You can also add or delete columns by clicking Customize Report and checking or unchecking labels.

Learn the mechanics of report display modification well, and your company's finances will come into much sharper focus, improving the wisdom of future choices. 

If you have questions on this or any other QuickBooks feature, call or email us. We’re here to make your business better.

How do you charge sales tax to multiple general ledger accounts, since I have more than one state that I owe sales tax to?

All sales tax items default to the Sales Tax Liabilty account on the G/L, this cannot be changed. If you have them set-up properly, you should see the different vendors and the amounts payable on the Sales Tax Liability report. To run this report:

1.    Click on Reports (across the top)

2.    Click on Vendors & Payables

3.    Click on Sales Tax Liability

Make sure to select the date range you are reporting on.

Set up item codes for each state sales taxes,  and for some states, you will need multiple item codes for each county/city.    New York as example, has different rates for each county.    Orange County, Dutchess County, Westchester County each have its own rate, and Sales to each county are required to be reported.
As far as the liability - you might need to set up sub-accounts under Sales Tax Payable, and do a journal entry to move the liability on a daily, weekly, monthly or quarterly basis. 

QuickBooks 2012: New Paths to Better, Faster Financial Management

As it usually does this time of year, Intuit has introduced new versions of its Pro and Premier products. QuickBooks 2012 promises to help you get better organized, save steps, and acquire more in-depth financial insights.

The new Express Start is designed for businesses that want to blast through setup and start entering customers and invoices. You have two other options, though: Advanced Setup is the old EasyStep interview that solicits more details. You can also open an existing file or convert data from Quicken or other accounting software.

Express Start requires minimal input: company name, industry, company type, tax ID, and contact information. After you save your company file, it lets you start adding or importing customers/vendors/employees, products/services, and bank accounts.

An Activity-Driven Calendar

QuickBooks' Reminders keep you apprised of each day's tasks, but they don't provide any information about the past or future. QuickBooks 2012 solves this problem with its new Calendar. When you enter an appointment, to-do, or key business task (invoices, bills, purchase orders, etc.), it appears in the calendar. You can display a graphical view of the month that tallies activities for each day and lists them below. Daily and weekly views are in list form. And links open the original documents.

Save Excel Formatting

Once you've formatted a QuickBooks report in Excel, it's frustrating to have to reformat it each time you run it for different time periods and/or with your ever-changing content.  Excel Integration Refresh simplifies this process. You can now export a report to Excel, make formatting changes and save them, and then reapply them later to the same type of report using different date ranges and your updated QuickBooks data. Acceptable alterations include:

·         Row and column header font formatting

·         New formulas

·         Renamed column and row headers, and report titles

·         Resized columns

·         Inserted columns and rows

·         Inserted formula text

You can do this by opening your report in QuickBooks and clicking Update an existing worksheet, or by launching your report in Excel and clicking the QuickBooks tab on the toolbar, then the Update Report button.

A New Report Community

There's always room for more report formats. QuickBooks 2012 offers a library of Contributed Reports, variations created either by Intuit or your fellow users. You can select one of these, like Customer Sales By Quantity By Item Detail and instantly populate it with your own data.

You can sort these templates by industry and rating, and view them as a list, in a grid, or in the Report Center's Carousel view.

Centralized Operations

QuickBooks 2012 also saves you time with its new Centers. The Inventory Center works similarly to those available for customers, vendors, and employees. It's a clearinghouse of item records and transactions that can be viewed and sorted. You can also do inventory housekeeping tasks here, like adding items and launching transactions.

The Lead Center helps you carefully track new leads that you either paste in from Excel or enter manually. You can add to-dos and notes to contact records, and convert them into customers.

Upgrading Can Be Tricky

Intuit has included other, smaller time-saving organizational and reporting tools in QuickBooks 2012, like One-Click Transactions, which lets you create related transactions from existing ones (i.e., invoice to credit memo) with one click.

There's nothing especially difficult about using most of QuickBooks 2012's new features. But upgrading and setup are sometimes quirky, and the Excel Integration Refresh tool has a learning curve. We're happy to help you start your company file on the right foot or get acclimated to this latest version.

Customer Refunds: Are You Doing Them Right?

Refunds. You probably wince at the word. Some – like customer refunds for returns – are fairly uncomplicated, thanks to QuickBooks' tools. Others, not so much. You may find yourself unable to balance your accounts receivable.

There are numerous scenarios that necessitate the use of credit memos, including overpayment, order cancellations and bad debt write-off. It's critical that these are entered correctly. If they aren't, you may lose a lot of the time that QuickBooks helped you save as you try to chase down a few dollars.

Sending money back

Let's say a customer pays for an order but cancels before it ships. You could:

·         Apply the balance to an existing invoice

·         Keep it as an available credit

·         Issue a refund

 Click Customers | Create Credit Memos/Refunds. Select the correct customer and job (and A/R account, if you have more than one). Enter the items just as they appear on the invoice. When you're finished, click Save & New.  The Available Credit window opens, displaying your options.

You would select Give a refund and click OK. The Issue a Refund window opens and should already be filled in. If everything is correct, click OK. The refund check has now been entered in the checking register, ready to be processed.

WARNING: If the invoice was paid with a credit card, it gets complicated. Your instructions will depend on whether you are using Intuit Merchant Service for QuickBooks or another merchant account service. You'll also have to deal with transaction fees. We can help you deal with this.

Other refund options

If the customer has open invoices, you may want to choose Apply to an invoice in the Available Credit window. A list opens;  just select the correct invoice. Or if you want to have those extra funds available for other invoices but don't want to apply them immediately, click Retain as an available credit.  When you want to use them, click the Apply Credits button in the lower right corner of the invoice.

Sometimes, customers overpay an invoice or statement charge, or make a down payment for which there is no invoice. This is easy to fix. Open the Customer Payment screen (Customer Center | Transactions | Received Payments) and double-click the related payment.  In the screen's lower left corner, you'll see your options.

Click the correct button, then Save & Close. The Issue a Refund window opens; you'd treat it the same way you did when you dispatched a return refund.

Another use

You can also use credit memos to write off bad debt if you are using the accrual method of accounting.

If you don't already have a Bad Debt item in your item list, set up a new item as an Other Charge. Name it “Bad Debt” and match it to the correct account.

Open the Credit Memo window and select the customer, then select Bad Debt as the item. You'll get a message saying that the item is associated with an expense account; click OK. Enter the write-off amount minus sales tax if taxable (be sure the Tax column is correct) and click Save & Close.

WARNING: Enter two lines on the credit memo if it combines both taxable and non-taxable items (both charged to the Bad Debt account), one for each type. Be sure that the Tax Columns are correct.

The Available Credit window opens. Select Apply to an invoice. Put a check mark next to the correct one and click Done.

Make refunds make sense

It seemed easier in the days when you just wrote a check for a refund or made an entry in a paper ledger, didn't it? Using QuickBooks credit memos, though, helps you maintain records that follow standard accounting procedures and simplifies our understanding of your files. We'll be glad to help you make sure that this sometimes-complex task is done right from the start.

Accounts Receivable Payment Incorrect

I recorded a payment from a customer through Accounts Recievable but it wasnt for Invoices it was for something else, how do I get it out of AR?

1) Go to Receive Payment screen for the payment that is incorrect
2) Uncheck the checkmark next to the statement charge it was applied to (unapply pymt)
3) Click on History and see date of when the Deposit was actually made
4) Go to bank register and find the deposit on that date
5) Open up the Deposit- Find the check that is incorrect- Take notice of total deposit amount
6) Click on the line of the incorrect check and hit edit- Delete Line
7) Click Edit and insert a line (if needed)
8) Enter Account Name for whichever revenue account it should have been and deposit amount
9) The deposit amount should be the same prior to any adjustments
10) Go back to customer center and the payment that is being corrected
11) Edit- Delete Payment
12) As long as deposit amount is the same you should not have to clear the deposit again in the bank rec module