Do you own your own business? Are you trying to evolve your skill set to include financial and management accounting? Are you looking for an alternative to monitor your personal finances?   Whatever the case, you have probably heard of QuickBooks, the trendiest accounting software for small businesses.

In this article I will use QuickBooks Pro, as I give examples to help expedite the learning experience, and make your company’s transition to the software considerably easier.

The homepage consists of a graphical flow chart detailing the most common used functions (vendors, customers, employees, company, banking) and how they flow together during the accounting cycle. Each of these pages has its own “center” allowing a user to navigate the specific features of that function. For example, the Vendor Center displays a list of active vendors; clicking on one will show you the vendor’s information and relevant transactions processed throughout the fiscal year. The top of the page consists of customizable toolbar that contains functions that allow you to integrate the file to either word or excel, new transactions, new vendors, and to carry out other related tasks.

Another feature is the company snapshot, which gives the user an overview of the company’s finances and clear indication of the tasks that need to be completed to maintain consistency. It shows account balances, bar graphs of income and expense trends, customers with owing balances, vendors to pay, and alerts.

Now that you have a general idea of QuickBooks, here are some other tips to make using the software even easier, and less stressful.

 1.       Knowing the Key board shortcuts- In using any Microsoft applications, and any software for that matter, knowing the keyboard shortcuts is key to completing the task at hand considerably faster. Here are some essential QuickBooks, keyboard shortcuts to help in the process.

Ctrl-I     Create invoice

Ctrl-E     Edit transaction selected in register

Ctrl-F     Find transaction

Ctrl-J     Open Customer Center

Ctrl-M     Memorize transaction or report

Ctrl-N     New invoice, bill, check, or list item in context

Ctrl-Q     QuickReport on transaction or list item

Ctrl-T     Open memorized transaction list

Ctrl-W     Write new check

2.       Program Preferences- After installing the program, QuickBooks uses a setup wizard to help facilitate the user’s specific use of the program. Although it is helpful, it does not thoroughly cover everything.  Click|Edit Preference to open the preferences window. Some of the important preferences you can set for your personal accounting preferences are:

• o   What are the default accounts for activities like writing checks and paying bills?
• o   Do you want a one-window or multi-window view?
• o   What is the default annual interest rate?
• o   Do you want to use inventory and purchase orders?
• o   Do you create estimates?
• o   Do you want to use multiple currencies?
• o   Do you want to use payroll?
• o   What reminders would you like?
• o   Do you charge sales tax?

3.       Use Right- Click Menus- Right-click menus are everywhere throughout QuickBooks. It is a useful alternative, rather than solely relying on the toolbar. For example, highlight an entry on the employee roster, and you can perform a number of tasks, such as, editing and deleting the account, getting a Quickreport, or customizing the specific employee column. This is very useful because it allows the user to apply changes to one person, instead of all employees.

4.       Customize the Icon Bar- By now you should have a basic understanding of what QuickBooks has to offer your business or personal finances. Customizing your icon bar will help the user specify their exact needs, and to clear out any unnecessary functions that could possibly confuse the user, or disrupt any data already in use.

To remove an icon: Go to the View menu and click Customize Icon Bar. Select the icon you want to remove and click Delete.

To add an icon: Go to View | Customize Icon Bar and click Add. Select the desired item from the list and change the label and description if you wish. Click OK.

To modify an icon: Go to View | Customize Icon Bar and select the item you want to modify. Click Edit, make your changes, and click OK.

5.       Use Classes so you can better track profit and loss. When you're working with Preferences, make sure Classes is turned on (Edit | Preferences | Accounting | Company Preferences | Use class tracking). Classes are your own way of categorizing elements of a business. When you enter a transaction, a Class drop-down box will appear; you can create your own Class, such as Marketing, or Advertising, or Building One, or Region A. Then you'll be able to run a Profit & Loss by Class report.  This allows a business to isolate areas that have discrepancies, and allow the user to fix them without compromising the other information.

6.      Export reports to Excel - QuickBooks' reports are highly customizable. Coupling your report with Microsoft’s Excel power will allow the user to manipulate and format data and to run what-if scenarios to better predict future income and expense trends, leading to better business decisions, and continual success.

You can easily export QuickBooks reports to Excel.

Open the report you want to export.

Click the Export button at the top of the report.

Choose whether to export as a comma-separated values (CSV) file, or into a new or existing Excel workbook.

Click the Advanced tab if you want to preserve some of the QuickBooks report formatting options.

Click Export.

7.        Use Free support options- Intuit, QuickBooks software developer, charges for phone support if you have an issue involving more than installation or certain bugs and errors. But the company offers plenty of free assistance online. Furthermore, there are copious amounts of free YouTube tutorial videos, as well as Quick books forums to assist you when needed. If you run into problems you can:

Poke around user forums to see if someone else has had the same problem you are experiencing—the odds are pretty good, after all—click Help | Live Community.

QuickBooks' program-based help is quite comprehensive. Click Help | QuickBooks Help (or press F1) to search. If that doesn't work, click Help | Support to search the QuickBooks Knowledgebase. Use youtube.com, enter your specific issue, and watch step- by-step video tutorials to further aide your problems.

8.       Backing up Data- We have all experienced a time when we had our computers crash, and for whatever reason did not have all of our data backed up. Through the Setup Wizard QuickBooks offers a guide to backing up your data to a removable hard drive. Moreover, Intuit offers to back up all of its user’s data through an internet connection for a small cost. I advise any user to do one or both because I would rather be safe than sorry.

Well, that's it for today.

Make sure that you check out our full course at  http://QBUniversity.org for a in depth Quickbooks course.

Mat Hultquist

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The 2 ways to report the information are called the cash basis of accounting and the accrual basis of accounting.  These terms tend to confuse a lot of people.

Cash accounting basically means you only count as income the money you actually receive.  Expenses are only counted when you actually pay the bill.  It's basically cash in and cash out, regardless of whatever other bills you owe or whatever amount of money your customers owe you.

On the other hand, accrual accounting means you count as income anything that you have billed your customers, regardless what you have actually collected.  And your expenses are bills you owe to vendors, regardless if they have been paid or not.

For example, assume you an invoice a customer $50,000, but have only collected $10,000 of the invoice.  Under the cash method, your revenue is $10,000 and under the accrual method your revenue is $50,000.  Big difference!

The same holds true for your expenses.  Let's assume you have an outstanding bill you owe a vendor for $20,000, and you have only paid $5,000 of it.  Under the cash method, your expenses are $5,000 and under the accrual method your expenses are $20,000.

So, which is better?

Well, the cash method is easier to understand, but the accrual method more fully reflects your actual business activity.  The cash method can distort how your business is actually doing.

And Quickbooks makes it easy to switch between the 2 methods of reporting.

When you pull up a report in Quickbooks, simply click the button that says "Modify Report."  Then, on the next screen you will see an option to choose either Cash or Accrual.  Simply pick which one you want to see and click OK and your report changes accordingly.

You can also tell on the face of the report which method Quickbooks is defaulting to - just look in the upper left hand corner of your report and it will say either "Cash Basis" or "Accrual Basis."

It's as simple as that!

In the first situation (immediate sale), you would create a Sales Order in Quickbooks.  A Sales Order in Quickbooks signifies that your customer is paying immediately for the goods or services.  You can find a Sales Order form from the Home navigation page or by going to the "Customers" drop down menu.

The second type of sale you can make in Quickbooks is when you sell your product or service and bill your customer.  In this situation, you would create an Invoice in Quickbooks.  An invoice signifies that the customer now owes you money.  When you create an Invoice in Quickbooks, you create what is called an accounts receivable.  An accounts receivable is a fancy accounting term basically meaning the amount of money your customers owe you.

You can find an Invoice form from the Home navigation page or by going to the "Customers" drop down menu.

So, the next time you record your sales in Quickbooks, make sure you use the correct sales form to ensure that you keep your books clean and free of errors.

Well, it could be a custom order that requires prepayment, or it could be a small manufacturer that requires payment up front.  Or, you could have an opportunity to get a discount if you pay within a certain amount of time.

Whatever the case, recording this in Quickbooks can be a challenge.

Here are the steps to pull it off:

1. Create your purchase order like normal
2. Then create a new "Other Current Asset" account called "Prepaid Inventory" or something similar
3. Pay for your items with by writing a check or entering a credit card charge, whichever way you pay.  QB will mention that you have an open purchase order for the vendor, make sure to click No to not select the purchase order.
4. On the Expenses tab of the check or credit card charge, click the Account field. Choose the other current asset account that you created.
5. Save the check or credit card transaction.

Then, when you receive the items:

1. Find the check you wrote or the credit card charge you entered and bring it up on the screen.
2. On the Expenses tab, select the line that contains your other current asset account.
3. Go to the Edit menu and click Delete Line.
4. Click the Items tab.
5. Click Select PO.
6. Click the purchase order that contains the items you paid for and then click OK.
7. If necessary, record additional expenses (such as shipping) on a new credit card charge or check.
8. Don't add additional expenses to the existing credit card charge or check.
9. Save the transaction.

And that's all there is to it!  I hope this helps and let me know if you have any questions!

So, let me explain this common trap many small businesses fall into (without even knowing it!).

If you read my last post HERE, you learned about how to increase your cash in your business by using some common Quickbooks reports.  You found that you can pretty easily calculate 1) how long on average it takes you to collect your accounts receivable, 2) how many days on average it takes you to pay your vendors, and 3) how long, on average, your inventory sits on your shelves before being sold.

So, as an example, let's say you come up with the following for your business:

• Days to collect receivables - 45 days
• Days to pay your vendors - 30 days
• Days your inventory sits on your shelf - 90 days

On the face of it, this doesn't look so bad, does it?

But let's take a closer look.

In this example, you order your inventory on Day 1, and get it a few days later, with the bill attached.  30 days later, you pay for that inventory, but it sits on your shelf for another 60 days before you sell it (90 days total - 30 to pay for it, then 60 before it sells after you pay for it).

In the meantime, it takes your customer 45 days to pay for what they take out of your inventory.

OK, so what does this mean?

Well, first, you are financing your customers for an extra 15 days (ie you pay your vendors for goods in 30 days, but your customers pay you for those goods in 45 days), and you are probably not getting any type of interest on this "free" financing.

Second, your vendors are essentially using you as a bank, by selling you goods that you pay for that sit on your shelf - for an additional 60 days after you buy them!  Are you earning interest on this money you "loaned" to your vendors?

These 2 disparities in timing are what's called "cash gaps" and can literally KILL you business and your dreams of financial success.

Your goal as the OWNER, MANAGER and LEADER of your small business is to close these cash gaps.

And when you do, I can guarantee you will see huge swings in positive cash flow.

So, how do you close these cash gaps?  What is the most effective way to close them?

I'll go over some simple ways to close these gaps in your own business in my next few posts and let you in on some secrets I've learned over the years of what actually works and what doesn't...

And you can find everything you need to implement these strategies in your own Quickbooks file.

The Quickbooks University team

• Monitor your accounts receivable - your accounts receivable is what your customers owe you.  One simple way to increase your cash is to get your customers to pay you quicker.  Do you know how long, on average, it takes your customers to pay you?  It's simple actually, and its called your Accounts Receivable Turnover.  To figure this out, first take your sales and divide it by your average accounts receivable.  A couple things here - first the sales number you use should be the amount of sales you have where you issue an invoice, you do not include cash sales.  Second, "average" accounts receivable is the average of your accounts receivable balance over the period you are measuring.

As an example, if you are calculating the accounts receivable turnover for 2011, then take your net credit sales for 2011 and divide it by your accounts receivable balance at 1/1/11 plus the balance at 12/31/11 and divide that total by 2.  This result will give you a ratio - to figure out the number of days your accounts receivable are outstanding, divide 365 by the ratio you get.  So, let's say the end result is 45 days, this means it takes you 45 days, on average, to collect your accounts receivable.  To increase your cash, you have to figure out how to get this number down.

• Monitor accounts payable - your accounts payable are the bills you owe to your vendors.  A simple way to increase your cash is to extend out the amount of time you take to pay your vendors as long as you can.  This is called your accounts payable turnover and is calculated similarly to the accounts receivable turnover.  First take your credit purchases over a certain period and divide it by your average accounts payable.  To get your amount of credit purchases (for a business with inventory), take your cost of goods sold, add your ending inventory and subtract your beginning inventory.  Then divide this by your average accounts payable.

To see this as days it takes you to pay your accounts payable, simply divide 365 by the ratio you get for accounts payable turnover.  If the result is 20 days, then on average you pay your bills in 20 days.  Try to extend this out further to increase your cash.

• Manage your inventory - a final way to increase your cash is to manage your inventory more effectively.  How do you do this looking at your Quickbooks reports?  Again, we are going to calculate something called your Inventory Turnover.  This shows you how many times you sell through your entire inventory balance over a certain time period.

Looking at your Quickbooks financial statements, take your cost of goods sold and divide it by your average inventory balance over the time period.  Then, take this result and divide it into 365 to figure out how many days it takes you to sell through your inventory.  As an example, if you calculate 180 days, then it takes you that long to sell through your inventory.  This is rather long and it means you are leaving a lot of your cash on the shelves as inventory.  To increase your cash, you have to lower these number of days and move your inventory.

These are 3 simple ways to increase your cash in your business by simply reviewing your Quickbooks financial statements.  Of course, there are adjustments and caveats for service oriented businesses, or other types of businesses that do not have accounts receivable or inventory.  But this is the exact reason that it is imperative to learn Quickbooks the right way - so that you have the correct data to efficiently run your business, increase your cash, and make the right operating decisions to not only survive, but thrive.

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So, what can you expect in Quickbooks 2012?

Well, like always, there have been some changes for the better, such as:

• An easier start-up experience.  In previous versions, to set-up your company, you had to go through the Interview process, which asked you anywhere from 20-40 questions.  You can now set-up a company with a mere 3-4 questions.

• Calendar-based transaction view.  You can now look on a calendar to see what transactions you entered and when you entered them.  This will make it easier for some business owners who are more visually focused because before they would have to look through transaction printouts.  Keep in mind that this calendar does not integrate with your outside calendar, like Outlook, however, this is probably a good thing as it may just jumble up your appointments calendar.

• Better Excel integration.  In previous versions, if you exported data to an Excel spreadsheet, then changed the appearance with fancy fonts and whatnot, you would have to re-export the data and re-do the spreadsheet if the data changed.  Quickbooks 2012 allows you to now export this data to your fancied-up spreadsheet without getting rid of the formatting.

• A neat new function for us report junkies allows you to share and upload customized reports of other users.  What this now means is that if you run a construction company, for example, and want to see what other customized reports other construction companies are using, you can now get that information via an App-like store.  Intuit of course checks them first to make sure they are good enough to be distributed.

• A little bit better CRM solution.  A few years ago Quickbooks had a separate CRM solution.  I believe it was called Quickbooks Contact Manager.  I owned it and quit using it after 3 months.  It was horrible and Intuit stopped making it a year later.  Well, they are stepping back into the CRM arena with new features in Quickbooks 2012.  Now, you will be able to enter and keep track of sales leads and prospective customers instead of having to input them as full-blown customers.  You can also attach files, such as Word documents and PDF's to any transaction which will help with important documents for particular customers or transactions.

And, just as always, Quickbooks 2012comes in the Pro and Premier versions, with Premier versions having various specialty versions, such as the Accountant and Contractor editions. The Mac version of QuickBooks is also getting an upgrade for 2012, however, just like prior versions, it is still not nearly as robust as the Windows version.

And of course, Quickbooks Online is still available and it keeps making strides in its functionalities.

Should you Upgrade?

Personally, I will be buying Quickbooks 2012 because some of my clients will use it and I will need it if I want to work with their files.  But I personally will probably not use it yet until the bugs are worked out.  In every new version there are invariably a number of bugs in the newest release.  Over time they get fixed, but I don't want to be part of the experiment with my books.

So, my recommendation is to wait to upgrade to Quickbooks 2012 until the 2nd or 3rd update is released.  And if you are still using Quickbooks 2010 or 2011, you should be fine using those for another year or two until you have to upgrade because Intuit no longer supports your version.

But for those die hard junkies that feel the need to upgrade to Quickbooks 2012 now, you can get 20% off of Quickbooks 2012 here.