QuickBooks Pro Plus desktop 2022 customer section customer cycle. Get ready because we bookkeeping pros are moving up the hilltop with QuickBooks Pro desktop 2022. Here we are in our free QuickBooks sample file sample Rockcastle construction going through the set a process going to the view drop down opening the open windows list. So we have our open windows on the left, we’re going to go to the company drop down, open up the home page in the middle section going to maximize that home page. Then we’re going to open up our two major reports by going to the reports drop down company and financial gone down to that balance sheet standard report.
00:40
So now we have two items open now we’re going to open up the income statement otherwise known as the P and L Profit and Loss reports drop down company and financial profit and loss standard report. I like to change the date here so I can see the least more of the year, January through 1215. So let’s go back and toggle on over to our home page.
01:01
Now we’re now moving on down from the vendor section to the customer section which might be called the sales section, the revenue section or the accounts receivable section. If you’re working at a larger company, you might be working somewhere within specifically the customer section such as tracking the accounts receivable and collections. If you’re working at a smaller company, you’re probably going to be bouncing around a little bit more.
01:21
And if you’re working as a bookkeeper, for a smaller company, you might be doing all of the bookkeeping, in essence. Now there’s many different ways you can structure the flow of the customer section. And it will depend in part on the particular industry that you are in, I’m going to close the icon on the left hand side. And try to list this out from the most simple kind of setup you can do from the customer section to the most complex type of setup.
01:47
And once again, this isn’t just an arbitrary choice, saying I want to choose the easy one, or I want to choose the more difficult one, it’s a choice between multiple types of things, but including the industry that you’re in, which is when it got to be a primary thing that’s going to dictate which of these kind of methods you might be able to use and implement. So the easiest thing that you could do is have a cash flow method and go a step further, even from the cash flow method and wait till your money actually clears the bank and then say use the bank feeds for example, or check your bank account or use the bank statements to then populate your QuickBooks data with the information from the bank.
02:24
That would be basically over here, you’re going to start at the end of this flow, this flow chart, we’re just going to go right to in essence, the deposit. And when I record a deposit, then I assume that the deposits are all going to be from customers. And I can basically say that they’re all going to be basically revenue. So that could work in particular industries. For example, if you got electronic transfers if you’re in like a gig work economy, and so if you’re doing the book bookkeeping for for a gig worker that’s basically getting paid by different platforms, then the bank feeds that you will be receiving will typically indicate the platforms that you’re getting the money from, and so on.
03:02
And you could just take that money and any deposit is in essence, you can assume revenue, assign that out to revenue, increasing the checking account and the revenue at that point in time that you receive it. Now, that’s not that’s a cash basis system, not only as a cash based system, but it’s relying on the bank in order to record the transaction. So it’s not even really a full service bookkeeping system, because you’re not doing that double check of you entering the transaction, and then checking it to the bank. But in particular industries, that could work quite well, given the fact that you have those electronic transfers.
03:38
If you take a step away from that, then typically you will be entering the actual deposits into the system, and then checking those to the bank through the through the bank feeds and or through the bank reconciliation process. So that’s one method. Now note that if you if you do it in that method, and and you don’t have as much information in the bank feeds, then you could lose some information, you might just call it revenue, but you might not have as much information with regards to who paid you, for example, and you can come up with problems such as that.
04:11
So there’s some trade off with how much detail of information you’re going to have, how much internal controls you have, and the ease of the data input. Now if you take a step away from that, and you say, now I’m on a cash basis method, but I’m going to enter the transaction first. And then I’m going to record the transaction and check it to the bank. This might be a situation where you have like a food truck or something like that someplace where you have a check register.
04:36
Even if you’re just accepting cash and you’re not accepting any other form of payment. Let’s say you’re just getting cash at that point in time and you’re providing the food at the same point in time that you’re getting the money, you would probably use something like the Create sales seat receipt, which is a step away from just depositing it into the bank. Because now what you’re going to do is you’re going to take the sales receipts that you had Have record them on your end. And then you could deposit them directly into the bank as you receive them.
05:06
However, you got to be careful that what you group together in terms of your revenues matches what’s going to be on the bank statement, so that you could do that check doing the bank reconciliation and verify it to the bank. So what will typically happen is, if I’m collecting money, say cash, I’m going to record it here, and I’m going to put it into what we’ll call an undeposited funds, which we’ll explore in more depth later on undeposited funds often being a confusing component for many people working in QuickBooks,
05:36
whether you have an accounting background or not, it being an account, not often discussed when we’re thinking about just just journal entries, from a theory type of standpoint, because we just think about it as us receiving cash, but you got to think about Do I have that cash and I got to put it into the bank, and then I got a check that my I can reconcile to the bank. So in that case, then we’ll put it into undeposited funds. And then when we go to the bank, with our cash, we’re going to deposit that cash as a lump sum into the bank, the bank will then record it as a lump sum rather than individual payments from customers.
06:14
So this by doing this two step process, then we get the more detail if I was to wait for it to go to the bank, and then just record it all as income, I would be dependent on the bank. And I wouldn’t have that added information of who the customers were that paid us. And it would be a little bit more difficult to us to kind of match up to make sure that the sales items that we got here kind of lined up to what the deposit was in the bank. So we want to group the deposits here and and list them out. And then when we record the deposit on our QuickBooks system, we record the same grouping of the deposits that we expect to be on the bank, when we actually physically go to the bank.
06:55
So that we can tie those two things out in the bank reconciliation process. That would be the second level of controls. And then the third level and this would also be be driven by the type of industry is that we’re invoicing people, this kind of situation would be a situation if you’re a bookkeeper, if you’re a law firm, if you’re if your lawn care or something like that landscaping or something, and then then you’re often going to have to invoice someone, after having done the work. That means you do the work first, you’re not doing the work at the same time. As with like a food truck, you’re not doing the work, you’re not doing the work.
07:31
You’re not getting paid basically after you do the work, but just basically depending on on the application, say in gig work, but now you got to actually physically send the invoice which is the bill to the customers before they’re going to be able to respond and pay you to that. That’s when we got the full service process. Now we’ve moved away from just relying on the bank feeds, for example. And then we’ve moved away from a cash basis to an accrual component, because we’re gonna have to build the clients with what we’re going to call an invoice.
08:00
So recall the terminology here, the customer when we say the customer section, note, you might think we’ll work customers sometimes when we buy stuff from the vendors, we’re customers, but we got to think about the side of the table we’re on from QuickBooks terminology customers means that people are going to pay us for the goods and services, we provide an invoice his bill, he might see these two things and say, Well, these two things are kind of the same thing, aren’t they? Not for QuickBooks, because for QuickBooks, the bill means someone gave us a bill.
08:30
Not that we’re billing someone else. Even though in normal language, you can use it interchangeably as long as you know which side of the table you’re on in the invoice that that means that we’re billing someone else for the work that we have done. So the invoice means that we’re going to we’re going to do the work say it’s a law firm or bookkeeping firm or something like that, we have to add up the work it’s kind of like a job cost type of system in that case in that instance, and then we got to basically build a client for the work that was done and get paid at some future point in time.
09:00
Therefore we’re going to have to track how much is owed to us. So we’ll make the invoice closer to the point in time that we do the work. That means that the system will record revenue at the point in time we created the invoice because that’s closer to the point where we did the work even though we have not yet received cash at that point in time and then we’re gonna have to track the accounts receivable so if you’re in this kind of industry tracking the accounts receivable will be quite significant because you want to make sure that you’re tracking if someone has paid you and if you need to follow up on those types of payments.
09:32
And then at a later point you’re going to receive the payment from the customer so you got to track which customer paid you and then say that now you got to decrease this this item here receive payments will decrease the accounts receivable showing in our books that they no longer owe us the money and then the other side is going to go either into the checking account or it’s going to go into the undeposited funds.
09:56
We have that same issue if it’s going to Go into the checking account directly, we want to make sure that the checking account is going to show in the same format, the same grouping of deposits as how we entered it in QuickBooks, if, for example, we’re receiving payments, and we’re grouping them together, say cash again, and then we’re going to the bank and deposit in them, then we got to come up with some system that we go in and out of undeposited funds or in undeposited funds to try to group them in such a way that they’re matching up to what’s on the bank statement.
10:30
So we can reconcile, that also could be a problem when you’re working with a credit card company, because the credit card company might group the sales that have been made in some particular way. And then and then record those, those sales and you want to make sure again, that you can group the credit card transactions and tie them into basically what’s going on with the banking side.
10:51
So you kind of got to work with the bank, and the credit card companies and think about the fees to determine and make sure that you have a system where the deposits that are going into your checking account will match the amount that’s going to show up on the bank statements so that you can easily reconcile between the checking account and the bank statement. So that’s going to be like the full service process. Now, you also might have an estimate.
11:13
And that process, which is similar to the purchase order, if you’re in a job cost system, which could be a law firm, or it could be a construction company or something like that. And you have to give the estimate first, which is going to estimate in essence, what do you think it’s going to cost, then you got to send that out, that’s a form that you’ll create, which you can use them to populate the invoice. But it doesn’t actually record a transaction, the estimate doesn’t. So then so that those are going to be the major kind of flows that you will have, we’re here we’re going to focus in on June generally the full flow all the way through with an accrual process.
11:49
And then you can peel away what you want, if you’re not using that full flow process to use what you need. And you can also take a look at the bank feeds section if you have a system where you just want to connect directly to the bank feeds because you’re working like with gig work or something like that. And you don’t need to invoice clients, or use the check register or something like that, and you want to go straight there. That will be at the end of the course.
12:13
Now there’s one other kind of system that you might have, which is not as common, but actually kind of becoming more common. And that’s a case where we talked about a case where you get paid at the same time, as you do the work. We talked about a case where you get paid, you get paid after you do the work because you have to invoice What about times when you actually get paid first you get paid before you do the work. So the classic example being like a newspaper company or magazine company that gets a subscription, and they get paid before they do the work.
12:42
So in essence, you got to receive payment here, we’re going to in essence, record the payment first. And then we’d have to basically record the fact that we’re billing the clients for it at a later point. In other words, on an accrual basis. Even though we got the payment, we can’t really record it as income at that point in time because we haven’t earned it from an accrual statement standpoint. So we’d have to actually record the receive payment before we record the invoice which would record the revenue. And we’ll talk about how to that’s a little bit more tricky.
13:12
There’s a couple different ways that you can deal with that. But we’ll deal with that in the future. You might other other instances when you might see that as you might have a deposit that you might be receiving, which is kind of like a form of prepayment. If you’re renting, for example. And you’re collecting that first security deposit or something like that. And you might see it in in says something like a concert, where you’re basically getting paid for tickets before you actually provide the concert.
13:38
And you might see it in a situation where you have applications which is quite common these days, where you have service based applications, and you get paid for a yearly subscription, and then you provide the service after you get paid. So all of those kind of instances, you get this kind of weird, a little bit different have a problem that you got paid, but you can’t really record it as revenue on an accrual standpoint, and then have to make they have to adjust for it periodically.
14:03
And so that’s kind of a special case. We’ll talk more about that in a future presentation as well. Then of course you’ve got the refund, which will basically refund later we’ll talk about more about that icon that particular process in a future presentation too.