QuickBooks

These are uncertain economic times. Bring in money faster by using progress invoicing.

If you’re concerned about your company’s cash flow because you don’t know what will happen with the U.S. economy in the coming months, you’re not alone. The vast majority of small businesses struggle with cash flow — all the time. Are you making more than you’re spending? Will that change six weeks or three months from now?

We don’t have a crystal ball that will help you answer that question. But we do have QuickBooks Online. Besides providing predictive charts that can assist you in looking at future cash flow trends, the site offers a tool that can help you take concrete steps to actually improve your cash flow in the near future.

If you send out estimates and/or do multi-part projects for your customers, you can create progress invoices. These modified invoices allow you to send partial bills. You can break up your product and service costs into smaller pieces and start getting paid sooner than you would if you waited until your work was complete. Here’s how it works.

Readying QuickBooks Online

Before you get started, check to make sure QuickBooks Online will accommodate these modified invoices. Click the gear icon in the upper right and click Account and settings under YOUR COMPANY. Scroll down and click Sales, then scroll down in the right pane until you see Progress Invoicing. Make sure this option is turned On. Click Done in the lower right corner.

Creating A New Template

Now you have to modify the invoice template to accommodate progress invoicing. Click the gear icon in the upper right again and then click Custom form styles under YOUR COMPANY. Open the New style menu in the upper right and select Invoice. Your default template will appear in the box under Design/Content/Emails. Replace that name with a new descriptive name so you don’t overwrite your default invoice settings. Click Change up the template.

You’ll have to change the name of the default invoice template so you can modify it to use as a progress invoice.

Select Airy new in the box of options that opens. You can now modify the design of your new template by, for example, adding a logo. Click When in doubt, print it out to see your print options. Next, click the Content tab. You’ll see a grayed-out version of your template in the right pane. Click any of the template sections, and the corresponding fields will appear in the left pane. You can modify these as needed, then move on to the next. When you’re satisfied with the template, click the Emails tab and make any changes necessary there. Finally, you can Preview PDF by clicking the link in the lower right corner. Click Done when you’re finished.

You’ll be returned to the Custom form styles page, where you’ll see your new template in the list. Pay attention to which template says (default) in the FORM TYPE column. This is the template that will automatically open when you’re creating a new form (you can change this on the fly). You can designate a new default by opening the Edit menu in the last column.

Creating A Progress Invoice

When you have an estimate that you want to start billing (even though you haven’t completed all the work or purchased all the products needed), locate the estimate in the Estimates list. Click Convert to invoice at the end of the row. A window opens, asking how much you want to invoice. Your options are:

• Remaining total of all lines
• Percentage or amount
• Manual entry for each line

You have three options when you’re creating a progress invoice.

You would choose the first option if you’ve already partially processed the invoice and are ready to close it out. The second option allows you to just enter a flat percentage of the invoice total to include. If you choose the third, the invoice that opens will have zeroes in the Due column.

You can alter the amount due for any of these by either a percentage or an amount, and/or leave them at zero if you don’t want to bill a particular product or service. Either way, the Balance due will reflect your changes. When you’ve come to the last invoice for the project, you’ll check Remaining total of all lines.

When you’re done, just process the invoice like you would a standard form. You can always see an accounting of your progress invoices by running the Estimates & Progress Invoicing Summary by Customer Report.

Other Routes to Better Cash Flow

Of course, there are other ways you can improve your cash flow. We’ve gone over them before and explained how QuickBooks Online accommodates them. You can, for example:

• Offer modest discounts for early payment,
• Apply finance charges to late payments,
• Send invoices immediately and consider altering your terms (like 15 days instead of 30 days),
• Look for inventory items that aren’t moving fast and sell them off with a sale, and,
• Send reminders for late payments and follow up if they’re not settled quickly.

Progress invoicing benefits both you and your customers. And in these challenging economic times, everyone needs a break. Let us know if you have questions about managing estimates and invoices in QuickBooks Online. We’re here if you need us.

Running out of products? Stocking too many? How QuickBooks Online can help solve both problems

Maintaining a healthy inventory of products to sell is always a balancing act. And it usually involves a lot of trial and error when your business is young. If you’re selling unique products that you’ve created yourself, it’s not so hard. You make one, you sell it, and your inventory is gone.

It gets trickier if you’re mass-producing the same item or buying items in bulk, or wholesale. How many will you be able to sell? Your first estimates may be wildly off base. You take those early losses and try to make better buying decisions. You want to have enough products in stock that you don’t have to turn away sales, but you also don’t want to tie up a lot of money in excess inventory that isn’t moving.

As a business manager, you have to learn on your own where that sweet spot is for every item you stock. It can take months or even years. QuickBooks Online can’t make those buying decisions for you, but it can warn you when you’re running low and when you have too much on hand that isn’t selling so well.

Here are five ways to improve that delicate balance.

Make sure all of the inventory tracking options are turned on

Click the gear icon in the upper right and scroll down to Sales on the Account and Settings page. In the Product and services section, make sure all of the options are set to On (we’ll get to price rules later). Be sure to click Done when you’re finished.

Don’t skip the detail on inventory product records

We strongly urge you to complete all fields in inventory item records.

We’ve described the process of creating inventory item records before. You click the gear icon in the upper right corner and select Lists | Products and services. Click New in the upper right and Inventory in the panel that slides out from the right. You’re only required to complete three fields here: Name, Initial quantity on hand, and As of date. This allows you to include those item records in transactions. QuickBooks Online will subtract items when you sell them and keep your inventory level current.

The Reorder point field is very important. When the inventory level for that product drops to the number you specify, QuickBooks Online will let you know. In fact, when your cursor is on the QTY (quantity) field in an invoice, the three numbers pictured above will appear in a pop-out window (Quantity on PO automatically appears in the record based on your current purchase orders). Be sure you pay attention to this information when you’re selling products.

Set up flexible pricing

There may be times when you want to temporarily lower the price of a product or products because they’re just not selling. Maybe it’s a seasonal issue, and you expect that sales will pick up at a later time. You can use QuickBooks Online’s Price rules. This tool allows you to discount certain products for a specified period of time.

Let’s say you’re overstocked on fountain pumps and you want to discount them for a month to see if you can reduce your inventory level. Click the gear icon in the upper right again and select Lists | All lists | Price Rules. Click Create a rule and give it a Rule name. Price rules apply to all products and all customers by default. So you’d leave Customer | All customers as is. Scroll down under Products and services and click Select individually. Under Price adjustment method, select Fixed amount. Choose Decrease by and 12, and in the next two fields, then No rounding. Enter the Start date and End date (optional).

You can create Price rules to decrease (or increase) prices temporarily for some or all customers.

Click +Add product or service, then click the down arrow in the field under Products in the lower half of the screen. Scroll down to Fountain Pump and select it. Your Adjusted Price should appear in that column. Click Apply rule and then save it. This price will appear automatically when you create an invoice, though you can override it, or delete it on the Price Rules page.

Use the site’s inventory reports

As you might imagine, QuickBooks Online offers excellent templates for inventory reports that you should be running on a regular basis. We talked about how the site alerts you to low stock levels when you’re creating invoices. But you should study the big picture on occasion. These reports are:

• Inventory Valuation Summary. Transactions for each inventory item, and how they affect quantity on hand, value, and cost
• Inventory Valuation Detail. The quantity on hand, value, and average cost for each inventory item
• Physical Inventory Worksheet. Your inventory items, with space to enter your physical count so you can compare to the quantity on hand in QuickBooks Online. QuickBooks Online allows you to adjust inventory levels, but this should be done with great care. We can advise you on this.

You can also visit the Products & Services page, which displays a detailed profile of each item. If you’re low on stock or completely out, you’ll see that information at the top of the page.

We can’t advise you on the inventory levels you should be maintaining. Over time, this will become easier to gauge. But we’re here if you have questions about the mechanics of inventory management or any other element of QuickBooks Online.

Is Your QuickBooks company file ready for 2022? Three things you can do to put things in order.

January is always such a transitional month. You’re trying to wrap up everything that didn’t get done during a hectic December. At the same time, you have to jump into the new year and start doing your regularly-scheduled work. It can be hard to tell sometimes which year you’re working on.

Don’t forget about QuickBooks while you’re catching up on 2021 and looking ahead to 2022. You probably don’t want to put one more item on your to-do list, but any steps you take now to ready the software for the new year will pay off. Once you start entering transactions and placing orders and welcoming new customers, it will help tremendously to have a clean slate.

Here are some suggestions for completing as much of the work you started in 2021 as you can.

Run four critical reports

Bills can slip through without being paid in December because there’s so much going on. This applies to both you and your customers. You need to catch up on what’s owed to you and what you owe. So generate these four reports in QuickBooks:

• A/R Aging Detail. Which of your customers are in arrears with their payments to you? How much do they owe you, and when should the money have come in?
• Open Invoices. Which invoices have not yet been paid? There will be some duplication with A/R Aging Detail, but this report isolates only unpaid transactions.
• A/P Aging Detail. Are you caught up with the money you owe other individuals and companies? This report will tell you.
• Unpaid Bill Details. Like Open Invoices, this report sets apart only the bills that have unpaid balances.

Create statements for past-due customers

You’ll have to decide how hard you want to lean on customers who are late paying your bills when it’s so early in the year. Certainly, if some customers are more than 60 days late (30 days if they have sizable balances), you may want to make a phone call or at least send a personalized email asking them to fulfill their obligations.

But you can also send statements. These documents provide details of financial activity between you and your customers for a given period of time. Open the Customers menu and click Create Statements. Look over all of the options in the window that opens and indicate your preferences. If customers don’t respond to your statements within 10 days, then it may be time for a phone call.

Take a hard look at your inventory

It may have been a while since you did this, but it’s really important to do it regularly – especially if you had a busy holiday season. The best way to start on this is to open the Vendors menu, scroll down and hover over Vendor Activities, and click Inventory Center.

If you don’t have a lot of inventory, you could just highlight each entry under Active Inventory, Assembly over to the left. The window that opens on the right side of the screen holds an enormous amount of detail about each item. But if you sell a lot of different kinds of items, that will take too much time. In that case, you might run one or more of the reports linked from this screen. Even the QuickReport can be helpful.

Tip: If you need to adjust the quantity you have on hand, click the down arrow next to Manage Transactions in the lower left and select Adjust Quantity/Value on Hand. You might consult with us if you’re running into this problem, and we can go over inventory issues with you.

Set Up Online Financial Connections

January is also a good time to be thinking about how you can better use QuickBooks in 2022. We tend to learn how to use the tools we need and not explore any further when we’re using any kind of software. QuickBooks is such a massive program that that’s understandable.

But there are two tools that can have tremendous impact on your daily workflow, your ability to get paid faster by customers, and your understanding of where you stand financially every day. They are:

• Online Banking. Did you know that you can connect QuickBooks to many financial institutions and import your cleared transactions every day? That’s what the Bank Feeds Center is all about. If you sign up for this service, you won’t have to wait until your monthly statement comes to see what transactions have gone through.
• Online Payments. If you’re only accepting checks as payment from your customers, you’re probably getting paid more slowly than you might. Sign up for QuickBooks Desktop Payments, and you’ll be able to process credit cards, eChecks, and ACH payments.

We know you’re busy catching up from the holiday breaks right now. But if you need our help with anything we discussed in this month’s column, please reach out to us. We’re always available to set up a consultation.

SOCIAL MEDIA POSTS

Were you unable to keep up with all of your QuickBooks tasks over the holidays? We can recommend several ways to catch up.

A good way to start 2022 would be to run receivables and payables reports in QuickBooks to see what you owe and are owed.

Do you have customers who are behind in their payments to you? Sending statements in QuickBooks can help. Ask us how.

If you’re still not using QuickBooks Payments, you’re getting paid more slowly than you might. We can help set you up.