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Quickbooks – Tips to Reduce Errors

A significant portion of my career has been spent working with small or medium sized businesses that share two things in common.  They use QuickBooks for their accounting software and their accounting personnel are not trained on how to effectively use QuickBooks.  Without being trained on how to effectively use QuickBooks, the risk that errors will result increases.  To combat these potential errors, I have made a short list of things that can be done to reduce the number of errors and catch the ones that do occur.

• If your company does not have an experienced accounting professional, such as a controller or CFO, engage an outside accounting professional to perform a periodic accounting check-up.  Some companies have their tax CPA do this, but I would recommend an accountant with hands on experience in operational accounting.  Having this periodic check-up will help catch errors, but it also will provide an opportunity to train your staff to use QuickBooks more effectively.

• Bank reconciliations are sometimes performed by the same individual who manages the day-to-day cash transactions.  If this is the case in your company, consider having someone else perform the bank reconciliations.  This not only provides a better internal control environment, but it also allows for a fresh set of eyes to spot errors or unusual items.  Have your accounting professional review the bank reconciliations for old outstanding items and investigate items as needed.

• QuickBooks allows you to set a closing date for your books.  Once you have set a closing date, the program will not allow you to make changes for any date on or before that date without a password.  This will prevent someone from making changes to prior periods after they have been reviewed by your accounting professional.  I once saw an entry from 2007 that was entered in 1907 in my client’s accounting records.  Entries like these will throw off beginning balances for tax or financial statement purposes and will make your current period financial statements unreliable.

• Select names for your chart of accounts with auto-fill in mind.  A typical problem is that your accounting personnel will attempt to select “Vehicle Expense” (an expense item) for the gas card payment but accidentally select “Vehicles” (the fixed asset account).  Try to eliminate this sort of confusion in your chart of accounts.  For example, you could use the heading “Automobile Expense” instead to distinguish it from the vehicle fixed asset account.

• Build processes that use the QuickBooks functionality for entering bills and paying them.  Even though you can write a check directly from QuickBooks without entering a bill, always have your accounting personnel enter a bill and then pay the bill using the “Pay Bills” function.  It is very common to see a bill entered and then a check written for the same bill using the check writing function.  This error will enter the same expense twice and leave an accounts payable balance on the books that has actually been paid.  If the same process is always followed for paying bills this problem will occur infrequently.

• Mark items, accounts, vendors, customers, etc. as inactive when they are no longer in use.  This keeps the options simpler when using QuickBooks.

Always remember, there is no need to go it alone.  If you need assistance with using QuickBooks or training your accounting personnel on how to use QuickBooks more effectively, please do not hesitate to contact one of Henry & Horne’s accounting professionals.

Rex Platt