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Bookkeeping and Consulting to Drive Your Business

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Categories / Bookkeeping, Budgeting, Cash Flow, Time Tracking On Jul 06, 2017

An accountant walks into a bar . . .

No, it’s not the beginning of a corny joke. It describes a visit I once made to a client.

Her books were in shambles. She was bouncing checks right and left. She never had as much money in the bank as she thought she should. And she couldn’t figure out why.

When I sorted through the whole mess, it turned out she had a very common bookkeeping problem—which too often goes undiagnosed. I call it the “split system” syndrome.

Do You Have Two Pieces of Software Not Talking to Each Other?

In a split system, there are two (sometimes more) pieces of software capturing financial information. The problem is that they’re not talking to each other. Because they aren’t sharing information, neither one contains a complete financial picture of the business. And when it comes to bookkeeping, incomplete = inaccurate. And unreliable.

In my bar owner’s case, she had point of sale (POS) software that functioned as her cash register. The POS system tracked sales, maintained inventory, captured credit card batch data, and helped perform a daily cash register reconciliation. She also used QuickBooks (QB) to reimburse her vendors and run payroll.

That means POS knew everything there was to know about money coming in to the bar. QB knew everything there was to know about money going out of the bar. But they weren’t talking to each other.

That was the source of all her problems. She would record the entire month’s bank deposits at the end of the month when she got her bank statement. Consequently, the cash balance she saw in QB was never up-to-date or accurate. She was smart enough to know that.

But when she went online and checked her balance, the bank never knew about the checks she had just written but not mailed, or the credit card batches that hadn’t cleared yet. Her bank’s website couldn’t give her up-to-date or complete information, either. She had nowhere to turn to for an accurate, reliable and timely cash balance.

Uniting a Business’ Split Personality

We solved the problem by connecting the two systems. Not literally. But we uncovered two simple reports from POS and taught her how to record that information in QB. Bingo: we connected the split systems!

Then we taught her how to maintain and verify that exchange of information. Now she had an accurate accounting of her cash balance in QB. She never bounced a check again.

Because we’ve done this for a number of befuddled business owners, we’ve learned a few useful things:

In most split systems, we don’t need or want a complete sharing of all the financial information. The bar owner’s POS gave her robust reports about sales: by the day and the hour, what drinks sold best and when, when to reorder liquor, etc. We knew QB didn’t need to replicate that level of detail. That’s why she only required two simple reports to connect the sets of information.
Sometimes the connection solution can be automated. Many pieces of software have been designed with the ability to export to or import from QB. We understand which features to turn on, so the split system problem goes away.
It’s a pain when billing and QB don’t speak. Many doctors and dentists use industry-specific software to handle their patient and insurance billing. The billing software handles all the accounts receivable. And when billing isn’t communicating with QB, the business’ future isn’t talking to its present and past.
Professional services need to link timekeeping and QB. Many of these firms (mine included) track billable time outside of QB. If that information is not shared with QB (it is in mine, thank you very much), the labor costs per client and per job are incomplete. In short, you have no idea how much you’re making an hour per client or per job.

Are you running two or more financial software programs and aren’t sure how well they’re communicating—and if you have a clear picture of your performance?

We know where to look to determine this and—if necessary—how to fix it. Nothing makes us happier than saving time, money and frustration for business owners!

Wishing you lots of positive cash flow.