Are You Misusing QuickBooks?

Wednesday, August 25 2010 - Blog

Most people misuse QuickBooks and don’t even know it.

QuickBooks is a great accounting program for small businesses.  QuickBooks got to be the country’s most popular accounting software because of its ease of use and its great reporting capabilities.  That ease of use, however, causes businesses to accept the automatic set-up generated by the software and not look more deeply into the program.

People don’t realize that there are two ways to record transactions in QuickBooks:  the expedient way and the BEST way.  The expedient way focuses on entering data in the fastest way possible.  The fastest way usually codes transactions to the proper account, but often causes a breakdown when something a little more complex comes along.  The greatest defect of the fastest way is that it does not take full advantage of QuickBooks’ informational capabilities.  An example of the fast way is using checks to record disbursements from the checking account.

The BEST way, often requires at least two steps.  A little bit of extra effort produces amazing results!  Imaging knowing when it’s time to re-order inventory, what your best selling products/services are, what bills are due and when they are due, the amount of revenue derived from referral sources and how much cash you will need to fund the business in the coming week.
The key to harnessing this power is hiring an outsourced CFO who knows QuickBooks inside and out and who has operational experience.
 

Tagged as: quickbooks, quickbooks-tips, cfo-skills

#1 David C. Lightweis on 8.31.2010 at 11:25 AM

If you "an outsourced CFO who knows QuickBooks inside and out" then you probably not a CFO, you're a Controller at best.

#2 Steve Breitman on 9.03.2010 at 12:18 AM

I beg to differ. Being a CFO has nothing to do with the accounting software one uses. Being a CFO has everything to do with understanding the numbers and knowing what to do with them. Accounting software is just one tool for gathering numbers. I believe my record speaks for itself.

As an aside, I know QuickBooks well because my clients are small business with revenues up to $20 million. QuickBooks is appropriate for many types of companies in various stages of growth. Business like the software because its capable of producing a vast amount of important management data and because its inexpensive. One doesn’t always need to spend tens of thousands of dollars on an accounting system. Spending less money doesn’t make one less of a CFO.

#3 Lori N. on 8.31.2011 at 2:10 PM

I understand, yet adamantly disagree with David's comment about a "real" CFO not needing to know accounting systems. And I work in the accounting field!

The status quo in the accounting industry is appalling to me. David inadvertently expressed one major flaw of this status quo quite well. As Steve points out, for small companies a CFO can add significantly more value if they can train the bookkeepers how to enter transactions appropriately in the first place. That can’t be done when the CFO can’t “speak the bookkeeper’s language”, and show how to do things properly in QuickBooks to start with. Maybe in large companies CFO’s don’t need to know this, but in small companies it is a huge “missing” when well-intentioned but poorly trained bookkeepers don’t get the training they need from the CFO.

It is utterly appalling to me that it's “expected” that small businesses will have to pay teams of expensive accountants or auditors (at rates around $100-$200/hr) “later” to come in and clean up the books every year for taxes (ambulance in the valley). No one has been taking responsibility to train their bookkeeping staff IN ADVANCE how to properly classify and post the transactions in the first place (fence on the hill). Doesn’t it make more sense to train your $25 to $75/hour bookkeeper to do it right the first time, and avoid the expense of the cleanup?!

I am thrilled that people like Steve are out here putting "fences on the hills"!

For full disclosure... I'm a new CEO (April 2011), and I’m building a company that will actually be somewhat of a competitor to Mindful Business Solutions. I’m not mentioning my company’s name here because this isn’t about advertising for business. I’m just so PASSIONATE about educating small business owners and startups I wanted to add my voice to Steve’s! Small business owners shouldn’t have to continue to pay an exorbitant price for “ambulances in the valley”, when VERY cost effective fences can be put on their hills!

I am happy to support the success of Steve and Mindful Business Solutions, because I'm quite sure it's going to take at LEAST two companies like ours to effectively serve the thousands of small businesses who are saddled with the horrifically ineffective and inefficient status quo!

Warmly,

Lori N.

#4 Marvin Weil on 11.04.2011 at 10:55 PM

It's ironic that you say 'warmly' because I am up here in Connecticut with no power or heat. I agree with you completely and want to say that I want to learn more about all three of you. I hope to form an alliance with a CFO that outsources himself to help the small to medium sized businesses. I'm a different type of QuickBooks Certified ProAdvisor because I primarily support and assist other ProAdvisors and Accountant type people including the Chief Financial Officers, Controllers and the Tax Preparers with the Bookkeepers and Auditors. I basically do this with Third Party Software.

Leave a Comment