Lately We Are Seeing An Increase In QuickBooks Journal Entries
Journal Entries - Are a quick and dirty way to get transactions in without putting forth time and effort to enter each transaction. In the short run you save time; in the long run you can forget about accurate Job Cost Reports.
Credit Card Statements - Are the most common example we see followed by vendor statements from lumber yards, Home Depot, Lowes, concrete suppliers, plumbing and electrical suppliers and others.
The Bookkeeper - Shuffles through a pile of paperwork or electronic documents and finds a credit card statement like the sample above and notices it has a lot of transactions. Depending on how well the bookkeeper has trained the contractor is what determines whether the transactions are properly entered and the costs assigned to a job using the item codes or if there is one giant Journal Entry like the one shown below.
As You Can Clearly See - There is no place to record the Job Cost information which some contractors call Schedule of Values, CSI Codes, SOV, WIP and a bunch of other labels used to describe the terms that are common to both construction accounting and construction project management.
We Have Seen - Hundreds of situations where a regular bookkeeper somebody has input one giant Journal Entry instead of properly coding and inputting each transaction and then told the contractor QuickBooks will not produce accurate Reports of any kind. In a few situations the bookkeeper has suggested we should use our influence with QuickBooks to get them to fix the problem.
We Do Our Best Not To Say - That we are looking at the problem, a bad bookkeeper not properly trained in construction accounting. Unless and until the contractor is willing to pay $25,000 to $50,000 for their education, and pay their salary for the time they will spend in classroom instruction and homework the problem will not be solved. However, for a fraction of the cost they could outsource the bookkeeping to us and not worry about it anymore.
Contractors Have Come To Us - Extremely frustrated because they heard from someone else that we can make QuickBooks sing and dance and do amazing things and that Job Costing is only a tiny little part of what we do!
We Can And We Do - Every day of the week and Job Costing is only one of the tips of the QuickBooks Construction Accounting Iceberg.
QuickBooks Setup - And choosing the correct QuickBooks Version is the most critical part of being able to generate accurate QuickBooks Reports including Job Cost Reports all because it is the foundation upon which your entire financial system is built. Put the wrong foundation under your business and it will not matter who is doing the bookkeeping because it will always be a mess and you will never get the reports you really need in order to operate and grow your business profitably. Your Board of Advisors and especially your banker will be unhappy; however, they may not say it outright, just that your loans, lines of credit and referral opportunities may be limited.
Four Things To Watch For That Could Be Killing Job Cost Reports
Are there more than three Journal Entries a month?
Are credit card charges and payments being recorded with Journal Entries?
Are supplier and vendor bills and payments being recorded with Journal Entries?
Are the Job Cost and Job Profitability Reports vastly different from the Profit And Loss Reports?
We Have A Bookkeeping System - And checklists for everything and including a Quarterly Review Checklist to make certain all transactions are properly coded based upon the electronic and paper documents our clients provide us.
If Your Intention Is - To someday sell your business and retire excessive Journal Entries will not help you get the best possible price because there are a number of financial ratio’s that will not calculate using Journal Entries.
From An Accounting - Point of view there is nothing wrong with Journal Entries and many companies operate with a set of Journals, Ledgers and Sub-Ledgers and they generate financial reports and file taxes with no problems at all.
From A Project Management - And business planning perspective the opposite is true because accounting looks backward into historical records to determine what happened and why. Project Management, Business Planning and Forecasting looks forward and bases projections on accounting records in the form of financial ratios, job Costing and uses S.W.O.T. Analysis to determine the best place to focus your company's limited resources in order to optimize profits.
QuickBooks Expert Specializing In Construction Bookkeeping Services
About The Author:
Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor and QuickBooks For Contractors Expert. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.