Are You Importing Data Into Your Accounting Software?

By Bob Swetz
Controller Consultant | Tier One Services, LLC
I used to think that importing data was only useful for conversions from one software to another. Boy, was I wrong!

Lately, we have been using data imports for our clients for all kinds of special situations.
I thought I would share a couple examples with you to help get your creative juices flowing. Considering how busy everyone seems to be these days, saving time while providing value is a hot commodity.

Example 1 Payroll Allocation to Customers or Jobs
It seems like so many organizations are outsourcing their payroll these days. That can be a great option for a lot of reasons, but one of the drawbacks is the difficulty in recording the wages and taxes in a meaningful way in the accounting software. What if you could allocate those wages on a spreadsheet and then have the allocated costs flow to another tab that contained an import-ready journal entry? Using programs like Transaction Pro Importer along with QuickBooks will allow you to zip that entry into your accounting system in seconds as opposed to hours. This example not only saves time but provides a ton of value by getting the costs allocated properly.

Example 2 Importing Job Estimates for Contractors
Another import project we recently worked on was to develop a way to import estimates into QuickBooks using a macro-enabled spreadsheet and Transaction Pro Importer. This was a fun project because, in addition to getting the end result, which was the import, we got to do all kinds of fun stuff in Excel to create it. In this project, we saved the client a ton of time by creating a single point of entry for their entire estimate process. Who would have even thought to import an estimate into QuickBooks in the first place? I have to give the client the credit here, it was her idea to do it, we just made it happen.

If you have questions or want to dig deeper, feel free to schedule a 15-minute troubleshooting session with me at http://bit.ly/Scheduling_Troubleshooting or connect with me on Facebook at https://www.facebook.com/bobswetzonline.

What Happens if Management Overrides Your Internal Controls

 

By Bob Swetz
Controller Consultant | Tier One Services, LLC
What is Management Override?
In an earlier post I talked about the importance of management’s attitude towards internal controls. If management has a poor attitude towards controls, the entire system can break down. Management override of controls is when a well-designed system of internal control breaks down because management doesn’t do their part in following the policy or procedure. In the AICPA publication Management Override of Internal Control: The Achilles’ Heel of Fraud Prevention, “even though internal control over financial reporting (hereinafter referred to as internal control or simply as controls) may appear to be well-designed and effective, controls that are otherwise effective can be overridden by management in every entity. Many financial statement frauds have been perpetrated by intentional override by senior management of what might otherwise appear to be effective internal control.”
An Example
Looking at the cash disbursements function, let’s assume a simple set of controls:
·        The receptionist opens the mail and gives vendor bills to the accounts payable department
·        The AP department staff enter the bills and print a report of open items for the Controller to review
·        The Controller reviews the list and attached bills and determines what to pay
·        The AP department prints the checks and gives them to the board Treasurer to sign along with the Controller’s approved list
·        The receptionist mails the signed checks
In this example, the Controller is senior management. If the controller does not properly review the list of bills to be paid along with the invoices, then unauthorized disbursements can get through. Especially if the AP staff knows the Controller will not adequately review the list.
The Danger
If even one person in the system of internal control is not performing their task adequately the system can break down. The danger with management override is that in many cases, the task performed by management is a critical step in the process. If this step is missed, overlooked or done poorly, fraud, theft and lots of other bad things can occur.
I invite you to check out my previous post What is Management’s Attitude About Internal Control and Why Does It Matter? It might help to complete the picture.
If you have questions or want to dig deeper, feel free to schedule a 15-minute troubleshooting session with me at http://bit.ly/Scheduling_Troubleshooting or connect with me on Facebook at https://www.facebook.com/bobswetzonline.

Q&A: Secure, Paperless Nonprofit Accounting

[1] When you have paper receipts do you scan them?
Hell no. They snap a picture of them with an app like Entryless or Expensify, where they get automatically classified and synced with the accounting system.

[2] How do you have staff code and authorize expenditures and keep that info with the digital receipt?
Staff don’t need to classify transactions. That’s the job of the Finance team. What the Finance team needs is a description of the expenditure and the grant it was for, if that applies.

Staff don’t authorize expenditures, either. That’s up to the ED, who sets policy and then reviews expenditures in the accounting system or an app. Some apps (like Bill.com) and some accounting systems (like Xero) have an Authorize button for bills.

[3] How do you store all these digital bits?
In the app and/or attached to the transaction itself in the accounting system.

[4] How do you pass on the receipt, coding, and authorization to the person signing checks?
In the app & accounting system. In Xero, for example, there is an in-program authorization button for payables.

[5] If there’s fancy software that does this all, what is it and how much does it cost?
It’s not fancy software. It’s cheap and zillions of people are using it. Times have changed. Thank goodness.
Check out Entryless ($22.49/mo), Xero ($30/mo for unlimited users), Bill.com ($19.95/mo).

[6] How much server space does 7 years of “paperwork” eat up?
Servers have evolved. First of all, in most cases you’re not using your own server but that of your cloud-based app, and (a) you don’t care how much space these documents take up, and (b) they’ve got such economies of scale that the space is dirt cheap. See pricing above.

But secondly, server space is cheaper now than it has ever been. So if you run out of space, you buy more. It’s not a big deal. Certainly cheaper than renting a bigger building to store more paper files, and because no one actually does that since that idea is ridiculous, I’ll mention that it’s still cheaper than renting a storage unit for your older paper files, which plenty of people do. And it’s less risky. Paper file can be so easily damaged. Flooding, fire, mold…stuff happens.

Two final points on questions that you didn’t ask:
[7] The risks are higher when everything is on paper:
[a] The savvy cloud-based providers have redundant servers in geographic locations with different natural disaster profiles (“we here at San Andreas Cloud Services store all of your data securely in a nearby warehouse!”)
[b] Paper is easily stolen, lost, or otherwise messed with. When everything is electronic, all you have to do is revoke access when an employee leaves, for example.
[c] You’re stuck with local auditors, whether or not they’re any good, whether or not they charge competitively, plus you have to pay more for all of the shlepping they have to do for the field work. Plus the audit takes longer. Which the Board really loves. Whee! Last year for a new client we cut the timeline from “year-end” to “board presentation of the financials” from 8 months to 4 months. So having everything available paperlessly gives you more leverage to shop around, and if you live in a major metropolitan area you can get an auditor in a lower COL area and pay less but without sacrificing the level of service.

[8] And lastly – this applies only to some organizations, but in those cases, the costs are outweighed by the revenues generated in the physical space that is now freed up. What does the org get to put there, in the entire office drowning in file cabinets? Another fundraising professional, perhaps?

Cash Crunch! Nonprofit Edition

 

The best paths out of a cash crunch depend on the cause of the problem. Some examples are below; I hope one or more is helpful.

We’re going to skip the obvious “Get more grants! Do more fundraising!”

Cause: Solution

Embezzlement: Plug the leak, make them give it back, get a line of credit if necessary to see you through until you do.

Unreimbursed grant expenses: Speed up your processes so you can invoice faster. Engage in faster communications with grantors so they don’t forget about you. Set up electronic inbound payments for the grant funds.

High monthly burn not covered by grants: Take a look at any expenses that aren’t providing the organization with value and cut them. Start with the largest ones, not your deluxe paper clips.

Typical seasonal flux: Consider a line of credit. This financing tool is what a lot of seasonal organizations use to get them through the predictable, seasonal tough times if they haven’t saved up from the abundant times. And next season when the organization has plenty of cash, squirrel more of it into a savings account and then you’ll be your OWN line of credit!

Disallowed grant expenses: Use technology to collect backup documentation so you can submit all of those documents to grantors. For example, use Expensify or Entryless so authorized employees can snap a photo of their receipts or scan them, and send them ultimately to the accounting system. And review grants/authorizations with everyone empowered to spend so no one spends on something not covered by a grant.

Overspending grants: Quickly realign your authorization policies for spending as well as the clarity of your accounting on a grant-by-grant basis. Even basic accounting systems such as QuickBooks and Xero are able to produce an income statement by grant if you set them up to do so.

Is it worth it to track inventory quantities, not just dollars?

 

How much money do you stand ready to make & keep from this data?
Uses of quantity-specific inventory information include:
* prevention & detection of theft and loss
* guard against being overcharged by the supplier
* highest ROI on giving of samples
* shaping of messaging & promotion strategy to focus on highest-margin products, not just highest or lowest sale price
* cash flow management from clarity on reorder points so disbursements aren’t accelerated, or on the other end of the spectrum, she isn’t left without product when a customer needs it
* prevention of losses when she has too much of a non-selling or slow-moving product and has to let it go at a fire sale
* once her business is large enough such that she has to file on the accrual basis, you can help her to make sure she’s not paying too much in income taxes (or too little and then pay extra for it later with money and time)
* assist in setting sales targets & plans for achieving those targets
Track.
Profit.
Repeat.

The Pointillism Maserati

 

Every action that we take either enriches us or impoverishes us.

When we have perfect clarity about which is which, we’ll have the keys to the vault.

Expenses

I was driving through downtown Naples on a beautiful October Saturday. You have probably heard – and rightly so – what a beautiful city Naples is, and certainly there is a lot of wealth here, in the city itself and on lovely Marco Island.

On U.S. 41, the main north-south road connecting the main cities in the area, there are plenty of luxury car dealerships. I don’t mean the Honda Acura. I mean Maserati, Aston Martin, Tesla.

That’s fine.

But these are, for most people, expenses. Most people will not leverage a vehicle into a (spoiler alert!) ROI.

In the heart of downtown Naples is the difference between spending 6 figures to enrich your life or spending 6 figures to impoverish it. Just where U.S. 41 turns to the southeast is a cluster of establishments that spells out that difference in 2 words:

art galleries.

Art appreciates in value. Most vehicles do not. In a given transaction, one type of disbursement is an expense whereas one is an investment.

But while the dealerships are all up and down U.S. 41, you have to go to one special place for those art galleries.

What are the questions you’re asking yourself right now?

 

Five Money-Saving Things to Do Before Ringing Out 2016

Hopefully you’re having a wonderful December with all of the holidays and parties this month. And if you’ve spent too much on gifts and decorations, never fear. Here are six ways to save on your accounting and taxes. But hurry, you only have until year-end to cash in a few of these tips.

1. Check your profits

After adjustments, are your books going to show a profit this year? If so, you may want to try to increase business spending before year-end so you won’t have to pay as much in taxes. Consider accelerating larger expenditures to reduce your profits and therefore, your 2016 taxes.

If your business is cash-basis and you pay with a credit card, pay the card off before year-end so that it will fall into this year’s deductions.

There are many tips on business deductions, so check with us to get the full benefit.

2. Eliminate payroll headaches

If your payroll system is causing you pain and suffering, consider switching. Year-end is the best time because switching costs are lower and year-to-date amounts don’t have to be entered. You’ll still want your old system to generate January’s W-2s, but if you start writing 2017 paychecks out of a new system, it will give you a clean break.

And if you’re not sure what system to move to, we have answers.

3. Make January smoother

January is typically a bookkeeper’s busiest month of the year. Many tasks can be done early, such as checking to make sure your W-9s are current and ordering W-2 forms if they are needed. To avoid last-minute headaches, check with us to see what can be done early. It may help keep your accounting costs lower.

You may also want to consider automating more of your accounting system. Adding an app to your existing system may save you time and money in 2017.

4. Give to your favorite charity

Giving to your favorite charity may reduce your personal taxes if you plan to itemize your deductions on Schedule A of Form 1040.

There are many personal deductions that can help reduce your taxes, so check with us for options to minimize your tax payment.

5. Get ready for tax time

Start collecting the documents you need for tax time so they’ll be handy when you need them. You may be able to upload them to your accountant’s portal, or simply set them aside in a special drawer or folder.

Go through your receipts to be sure you communicate all your possible deductions. If you’ve had a major event, such as a move, new child, new marriage, or new job, be sure to mention it to us.

When all of the parties are over and the relatives have left, try these tips to save time and money on your taxes and your accounting in 2017.

Three Costly Accounting Mistakes to Avoid

Small business owners have a lot on their plates, and time simply does not allow you to become an expert in all the areas required for running a business. Here are a couple of common mistakes that we see all the time. Correcting them will help you be more productive and profitable in your business.

1. Mismanaging receipts

Maintaining receipts are challenging for everyone, but the IRS requires that you have proof of business expenditures. Periodically, we come across people who feel that keeping the credit card statements are enough; unfortunately, they’re not. You’ll want to create a process to keep your receipts all in one place so they don’t get lost.

Receipts printed on thermal paper (think gas station receipts and many more) will fade within a year or two, and the bad news is the IRS could audit several years back if they come calling. Correct this by scanning them in or taking a clear picture of them using your smartphone.

Some accounting systems and/or document management applications allow you to upload the receipt and attach it to the transaction in your accounting system. This is a great solution, and if you’re interested in this, please ask us about it.

2. Ignoring the accounting reports

There are gold nuggets in your accounting reports, but some business owners don’t take the time to review them or are uncertain about how to interpret them. Your accountant can help you understand the reports and find the gold nuggets that can help you take action toward profitability.

Some of the things you can do with your reports include:

  • Identifying your highest selling services or products
  • Projecting cash flow so you’re not caught short at payroll time
  • Getting clear on your top customers or your demographic of top customers
  • Evaluating your marketing or business development spend
  • Pointing out trends compared to prior years, budget, or seasonality effects
  • Checking up on profit margins per product or service to make sure you are priced correctly
  • Managing aging receivables or speeding up collections
  • Measuring employee profitability, if relevant
  • And so much more
  • Being proactive with your accounting will help you spot opportunities in your business that you can act on, as well as spot and correct problems long before they manifest into trouble.

    3. Mixing business and pleasure

    In your bank accounts and on your credit cards, mixing business and pleasure is to be avoided when possible. All businesses should have a separate bank account, and all business transactions should go through there. It takes an accountant much longer to correctly book a business deposit that was deposited into a personal account.

    Taking out a separate credit card and putting all your business transactions on it will save your bookkeeper a ton of time. The credit card doesn’t even have to be a business credit card. It can just be a personal credit card that’s solely used for business. If you have employees making credit card charges, sometimes a separate card for them helps you control fraud.

    The hardest area in which to separate business from pleasure is cash transactions. Be sure your accountant knows about these. The accountant can either set up a petty cash account or a reimbursement process so that you can get credit for cash expenditures that are for the business.

    How did you rate on these three mistakes? Avoid these three and your accounting department as well as your business will run a lot smoother.

Five Ways to Go Green with Your Accounting

With St. Patrick’s Day and spring arriving, March is a great month to have “green” on the mind.  There are green shamrocks, green beer, the green of new vegetation, and there’s even green accounting too.  Here are five ways to make your accounting a little more green.

Business Receipts     

When you spend money on your business, ask for an emailed receipt rather than a paper one if you have an option. More and more vendors are providing this option.   Then when the receipt comes in your email, you can forward it to your bookkeeper and/or upload it to your accounting system.

Smile for the Camera

If the vendor does not offer an emailed receipt, do the next best thing:  take a picture of the receipt with your cell phone.   Some accounting systems allow you to upload the receipt right from your phone, and if you don’t have that feature, you can always email it or upload it to your PC.

PDF Invoices

If you invoice customers, send a PDF invoice via email.  More and more businesses are abandoning the snail mail and getting it to customers faster via email.  They’re getting paid faster, and speeding up your green is usually a good thing.

Online Banking

Many people adopted online banking about a decade ago.   If you’re still getting paper statements, you can get those stopped and download your statements once a month from your online account.  It’s better not to get your statement in the mail anymore; it reduces your risk of identity theft from stolen mail.

Software and Supplies

When possible, purchase your software online and download it rather than making a gas-guzzling trip to the store and purchasing a box.  You can also order your office supplies online and have them delivered.   As long as you buy local, it should be a green purchase, and it will save you tons of time too.

These five ideas will help your accounting become a little more green.

Five Tips to Get Ready for a Pain-Free Tax Time

With the holiday season just around the corner, it’s a perfect time to get your financial records in order.  Tax moves you make now can mean finding more “green” to spend on family gifts and festivities.  Here are five quick tips for you to feel more prepared about your financial status as you go into year-end.

Avoid Penalties

This time of year is ideal to double-check your tax payments to make sure enough has been paid in, and even more important, to avoid overpaying so your money is not tied up unnecessarily. If you’re not sure of your 2013 tax liability, check with your tax preparer.

Balanced Books

Rather than wait until the busiest time of year for accountants and bookkeepers, you can get a head start now on catching up your books  You’ll have more of their attention and you may even avoid a rate increase if you get your books done early.  Completed bank reconciliations are a very important part of catching up.

Forms

It’s not too early to get your orders in for the forms you need at year-end like your W-2s, W-3s, 1099s, and 1096s.  That way, your forms will be onsite when you’re ready.

Records

Information that’s missing at the last minute can take up extra time and be costly.  It’s a great idea to do an audit now of W-9s to grab missing addresses and tax ID numbers of your contractors.  Also do a scrub of your employee payroll records so that your W-2s will be complete and accurate.

New Tax Changes

Be sure to check with your advisors on new laws affecting individuals and businesses next year.  One of the biggest ones making news is avoiding the fine involved regarding the new health care requirements for individuals.  And there are many more you’ll want to get up to speed on so that you’ll know how they affect your situation.

We know it’s early to be talking about taxes, but we’re also all about saving you money and time.  Try these five tips so you’ll have better peace of mind and be more prepared for year-end.