Quite often as I am out in the community networking with area businesses, a person who learns I am a QuickBooks ProAdivsor will say to me, "I use QuickBooks, but I know it's messed up. I just let my accountant fix it at the end of the year. I don't understand that stuff anyway."
What a shame! QuickBooks is an awesome program. Most people only scratch the surface and use it simply as an electronic check register, a word processing program to send out invoices, and a means to get information to their accountant. Used correctly, it can help a business owner make all sorts of decisions on a daily basis.
For instance, it is not uncommon to think that the customer who gives us the most business is our most profitable customer. By utilitizing a few tools within QuickBooks such as job-costing and tying expenses and time to various customers, we can create a profit and loss report by customer. We may find that the customer who gives us the most business is also costing us a lot more than we think! In fact, by the time we calculate all the time, entertainment, and all the discounts you give this customer, we might even be losing money. Set-up correctly, this information is actually fairly easy to obtain.
In the course of my consulting work, I see many QuickBooks company files. Quite often a business will have all revenue generated posted to one account - Sales Income. While there is nothing wrong with this, it really doesn't tell the business owner very much. That revenue may come from different sources. Some may be from labor; some may be from materials which had to be purchased. By creating a few more accounts in the Chart of Accounts and a few more items, the business owner will get a more detailed picture of the business.
Harold Geneen said in his book, Managing, "The drudgery of numbers will make you free." The joy of QuickBooks is that once set up correctly, it takes very little effort to get those numbers to create all sorts of reports you can rely on to better run your business.
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