We’ve all been there: An urgent need arises regarding your financials or accounting processes. So, you head straight to Google for the answer, but then what happens? Ads, opinions and spam get in the way. Each option vying for your attention, but more so, your wallet. So before you cold call each company on the first page of the search results to see if they can sell you some application or process as a solution, let’s dive into 9 FAQ’s (frequently asked questions) about QuickBooks® functionalities to try and save you time and money. Hopefully one of these answers helps solve your “Can QuickBooks® do (insert any function)” questions.
Below is a table of contents in case you want to save time and jump straight to a certain section. Just click the question you desire to have answered to automatically scroll to that point in the article.
1. Is QuickBooks® just a financial system?
Actually, no. QuickBooks can be used to record ‘straight financials’, but it can also be used for much more.
If you are a product company, QuickBooks can help you with order management and inventory. It can print your pick-lists and pack-slips, and track your Accounts Receivable. If your business does ‘lite’ manufacturing, QuickBooks can help you track your component inventory and consume those components in an Assembly Build process.
If you are a services company or general contractor, QuickBooks can help you see profitability by customer engagement via job-costing features. Time-tracking and rebillable expenses can be managed by QuickBooks, to ensure all costs are captured and rebilled as needed.
Although QuickBooks has its limitations, as do all systems, it is a low-cost of entry system with quite a bit of flexibility for businesses. And many businesses aren’t aware of all of the features that QuickBooks can provide, if implemented and managed properly.
2. What types of information or reporting does QuickBooks® have beyond a P&L and Balance Sheet?
If implemented fully and used consistently, QuickBooks can provide businesses with some helpful information for managing your business. Some examples are below:
On-hand by inventory location, reorders needed
Total valuation and valuation by location
Customer Order Information
Open Orders by Item or Customer
Fulfilled Orders by Item or Customer
Customer Sales Rankings
Vendor Order Information
Open Purchase Orders (including options to view by Customer, if orders are for specific customers)
Job Cost Information
Estimates vs. Actuals – Summary and Details – by Customer/Job
Sales by Representative and Profitability by Representative (for commission / bonus reporting)
Salary History and Pay by Customer
3. What is QuickBooks® Hosting and how does it differ from QuickBooks® Online (QBO)?
QuickBooks Online is a unique Intuit product, it is accessed via a browser-interface, and all functionality is contained within the browser.
QuickBooks Pro, Premier and Enterprise are the ‘desktop/server’ software products. These were designed for use with desktops and a server, and they operate via a traditional “windows” style interface.
Currently the Pro/Premier/Enterprise products have much more robust functionality than the QuickBooks Online product, including inventory management features. They are also often preferred due to their inherent ‘usability’ in a Windows environment.
However, despite the product limitations, QuickBooks Online has gained business interest for two big reasons:
Access from anywhere/anytime as long as you have internet capability
No need for special servers, hardware or network capabilities
Due to these reasons, QuickBooks Hosting of the Pro/Premier/Enterprise has become a new option. QuickBooks Hosting is a concept where another company, called a Hosting Provider, provides the server/desktop environment, remotely and ‘hosts’ the Pro/Premier/Enterprise product for you. They also provide access anywhere, anytime as long as the user has an internet connection. QuickBooks is not installed on the local PC, but is instead installed and managed by the hosting provider. Many hosting providers also provide additional services or software, and they usually guarantee data backups and recovery, as well as specific availability. Hosting Providers charge a monthly fee for this service, which is usually a reasonable fee considering the hardware/software/services they are providing.
Several of these Hosting Providers are linked below:
Trapp Online www.trapponline.com
4. Does using QuickBooks® require extra ongoing work?
The truth is, it depends.
If you are currently managing your business using spreadsheets, and creating Purchase Orders, Sales Orders and Invoices using Microsoft Word, you will probably find that QuickBooks, when implemented properly (and with appropriate training and procedures), can decrease your work efforts and increase the quality and accuracy of the information you have about your business.
If you don’t currently manage inventory, payables, receivables, etc., at all, you will find that QuickBooks requires extra business process vigor and information management discipline. We would challenge you to consider that your business may not manage very effectively without this information, so you will probably need to invest the extra energy to gather and maintain this information, whether or not QuickBooks is your system of choice.
5. When is QuickBooks® not the right choice?
For most start-up businesses, QuickBooks is a low cost-of-entry system that can provide the base functions needed for Finance and Operations. Also, add-on integrated systems can provide additional functionality not inherent to QuickBooks. (Note: Many integrated solutions can be found at at https://desktop.apps.com/home
Some business types find that they outgrow QuickBooks more quickly—or opt to find a more unique/specialized solution right out of the gate. Manufacturing businesses that require complex bill-of-materials management and materials requirements planning (MRP) sometimes find QuickBooks capabilities insufficient or just too simplistic for their needs.
Other businesses have very unique and specific business flows, such as agency royalty management (for publishers, entertainment or sports agents), or medical insurance management (for doctors, dentists), and find that industry-specific software is needed to manage their business.
Some of these businesses use industry-specific solutions for a portion of their business (e.g. MRP, bill of materials, or insurance/patient accounts receivable) while still using QuickBooks for full financial reporting and vendor/bill management. This does require integrating two systems, or maintaining data in two places. But for smaller business, this is sometimes an acceptable approach to keeping their overall systems costs low.
We have found that the most important factor to consider when determining if QuickBooks is a good fit is complexity/uniqueness of your business model, and not the size of your business. QuickBooks is a somewhat “generic” system, so it becomes more difficult to manage as business processes/flows and data is more unique. But, several of our clients with straight-forward business models are in the $20M-$50M gross revenue range, and successfully manage their operations and financials with QuickBooks.
6. Can QuickBooks® manage inventory?
Yes, QuickBooks desktop products (Pro, Premier and Enterprise) provide the ability to track both the quantity and the value of products/items. Inventory is ‘increased’ by using the Purchasing/Receiving features, or by using the Assembly Build to create to assemblies. Inventory is ‘consumed’ by using the Sales Order/Invoice features, or by using the Assembly Build to consume components. Key factors in successfully managing inventory in QuickBooks include:
A Good Starting Point: An accurate accounting for inventory on-hand quantity and value at a specific point in time. Often, a physical inventory is also a good time to implement QuickBooks inventory.
Process Mapping: Identify all business processes that affect inventory, and determine the QuickBooks transactions that will be used to record these business activities in QuickBooks on a real-time basis.
Real-Time Process Integration: Integrate QuickBooks with your business process, as tightly as possible. For example, use QuickBooks to create the packing slip at time of product shipment. By doing this, inventory is decremented in QuickBooks at the same time it actually leaves your warehouse.
Ownership: Identify the inventory ‘owner’ within your business. The person who will be ultimately responsible for valid inventory tracking.
7. Does QuickBooks® support tracking inventory at multiple inventory sites and bin locations within those sites? (3pls, multi-warehouse operations, etc.)
QuickBooks Enterprise (but not Premier or Pro) does have an Advanced Inventory feature that can be purchased for an additional annual fee.
This Advanced Inventory feature includes the ability to track inventory at multiple warehouses, or “inventory sites”. Some companies use this feature to track multiple locations within a single warehouse and will have inventory sites for Components, WIP, Finished Goods, and Quarantine/Inspection.
This Advanced Inventory feature also provides the ability to track BINs or Shelf locations (or any other sub-location distinction), if so desired.
We typically recommend tracking Inventory Sites when there is a physical segregation to your inventory. Or, even when there is a logical segregation – such as inventory that you would not want to ship from (such as Inspection or Quarantine inventory). Some of our clients segregate inventory in order to reserve inventory for special categories of customers – such as wholesale inventory versus online inventory.
We typically recommend using QuickBooks BIN tracking feature only when this information will be helpful for picking/locating inventory for assembling or shipping. There is significant effort in consistently recording BIN activity and BIN to BIN transfers within QuickBooks, so we encourage our clients to look at the value this tracking will bring to their business before diving into this feature.
8. Does QuickBooks® provide Material Requirements Planing (MRP) capabilities?
The short answer is ‘no’, QuickBooks does not inherently provide MRP capabilities, such as production scheduling and purchase planning/scheduling. QuickBooks does not look at the sales plan, in order to back into the production requirements, and it does not drive a component’s purchasing schedule based on this information. There are many add-on products that may assist with some of these features that can be found at https://desktop.apps.com/home.
Meanwhile, we find that smaller companies that need these features will use QuickBooks reports and some off-line analysis to support these needs until they can afford the costs of a more full-functioning MRP system.
9. When does it make sense to use QuickBooks® Payroll solutions?
Intuit has payroll offerings that are fully integrated and launched from within QuickBooks. When set up properly (with the help of Intuit and your QuickBooks ProAdvisor, together) the accurate Financial tracking of the paychecks is automatic, so no journal entries are needed. Intuit has offerings that provide full-service (tax returns, tax deposits) just like many of the payroll companies provide. The difference is that integrated payroll solutions are ‘launched’ from within QuickBooks. You can take a look at their payroll service here: https://payroll.intuit.com/
We usually recommend that Intuit integrated payroll solutions be considered when any of the following are true:
Employee time-tracking is in QuickBooks (so time tracking can/will feed their paychecks)
Job-costing of payroll is required (service companies are typically a candidate for this)
Class-tracking of payroll is required
Otherwise, an existing outsourced Payroll solution (such as ADP, Paychex) may be working just fine for a business, and changing this is not recommended.