Working in this cloudy world means that we are running things on the basis of extreme efficiency. We work exclusively in QuickBooks Online so that we can leverage apps that make it easy to share data from one place to another. In essence this is how we can be super efficient. That increased efficiency allows me to spend time with clients on things that matter. Things like reports. Here are 8 reports every company should set up in QuickBooks Online.
When I take on a new client, first I on board them. Once the books are caught up and cleaned up, I make an appointment with the client to review the basic reports.
I start with the Balance Sheet and The Profit and Loss. This helps the client to see what I have created for them. It also helps to confirm that the client understands where things are going and why. Finally it gives the client an opportunity to give input on how they would like to see things presented on the financial statements. There are many things that are not subject to rules, and allow me to custom design what the reports look like with one important aim in mind.
The client should be able to read and understand the financial reports.
After I’ve reviewed the reports in some detail with my clients, I have 8 reports every company should set up in QuickBooks Online. These reports are then added to a weekly schedule. They are automatically sent the client every week.
I ask the client what day they would like to get them.
Once that day is set, then our day to update the books is now set. We generally work on each client, on the same day every week. The day we do the work is two days before the client’s reports go out. This gives us time to make adjustments if needed.
1. Balance Sheet – Year to Date Monthly
The balance sheet is our checklist for making sure the books are accurate. That’s why this is the first of the 8 reports every company should set up in QuickBooks Online. Analyzing your balance sheet on a monthly basis provides much better context. When you can see trends on a balance sheet (eg) accounts receivable keeps going up, you can spot problems and address them promptly. Steadily increasing accounts receivable could indicate a collections problem. It could also mean that sales keep increasing. So when we see something like this, we want to investigate further, and looking at the Statement of Cash Flows will confirm which answer it is here.
2. Profit and Loss – Year to Date Monthly
The second of the 8 reports every company should set up in QuickBooks Online is the Profit and Loss. Just like the balance sheet, we want this grouped by month. The information becomes much more meaningful.
One thing I like to do when I analyze the monthly P&L, is to go straight to the bottom, and look at the net income trends. When a month is either much higher or much lower than normal, I scan up and down that column to understand why. Is income much different? Total Expenses? Both?
There can be a lot of reasons. Maybe rent is being booked as paid, instead of with a bill. This means we wind up with double rent in one month, and $0.00 rent in another. This can skew your information. For this reason, I like to set up a monthly recurring bill for things like rent, to make sure the expense is recorded in the proper period. This way I can see the true cost of operating the business each month.
Even if you are “cash basis” that is only a means of reporting for tax purposes. Using the very example I illustrated above, you can see why a business cannot function properly using cash basis reporting.
Using the example above, you can begin to see how you can clean up a lot of what is on the books, both in terms of timing, and classification.
If your monthly payroll expenses are not pretty consistent, there is a good chance it is being booked net, and not gross. Get the payroll reports and fix that!
3. Statement of Cash Flows – Year to Date Monthly (only after reviewing with client)
The third of the reports to set up in QuickBooks Online is the Statement of Cash Flows. This report will fill in the gaps left behind by the other two reports. If we are making a good profit each month, but not collecting, the Statement of Cash Flows will confirm this.
If we are making a good profit, and collecting, but servicing a ton of debt, the Statement of Cash Flows will confirm this.
The tricky thing about the Statement of Cash flows is that where the others analyze balances in accounts, this statement analyzes the changes to those balances. This makes it a little confusing to read, and that’s why I do not recommend sending this to a client until you’ve had a chance to review it with them.
If you ARE the client reading this (or an accounting professional in need of help so you can better understand and explain it), sign up for a 1:1 session with me and I will walk you through how to read this statement.
On the other side, once you and your client have walked through the Statement of Cash Flows, and everyone understands how to read this, the value you create is enormous!
NOW we are getting strategic. Now we are adding value instead of merely compiling a set of books for the tax return to be filed. This is what in my experience clients desperately crave, and so few of us are offering, because no one thinks they have the time.
If you think you don’t have the time, then go back and re-read this post from the beginning. I started off by explaining exactly how and why you should have the time now.
4. Accounts Payable (A/P) Aging Summary
The fourth report of 8 reports every company should set up in QuickBooks Online is the Accounts Payable Aging Summary. This one should be obvious. I like the aging summary because it highlights where we may be very late in paying people. Oftentimes when I review this with a client I get a ton of insights about what is going on with their business.
They are in a dispute with a vendor, or they have a unique relationship with loose payment terms. There are often stories behind these situations, and listening to them helps me understand a lot about my client as well as their dealings with these vendors and how they do business.
Of course we also often find errors, as in, “I KNOW we paid this…” Those are easy to find and correct. Especially since we don’t tolerate any plugged numbers on a bank rec, so we know there can’t possibly be any payments missing from the books. In a case like this we’ve probably doubled the expense by recording the payment directly to that expense. A quick search in that vendor’s transaction history will usually reveal the error, so we can re-code it to accounts payable and then apply it to the bill.
5. Accounts Receivable (A/R) Aging Summary
The fifth of the 8 reports every company should set up in QuickBooks Online is the Accounts Receivable Aging Summary. This is important for the same reasons as the A/P Aging. I learn about the relationships my client has with their customers, and we find and fix errors as in when something is paid, but showing up on this report.
Once we clean up this report, a weekly review that normally takes no more than about 60 seconds is all it takes to KEEP this clean.
6. Bank and Credit Card Register Reports – Last 30 Days
The sixth of the 8 reports every company should set up in QuickBooks Online is the Register Report. This one is super important. Depending on how many bank and credit card accounts we have, this can actually be a number of reports, but once you understand how to use it, you can apply it to any bank or credit card account on the books. I set it up for every single one, no matter how light the activity, and I include it in my client’s weekly reports.
I have not seen a date range option like this in any other accounting product, but QuickBooks Online.
This lets you see a rolling activity report for the past 30 days. My clients will sometimes ask me why I am sending them a report with activity they already saw last week?
Every watch a movie or read a book for the second or third time,and find you picked up on things you had not seen previously?
This process, ensures that my clients and I have had 4 looks at every transaction that went through every bank and credit card account, before they cycle off the report.
There is a scant chance of something passing us by that doesn’t belong. The client can also see where we’ve coded these (in the split column) and sometimes my clients comment on that and ask me to code it somewhere else. As long as it doesn’t violate any rules, or create some kind of conflict, my policy on these things is “have it YOUR way!”
7. Uncleared Transactions
The seventh of the 8 reports every company should set up in QuickBooks Online is the Uncleared Transactions. I don’t know why this isn’t a very standard report. Every bookkeeper, and every business owner should be looking at this at least once per month. I include it weekly because why not? Old uncleared transactions will falsely reduce the register balance in a bank account, causing a skewed picture on the balance sheet. In short, we have more money than we think we do, and this will almost always account for the exact dollar difference between what the bank says we have and what QuickBooks says. Especially if we are reconciled every month.
This one requires a bit of customization beyond just grouping by a cycle like months. Watch the video to learn how to set this one up.
8. Uncategorized Income and Uncategorized Expenses
The eighth of the 8 reports every company should set up in QuickBooks Online is the Uncategorized Income and Expenses. This one should be obvious. I do like to use two separate accounts for these and include them on separate reports. So this is really two reports, but the same idea.
Since we are using QuickBooks Online exclusively with clients, we are finding more and more clients who will look at this report and fix it themselves. I LOVE those clients (you know who you are)!
If a client does not know how to go in there and fix it themselves, I will usually export these reports and put them into Smartsheet at first. After one round, we normally don’t accumulate more than a few of these in any given week.
I have all of my clients in Slack.
We have a channel called “uncategorized.”
When we only have a few, it is much easier for the client to comment in Slack about where to code them.
Also since we use QuickBooks Online, we can link directly to the transactions in slack. This makes it so easy to fix these on the fly.
Log in. Click the link. Edit the transaction. Keep moving forward.
That right there is a perfect example of how much more efficient it is when you are doing everything (and I mean everything) in the cloud.
So there you have it!
8 Custom reports to set up in QuickBooks Online and how to use them!
Watch the video to learn how to set these up.