What eclipses the view of your business finances?

On August 21st, I look forward to a sight my eyes have never before beheld: a total solar eclipse. A safe and optimal viewing experience requires proper preparation. Some of the best information I’ve found online is this article from Forbes and an interactive map from the Washington Post. Similarly, a spectacular view of the financial performance of your business isn’t going to happen by accident. Planning the who, what, where and how of your business finances is key to producing meaningful financial data.
  1. Timely.  If you miss totality of the solar eclipse which lasts about only two minutes, you’re out of luck. The same timeliness principle applies to financial information. If you’re making decisions based on data several months or years old, you’ve missed out on opportunities to make critical decisions for your business. Today’s technology enables you to do accounting in real-time. Are you taking advantage of it?
  2. Where.  For a view of totality, you need to be in the right place in the narrow path the moon’s shadow crosses the Earth. For the place of accounting data, consider the cloud. While there are many factors to consider if the cloud is right for your business, it offers many benefits such as mobility of accessing your accounting data anywhere.
  3. Security.  Don’t look at the sun without protection! Just as you should take great care of your eyesight, be sure to secure the sensitive information in your accounting software. Use strong passwords and evaluate the security of the data center or server where your data resides.
If you’ve tried doing your accounting on your own and found something is obscuring your view, consider outsourcing it. It will help you spend more time at the planetarium with your family.

No paper for a receipt? Take a picture of the gas pump

In a prior post, I wrote about how I use document management software to push transactions and the supporting documentation into accounting software. As I’ve developed this method of doing my accounting, I’ve realized that the key to keeping accounting in real-time is using the document management software for every transaction, if possible. It also helps me make sure every transaction that goes through my bank account is legitimate. So what do you do when you can’t get a receipt?Gas Pump This week, after I fueled up my car at the gas station, the screen on the pump said it was out of paper. I hate it when that happens! Since I couldn’t walk away with a receipt, I took this picture of the pump. With paper receipts, my document management software extracts information like the date, vendor and amount automatically. I wondered what it would do with this picture. Hubdoc used the date I submitted the receipt, but as it usually does with non-receipt documents, it didn’t capture anything else.  Still, it didn’t take long to publish it to my accounting software after entering the vendor and amount. Receipt Bank captured the amount from the gas pump, but didn’t get the vendor right. Strangely, it picked up “Department of Agriculture and Food” from the weights and measures sticker on the pump, even though the Sam’s Club logo was on the screen. Taking a picture of the pump instead of a receipt isn’t ideal since it requires more data entry, but it’s better than nothing.

Awesome Apps for Accounting: Genius Scan, Hubdoc and Xero

In my search for a fully automated, completely paperless, and mobile-friendly accounting system, I’ve discovered three apps I love that have almost made it a reality. Genius Scan, Hubdoc and Xero Unless I’m near a desktop scanner, every receipt or document enters my virtual file cabinets through Genius Scan.  I don’t know how it does it, but it turns my iPhone’s camera into a high-quality PDF scanner.  I love being able to crop my receipts, make them black and white, and make the PDF file sizes less than 100 KB (while image files from the camera are normally several megabytes).  I then use the app to easily upload documents to programs I use to organize them such as… Hubdoc recognizes the text on the receipts and puts them into a list showing the vendor name, date and amount of each receipt.  It also automatically gives them file names (such as Wal-Mart_20150126_$20.00) when I download the files.  Hubdoc DIETA VEGANA E CARROCERÍA generic zovirax por generic en espana acyclovir bodybuilding – día a díahas some good organizational tools for marking documents as paid, adding tags and notes, and putting documents into folders.  Hubdoc also automatically pulls online statements from my Amazon, credit card and utility accounts and similarly names and organizes those documents.  Hubdoc exports the electronic documents and transactions into online accounting systems such as… Xero has been my personal accounting software for some time now.  I’m a fan of the beautiful web interface and the mobile app that lets me reconcile transactions on my iPhone. I have a wish list that would make the process perfect:
  • Genius Scan can automatically upload to several apps, but Hubdoc is not on that list.  I currently e-mail each receipt to my Hubdoc e-mail address to do the job which isn’t too much of a hassle.
  • I’ve created many bank rules in Xero to automate how it classifies bank transactions it downloads, but they don’t apply to transactions coming from Hubdoc.  Although the two programs do an amazing job auto-categorizing them, I wish I had more control.
  • The Xero reconciliation screen doesn’t show me how the transactions from Hubdoc are categorized, so I have to drill into the reports to find them and make sure they’re categorized right.
Please leave a comment below if you have a different set of accounting apps and processes to share.

Can accounting be fun?

The stereotype is well-established.  SmileAccountants are often portrayed in the media with glasses, a pocket calculator, and the personality of a rock.  Prior to studying accounting, people warned me of it being the most boring profession there is.  While I admit that doing accounting will never be on par with a trip to Disneyland, I’ve learned that accounting can be fun because of the people and the technology. I work with people more than numbers.  My days are full of meetings and phone calls.  The joy of accounting comes from advising people and improving their lives financially; I have those opportunities every day.  Plus, I’ve worked with many in the profession who are fun and interesting people.  From trampoline dodgeball, go-cart racing, and a Mini-Masters golf tournament, I’ve been part of a lot of fun activities with other CPAs. Technology can make accounting fun (or at least less boring).  Many will agree that mind-numbing data entry and bank reconciliations are tedious tasks; few enjoy them.  I have helped friends move from traditional manual accounting systems to bank-connected online accounting software, greatly reducing the amount of time they spend doing their accounting.  Their feedback included:
  • “This is as fun as accounting can be,” and
  • “I’m actually looking forward to doing my accounting.”
Accounting software has become more beautiful and fun.  QuickBooks Online has a nice new look and simplified interface.  FreshBooks proclaims “Yo!” on its website and has some creative instructional videos that are actually fun to watch.  Xero touts itself as “beautiful software” and claims accounting can be fun (even addictive). Do you want to make your accounting more fun?  Let me know.  I’ll have fun helping you. Maybe your idea of “fun” is letting someone else handle the accounting.  I understand.  I have friends who would rather poke out their eyes than be the banker in a game of Monopoly.  In that case, I can help you too.

Fixing issues with the new QuickBooks to Xero conversion tool

While Xero has been converting QuickBooks files to its online accounting software platform for some time, it released a tool a few days ago allowing users to upload files themselves for conversion.  I am quite happy with the result, but it wasn’t as simple as making a few clicks.  When I converted a QuickBooks Online file to Xero, I discovered the following:
  • Subaccounts may cause problems.  I got an error message after uploading my QuickBooks file, but it didn’t specify what the error was and the file converted anyway.  Everything seemed fine at first, but then I found that I couldn’t make manual journal entries to a couple of credit card accounts.  It was as if they didn’t exist in Xero, though they both showed up in the complete chart of accounts list.  I believe that the reason for this problem was that they were both subaccounts of a credit card account in QuickBooks Online.  I deleted the Xero company, moved both accounts up a level so that they weren’t subaccounts in QuickBooks Online, and then went through the conversion process again.  There was no error message the second time, and now both credit card accounts are working as they should.
  • The balances don’t match!  After connecting the bank feed, I found that the balance in Xero was correct, but the statement balance was off. I had made sure it was reconciled and up-to-date in QuickBooks Online prior to the conversion.  In Xero, there were no imported transactions and no bank statement lines to reconcile, yet the “account transactions” tab showed many unreconciled transactions going back two years.  It was a perplexing problem, but I found a solution.  I exported a reconciliation report to Excel, made a few formatting changes, and imported it as a statement into Xero.  My finger is sore after clicking on “OK” a couple hundred times to match the transactions, but now I have a beautifully reconciled account.
Xero reconciling Has anyone else experienced these issues and know of a faster way to fix them?

Set amount thresholds in Xero bank rules so fixed assets aren’t expensed

One of my favorite things about Xero, an online accounting software, is its ability to automatically categorize transactions based on a customized set of rules.  While other accounting software have some built-in automation features (such as pre-filling information from the last entered transaction for a payee), Xero is unique in that it categorizes transactions when they match certain conditions for payees, amounts, references, etc. While this automation can save a lot of time classifying transactions, it could also result in misclassifications if bank rules are applied carelessly.  For example, if both office supplies and fixed assets are purchased from a payee, additional conditions may be required in the bank rules so that transactions are classified correctly.  In the screenshot below, I created a bank rule so that amounts less than $500 spent at Best Buy are classified as office supplies expense (I’m using this amount as an example – consult your tax advisor to determine if a transaction should be expensed or capitalized). Xero rule with threshold amount On the reconcile screen, Xero prompts me to apply the rule for the amounts less than $500, but not for the $1,053.62 which may need to be categorized as a fixed asset.  That transaction is left open, forcing me to investigate it further and properly classify it. Xero reconcile with bank rules  

Do you put social media links on your invoices? It’s easy with Xero

A creatively designed invoice can be so much more than a collection tool.  Links to social media websites are simple additions to electronic invoices providing opportunites for increased visibility and contact with customers.  Plus, they add a little color and fun to an otherwise boring document. While I was exploring settings in Xero, the social links area caught my attention.  When activated, it adds Facebook, Twitter, LinkedIn and Google+ icons to online invoices.  This is one of Xero’s many new invoicing features introduced in December 2012 and is a small step into the exciting world of Social Accounting. Social Media Links in Xero  

Bank rules in Xero for fixed amount checks

One of my favorite things about Xero, an online accounting software, is its ability to automatically categorize transactions based on a customized set of rules.  While other accounting software have some built-in automation features (such as pre-filling information from the last entered transaction for a payee), Xero is unique in that it categorizes transactions when they match certain conditions for payees, amounts, references, etc. For example, I set up an automatic monthly payment on my bank’s online banking site for a recurring expense with a fixed amount.  The bank sends the payment with a paper check.  Xero does not import a payee or description for these particular transactions.  Xero imports the amount of the check and “CHECK #XXXX” for the reference.  Even with this limited criteria, these transactions can be automatically categorized with the rule shown in the screenshot below. Xero bank rule for check Creating the automatically categorized transaction in Xero and reconciling it then becomes as easy as clicking on the “OK” button.  Though setting up the bank rules takes some time on the front end, it saves a ton of time in the long run.

Adjusting journal entries in Wave Accounting

Wave Accounting, a free online accounting software, has a very easy interface for non-accountants to automatically import and classify bank transactions.  Accountants who primarily use other accounting programs might need some time to get used to Wave Accounting’s interface.  I recently needed to make some adjusting journal entries in Wave Accounting and the screen to enter them wasn’t quite where I expected to find it. To make an adjusting journal entry, click on the Settings tab.  That seems strange to me since I don’t consider journal entries to be a setting in accounting software, but where else would it go? Under Wave Setup, click on Journal Transactions.  Then, a screen appears with a layout that will be familiar to accountants.  Wave Accounting has some nice features here, including the ability to create a new account by clicking the plus button, and yes, debits must equal credits (so much for my attempt to corrupt the system).

Integrating Chrometa and FreshBooks – easy timekeeping, easy invoicing

Like peanut butter and jelly, I’m adding Chrometa and FreshBooks to my list of things that go together.  Both perform time and billing functions, but have unique strengths in each area:
  • Chrometa, which I reviewed for the CPA Practice Advisor, runs in the background and automatically tracks the amount of time a computer user spends on active program windows.
  • FreshBooks has an easy user interface for online invoicing and accounts receivable management (including tracking when customers have viewed and paid invoices).
Setting up the integration was very easy.  It was so easy, in fact, I intuitively figured it out without having to search for help.  In Chrometa, go to Account, then Integrations.  Enter your FreshBooks URL in the input box as shown below. FreshBooks URL Chrometa exports invoices to FreshBooks, but not time entries.  A user integrating the two programs will have to use Chrometa for timekeeping and creating invoices.  The user would then use FreshBooks for sending the invoices to customers. In Chrometa, click on the Time button.  Assign time to a project (in my example, the client is “Test Client” and the project is “Tax Return”). Chrometa assign time to project Click on the Invoices button, then New Invoice.  Select the client and project name.  Enter the start and end dates for the time you want to invoice for.  There is also a cool feature here to round time to the nearest minute, six minutes, fifteen minutes, or hour.  In my example, 14 minutes and 42 seconds rounds up nicely to an even 15 minutes. Then, click on the Get Time button.  Click on Save to generate an invoice. Chrometa invoice setup Click on the Invoices tab.  Click on the drop-down arrow in the Action column and select Export To FreshBooks. Export to FreshBooks Now, log in to your FreshBooks account.  Under “Recent Activity” on the home page, the newly imported invoice should be listed.  Click on the link for the new invoice to view it. FreshBooks Invoice With the invoice open in FreshBooks, I can edit it and choose among several options for sending:
  • print it.
  • convert it to a PDF document.
  • e-mail it.
  • snail mail it.
*Obviously, this invoice is completely fictional.  I do not prepare tax returns for $100/hour, nor does it typically take 15 minutes.  The name “Test Client” is completely made up, and any similarity to a real person, living or dead, is purely coincidental.