Believe it or not, computers can make mistakes sometimes. We live in an age where data entry for bookkeeping is getting faster and faster via downloading or importing transactions. When the financial institutions communicate with QuickBooks a lot of information is exchanged and errors do occur. This is why the reconciliation step is so important. Every so often we will review a set of books and the credit card accounts are not reconciled. 'Why would they be off, I downloaded all the transactions' is the response we get when we point out the credit card balance is completely wrong. This is when we always have to tell the client that downloading is not reconciling. In addition to reconciling each time you download data you should look over renaming rules too.
When dumping data in QuickBooks via the bank import the user will get hit up with a lot of prompts and questions. If you aren't careful and you are cutting corners your Renaming Rules can get royally screwed up by clicking Yes or OK without reading what the prompts are telling you. Once the Renaming Rules get screwed up, you won't know the scope of the damage until you review these rules.
When in the Bank Feeds or Online Banking screen (this label varies from QuickBooks 2013 to 2014), click on the Renaming Rules link and then start reviewing the rules that QuickBooks has generated based on your previous imports. Recently, I caught a renaming rule that categorized all items with the term 66 in it to vendor Sinclair and gas expense. This caused all imported transactions that have 66 in the sequence code being booked as Sinclair and being a Gas Expense. This greatly skewed the expenses for the year and threw the financial budgets out of whack. Monitoring Renaming Rules might be tedious, but it is well worth doing a few times a year to make sure the books aren't suffering from a Renaming Rule error.
Banking and Credit Card Institution Upgrades
Banks and credit card providers are constantly updating the software, programming, etc. and this can cause issues with the QuickBooks data import. During a recent consultation, I noticed that Key Bank rolled out a new website several months ago and the Bank Feeds had to be re-established. For some reason, re-establishing the Bank Feeds were ignored and the bookkeeper reverted back to manually entering data, ultimately making a big expensive mess. Not only is this a bad bookkeeping practice, but its easily avoidable if you take 5 minutes to link the two programs back together.
First, right click on the account within the Chart of Accounts > Edit > Bank Feed Settings, then select 'Deactivate All Online Services' and Save & Close.
Once online services are deactivated for that account, log in to the account via the web and access the download screen. Before downloading, within QuickBooks verify starting date and balance as a quick but important checks and balances step. Then download the specified date range. This will prompt QuickBooks to ask permissions to import a new bank or credit card account. You will have to select the proper account from a drop down box during this step. This will then bring the data in to QuickBooks and re-establish the Bank Feed.
Make sure to pay attention to renaming rules questions when importing new account transactions too.
Reconcile, Reconcile, Reconcile
You have done a majority of the heavy lifting at this point, now it's time to click through some steps and make sure the import worked properly. It would be great to open the reconciliation screen and click 'Select All' and drive the reconcile balance to $0. We call this the Hail Mary in the bookkeeping world and hope it works each and every time but it doesn't. Slow down and find out why the difference is off in order to make sure the books are 100% accurate. Duplicated transactions can occur if someone is typing in transactions by hand during the statement period that doesn't match up exactly to the imported date and cause expenses to be over stated and net profit to be understated. Next thing you know, your books are jacked and you have no idea why.
These few pointers can truly make a good bookkeeping system a great bookkeeping system. It allows for more accuracy while not sacrificing time to review and find errors within the books. Not your cup of tea since you prefer to be focused on growing your revenue or developing different customer experiences? Or maybe you are a bookkeeper that wasn't properly trained to be one and need some more explaining. Either way, reach out and let's talk more about streamlining.