For so many people accounting seems like a foreign language.
Can you relate?
However, accounting is really just a representation of what’s going on economically in the real world in a set of books.
For example, when you perform a service for someone you send them an invoice and they pay you. This is an exchange of services for compensation. Pretty standard right?
In the accounting world we document (or account for) this transaction at every stage. Once the invoice is created and sent to the customer, sales are recorded and a receivable from the customer is created in the accounting system. When the customer pays the invoice, the receivable from the customer is reduced by the payment amount and the bank account is increased by the payment. There, now you understand accounting!
A client of ours was having a hard time figuring out how to use their accounting system to invoice clients in a way that was custom to their business.
Quickbooks and Quickbooks Online are programs that are probably used by 98% of small business owners. Since so many people use these programs it has to be very broad to serve everyone, which means it’s not incredibly customizable.
Tembo is really good at utilizing tools in Quickbooks to mimic real world economic transactions that our clients are experiencing.
Often times, business owners don’t understand how to make this process work in their accounting system so that it accurately represents the transactions occurring in the real world.
The customer comes to the client and says they want the service that the client is offering > they send the client a purchase order > the client receives the order > in Quickbooks we create a sales order to speak back to the customer and confirm what they wanted > the customer makes the payment > the work begins > when the work is finished another invoice is issued > the customer pays the invoice.
This may seem fairly simple, but it can get very complicated for business owners. Often times, business owners don’t understand how to make this process work in their accounting system so that what happens in the real world is accurately represented in their system.
There are many variables that apply in the real world. For example, sometimes companies require a deposit to start working, sometimes they don’t, sometimes payment is made up front. It can be hard to make your accounting system represent all that is actually happening.
The good news is that this is an area of expertise for our team at Tembo.
We’ve got you covered!
Be sure to check us out on Instagram for more quick tips!