I use Quickbooks (QB) religiously; I enter all of my debits, credit card charges and payments, invoices, payments towards invoices, purchase orders from vendors, etc. I don’t even own a paper checkbook register any more, I ditched it years ago and only use my QB register. I also love the income and expense pie charts and bar graphs it creates based on my income and expense categories I’ve set up. It’s all color coded to easily reflect where my money if going.
However, I realized at the end of last year, that my charts and graphs weren’t quite accurate. They were counting income that I hadn’t yet received. For instance, if I had an outstanding invoice in the month of November that was paid the following month, it would reflect that income in November, not when we received it in December. I was much more interested in the cash we had actually received for the month, not the cash we were supposed to receive. This also got a little hairy last year when I had a client pay 3 months late on an invoice. My charts were showing the income received in July, but I really didn’t get that income until October! I knew that there was a way to tell QB to show the amount when we received it, I just couldn’t figure out how.
After some digging around in my QB program, I realized that I could change it in my Preference settings. Changing the reports and graphs to ‘Summary Reports Based on Cash’ instead of accrual now accurately reflects our income. Prior to changing this setting, my January report was showing that we had received over $7,000 worth of income. However, most of our invoices hadn’t been paid yet (and I’m still waiting on payment!). After changing my setting, my graph accurately reflects that we had received almost $5,000 in income (I’m short this month!) This correction will help me refine my budget and look for monthly payment trends, such as January is a slow month, but March and April are usually great months.
Here is a screen shot of how I changed my reporting status: (Edit – Preferences)
Do you use Quicken or Quickbooks? Do you utilize their graphs and charts to help refine your budget? What are the pros and cons to choosing ‘cash’ versus ‘accrual’?
