In my previous article, I outlined setting up the Banking Feed and the basics of categorizing transactions. Now let’s look at real-life practical usage.
Item Purchases
If you are buying a product that is on your Products and Services list, don’t just assign it to an Expense or COGS account inside the Bank Feed.
For proper sales reporting, including Item Profitability, the QBO Plus and Advanced versions allow you to buy Items. To do this, make sure the Item is two-sided, with both an Income category and an Expense category. Make sure the Account and Settings allow you to view the Items table in your Expenses.
Then when you create a Bill or Expense, you can record the actual Products and Services you’re paying for. This not only adjusts inventory accordingly, but it also allows you to run profitability reports on your purchases.
Mastering the Banking Feed is essential to your success as a bookkeeper. Please join me in my webinar sponsored by Divvy, "Banking Feed in QBO" on August 27, where I’ll demonstrate all these techniques, and give you all my favorite tips and tricks! You can register here.
Transfers
If the transaction is a Transfer between bank accounts, or a Credit Card payment, mark it as a Record as Transfer using the radio buttons above the Payee. Otherwise, you’ll wind up with two transactions indicating money in and money out instead.
Once you categorize a Transfer on one side, it will Match the Banking Feed on the other side.
Deposits
When you come to a Deposit, do not just “Add” it here, because it will skip all QBO’s Customer tracking features.
Deposits must MATCH existing transactions with a green box, or you will double your income!
When you see a Deposit on this list, that’s your signal to go to +New > Bank Deposit to gather the corresponding individual Payments and Sales Receipts into a matching Bank Deposit. As soon as you’re done, QBO notices the new batched dollar amount and Matches the transaction.
If you are not using Sales Receipts and Invoices for Customer transactions, and instead tracking sales data in your POS or e-Commerce website, it may be OK to pull Deposits straight in using Add, but you won’t see any income in the Money Bars and Income graphs. I usually recommend running a report from your software and creating a Sales Receipt for your daily sales.
Bank Rules
Every time you process a new type of transaction, QBO creates a Rule, so the next time it sees that same Payee from the bank, it will update this entry automatically.
Instead of relying on QBO’s Artificial Intelligence, check out the Bank Rules tab at the top of the screen. Here you can create your own Rules. This feature is extremely powerful. You can specify criteria by bank account, bank description, and amount. Assign your own Payee, Category, Class, Location, Splits, and more.
My favorite part is at the very bottom. For routine expenses, use the AutoAdd slider. QBO will skip the Banking Feed and add the transaction straight to the register. No work for you at all!
Job Costing Options
Are you doing Job Costing or running profitability reports? The following features are part of QBO Plus and Advanced, and are turned on in Account and Settings.
If the Expenses are incurred while serving a Customer, be sure to put the Customer name in that blank on the right.
If you are passing the cost on to the Customer for reimbursement, check the Billable box. The next time you create an Invoice for that Customer, the Expense will appear in the right column, ready to be added to the Invoice with markup.
Receipt Capture
The Banking Center has a tab for importing jpgs and PDFs of your paper receipts, and attaching them to transactions. You can upload them, import them via email, or snap a picture of the receipt on your phone using the QuickBooks Mobile app. The receipt images will even Match the Banking import!
Conclusion
This explanation is just the tip of the iceberg. Join me in my upcoming workshop sponsored by Divvy, "Banking Feed in QBO" on August 27, and see the Banking Center in action! You can register here.
Next month, I’ll talk about how to troubleshoot Banking errors, and then do a Reconciliation at the end of the month.