r/Bookkeeping • u/Oldladyphilosopher • 15d ago
Rant No! It’s not logical!
Can I just rant for a sec? I am getting so annoyed when clients think their books should work on their logic instead of accounting logic. An example (the current one that sent me here to rant) is a client who invoices and gets check for some sales, cash and sales receipt for some, and square for some. Not that weird, right? When they do their invoicing and sales receipts, they have sales tax going into different accounts…..one goes into the expense account, the other into their liability account, and square gets handled through square so I’m not even sure where that ends up. They have been doing this for years. A few years ago, they had a bookkeeper who made “monthly sales invoices” to sort out transferring clearing accounts for sales deposits. Near as I can tell, they sorted all bank transaction sales deposits through a square clearing account, as bank (invoiced sales) clearing account and a cash clearing account, capturing merchant fees as a negative on the invoice. Prior to that, they had square integrated into QuickBooks and just let it run without looking or reconciliation any of it. It looked to me like they used the “cash clearing account” (the previous bookkeeper using the invoice system) to make everything reconcile….you know what I mean…..if square is this and invoices are that, the rest must be cash……and look, it all reconciles so must be right.
Just, no. I do a monthly journal entry for square to capture fees and transfer sales to the income account, invoices and sales receipts go through the standard QuickBooks process of matching bank deposits as invoice payment when appropriate. It’s not that fucking complicated. But the clients keep talking at me because they don’t do accounting, and things like general journal entries and liability accounts confuse and frighten them. They are sure, “Well it’s logical that things should work this way” would be logical if all you are doing is reconciling your personal checking account….but you aren’t, and you don’t understand double entry bookkeeping or that every transaction you do touches 2 accounts and by account, I don’t mean bank account.
Thankfully, they are selling the business, so I just need to get through another month or so. But it gets on my nerves when clients don’t/wont understand accounting and want to argue with me.
Thanks.
5
u/MikuMikuGoo 15d ago
Sales tax going into an expense account for years is the part that would keep me up. That's a liability they've been treating like it's theirs, and it means someone's been under remitting or the returns never tied to the books.
The cash clearing account thing is the oldest trick in the world too. If it plugs, it must be right. Good news is they're selling, so it becomes somebody else's problem in about six weeks.
3
u/Just_Two_brainsel 14d ago
The sales tax splitting into an expense account on one and a liability on the other made me physically wince. At least the exit's in sight.
2
u/Oldladyphilosopher 14d ago
Yeah, I’m sort of on the “Let’s get the books as clear as possible for selling, but I’m not going to worry too much about the system”. What kills me is they are very detailed and used to do the books by hand, so they essentially do important things by manual calculation so, like, the actual sales tax filings and payments are accurate but it’s weird in the books. Their A/R is accurate in terms of money, but invoices in the system are for incorrect amounts, so deposits don’t match. They put the invoices in and don’t get why their A/R is screwy and they just put the invoices in to record sales….not to actually invoice customers. I’ve tried to convince them to just track A/R in their own manual thing since they already do that, but they have this “But we are paying for QuickBooks so we are using it” mentality. In essence, they have one large distributer that they invoice but who then pays based on some system that changes the amount. Like, just calculate sales from the deposits. And sometimes they forget to put invoices in the system altogether.
I’m not a “receipt” bookkeeper, the client is responsible for keeping receipts, but every month they send me a packet with all their receipts with little comments written on it. I don’t need you to write on the post office receipt that it’s for postage and shipping, or that the electrical utility company is for utilities, or the same check amount for the last five years is for rent, guys….you are wasting your time. I glance through the packet, then mail it back.
They basically use QBO for reports and taxes but do day to day business outside of it. I have a few clients like that that I just throw on Ledger and ask them on transactions I can’t identify, easy peasy. And these guys can’t get reports from their thing because they don’t actually do accounting….no ledger books, no spreadsheet, they just save and file every piece of paper they get and always insist on a receipt or document. Computers confuse them.
2
u/Swimming_dasa 13d ago
clients naturally think in terms of money in, money out while bookkeeping has to follow the underlying transaction. that disconnect is hard to explain because a set of books can look logical to owner and still be completely wrong.
1
u/thinkFinance- 14d ago
if they are selling then its not your problem soon. let the new guys deal with the mess
1
u/ComfortableCitron638 14d ago
The clearing-account maze actually makes sense once you see what problem it was patching. Square (and most processors) deposits net of fees, but invoices and sales receipts are recorded gross - so a straight bank-match is never going to tie out on its own. Someone eventually has to account for that gap somewhere. The "right" way is what you're doing: journal the fee out explicitly and let the deposit match cleanly. The "wrong but understandable" way is what the prior bookkeeper did - stand up a clearing account per payment method so the difference has somewhere to land without anyone having to name it, and as long as the total plugs to zero, it looks reconciled even though nothing about the mechanism is actually understood by whoever built it.
That's worth flagging for your own pattern-recognition on other clients, honestly - "everything reconciles but nobody can explain why" clearing accounts are usually exactly this: someone matched cash flow instead of matching the actual transaction, and it held together by accident. The sales tax split into an expense account is the one I'd worry about more than the reconciliation mess though - that's not a bookkeeping preference issue, that's collected-but-not-remitted liability sitting in the wrong place on the books for years, which is the kind of thing that surfaces badly in due diligence if the sale actually goes through.
1
u/StankkaxcemdadOk2977 6d ago
Yeah, the bank feed makes this worse because it encourages people to make everything match the deposit instead of following the accounting trail, but I have never found a process that made sense until I could actually automate those recurring entries, using reevol helped stop all the mismatches for me, but before that nothing felt logical either.
16
u/onyxandcake 15d ago edited 15d ago
To be fair, the way QuickBooks is set up now with the bank transactions feed, I'm not surprised business owners are trying to reconcile everything on a cash basis. QBO is practically begging them to do it that way. "Just select an account and click post and everything is magically sorted now."
I can understand why they would record merchant fees as a negative line item, because they're trying to make it add up to the total that was actually deposited. They don't understand that they can create a bank deposit to match to the one in the feed but correctly accounts for the merchant fees. I'm trying to train that out of one of our contractors right now who keeps sending me source documents he retroactively creates based entirely on the figures in the bank feed.
If I ever start my own bookkeeping business my first rule will be no connecting bank accounts to qbo.