Learning to Listen to Your QuickBooks Clients

One of the most common problems new users face when they set up their company file is that they lack a full understanding of the benefits QuickBooks has to offer and what they need to do to reap those benefits.  This can be especially true when new users are not familiar with how the “behind the scenes” accounting works to create income statements, balance sheets, etc.

As a result, I get to be a hero if I can help clients set up, or reorganize, their QuickBooks company file to make it easy for them to record accurate and timely transactions, to create reports that really help them manage their business, and to realize the benefits of credit card processing, online banking, loan management, etc., etc., etc.

The most difficult part of being able to accomplish this for clients is to be sure you understand how their business works.  I just went through a great experience with a new client this last two weeks.  If I had listened more up front, I would have been more effective in establishing how to best help them. 

The clients have a small manufacturing company.  They had just transitioned to QuickBooks from other software, realized things were not working out as well as they hoped, and contacted me.  The company both purchased inventory for resale “as is” and purchased materials for assembly into other products.  

Being the smart guy that I am, I immediately thought of QuickBooks “assembly build” feature, which allows you to create an “assembly item” and link other inventory items to it, defining the quantity of each raw material used in the assembly.  Once we defined this “recipe” for the assembly item we just pressed the “easy” button, “build assembly” and told QuickBooks how many we wanted to build.  QuickBooks automatically reduced the inventory of raw materials and increased the inventory of assemblies.

After further discussion, however, it turned out that one of the raw materials was a large plate that could be cut many ways, depending on the product to be assembled.  The plates were purchased in cases of 10 so, being the smart guy that I am, I immediately started talking about how QuickBooks would allow us to buy by the case and draw it from inventory based on whatever unit of measure they wanted to use for assembly, a feature called “multiple units of measure”. 

Now I realize things are starting to sound a little complicated because we have these large plates sitting in the warehouse that can be cut into as few as four parts in one assembly and as many as one hundred fifty in another.  Did they really want to keep track of their inventory of plates based on increments of 1/150^th of a plate?  Another concern was the number of permutations between input and output based on color. We began trying to arrive at a less complex way to account for the raw materials and their assembly.

We established that my clients purchased materials and sold assemblies by the job and, ultimately, agreed that we should set up both the assemblies and raw materials as non-inventory items, identifying the customer/job on both the purchases and sales to track profitability by job. 

I reorganized the setup of their “items” and chart of accounts, trained their bookkeeper how to effectively use QuickBooks, and wound up with a happy client.  I didn’t mention it, but I also left them the flexibility to change their minds and use the inventory assembly and multiple units of measure in the future.

I spent some time thinking about what I learned from this project.  Here’s what I came up with.  Ask more questions up front and get the whole picture before you start discussing solutions.  My first priority is to get the solution right for the client. They really don’t want to know “how the watch works”, all of the possible elegant solutions to their problem.  They just want the time. 

Robert Guild is certified QuickBooks ProAdvisor in Austin, TX who conducts CPE courses for CPAs and individual training and group classes to QuickBooks users.  His company, Accounting Insight, maintains a sixteen-station QuickBooks lab, providing hands-on training.  You can contact him directly at rguild@accountinginsight.biz or follow him on twitter at QBPro