How to Track a Bill of Materials in QuickBooks
If your business builds and manufactures products, you’ll probably want to track the cost of the components. Overspending on components may result in a low or even negative return on investment. You may spend more on the components than the sale price of the finished product, resulting in a negative return on investment. Fortunately, you can track a bill of materials in QuickBooks. As long as you use QuickBooks Desktop Premier, Enterprise or Accountant, you’ll have the option of tracking a bill of materials.
Step #1) Create an Inventory Assembly
To track a bill of materials in QuickBooks, you’ll need to create an inventory assembly. An inventory assembly is essentially a group of items that are sold together as a bundle. Each item is a component, and the bundle is the finished product. You can create an inventory assembly by navigating to the “Lists” menu and selecting “Item List.” From the “Item” drop-down menu, select “New,” followed by ‘Inventory Assembly.”
Step #2) Add Cost and Price
You’ll have to enter some information about the product when creating an inventory assembly. QuickBooks will prompt you to enter the cost of the product. You can either enter the total cost of the product, or you can enter a custom cost that includes other related expenses like labor. You’ll also need to add the price of the product. Select “COGS Account” and choose “Cost of Goods Sold.” QuickBooks will then use this account to automatically track the cost of the product.
Step #3) Add Items
Now it’s time to add items to the inventory assembly. As previously mentioned, items are components. You’ll need to add all of the necessary items to the inventory assembly so that you can track the bill of materials. You should see a “Bill of Materials” section. Under this section, select all of the items that your business uses to build and manufacture the product.
Step #4) Complete Inventory Information Section
The final step to tracking a bill of material is to complete the inventory information. The inventory information section features several options. You’ll need to choose an asset account so that QuickBooks can track the cost of the finished product. You’ll also need to select a build point minimum, maximum number of products to build, number of products currently on hand, and the total value of the finished products.
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The Benefits of In-House Accounting
Do you currently outsource your business’s accounting to a third party? You aren’t alone. Statistics show that over one-third of all business owners outsource their accounting. In-house accounting, however, offers several key advantages. Rather than outsourcing it, you may want to perform your business’s accounting in house for the following reasons.
Saves Money
You can save money by performing your business’s accounting in house. Outsourcing accounting services to a third party can be expensive. Many professional accountants charge up to $200 per hour. By having an in-house accounting team, you don’t have to pay these fees. All of the money that you save on accounting can then be reinvested back into your business.
Better Control
You’ll have more control over your business’s books and financial records with in-house accounting. You can set up accounting processes and procedures that are custom-tailored to your business, allowing you to better manage your business’s books and financial records. When outsourcing your business’s accounting, on the other hand, you’ll have to rely on a third party. The accountant may or may not use your preferred processes and procedures.
Ultra-Fast Response Times
In-house accounting offers ultra-fast response time. With an in-house accounting team, your business can quickly respond to financial issues. The in-house accounting team can analyze financial records to identify and fix discrepancies on the fly. If you outsource your business’s accounting, you can expect longer response times. Professional accountants are oftentimes busy with other clients. You’ll have to wait until the accountant is available to look at your business’s books and financial records. Even then, it may take days if not weeks for the professional accountant to resolve the issue.
Security
Security is another benefit of in-house accounting. By having an in-house accounting team, you can ensure the confidentiality and security of your business’s financial data. You have greater control over who has access to your financial information, which can reduce the risk of data breaches and cyber attacks. This high level of security can help protect your business from financial and reputational damage.
Improved Forecasting
Improved forecasting is a benefit of in-house accounting. Having an in-house accounting team can improve your company’s ability to create forecasts. The in-house accounting team can use historical data and trends to create more accurate financial projections. Using these projections, you can make well-informed decisions about future investments and expenses.
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FIFO vs LIFO: What’s the Difference?
If your business manages inventory, you’ll need to implement an inventory accounting system. Inventory accounting systems are used to determine the cost of goods sold (COGS) and the value of inventory. There’s first in, first out (FIFO), and there’s last in, first out (LIFO). What’s the difference between these two inventory accounting systems, and which one should you use for your business?
What Is FIFO?
FIFO is an inventory accounting system that assumes the first products purchased from a vendor or manufacturer are the first products sold. With FIFO, you use the cost of the oldest products in your business’s inventory to calculate COGS, and you use the cost of the newest products to calculate the value of your business’s ending inventory. The FIFO accounting system is commonly used when a business wants to report a higher net income, as it results in a lower COGS and higher ending inventory value.
What Is LIFO?
LIFO is an inventory accounting system that assumes the last products purchased from a vendor or manufacturer are the first products sold. The cost of the newest products in your business’s inventory are used to calculate COGS. Conversely, the cost of the oldest products are used to calculate the value of your business’s ending inventory. The FIFO accounting system is often used when a business wants to minimize taxes, as it typically results in a higher COGS and lower ending inventory value.
Differences Between FIFO and LIFO
Two of the most common inventory accounting systems are LIFO and FIFO. While used for similar purposes, though, they aren’t the same. FIFO uses the oldest inventory products or items to calculate COSTS, whereas LIFo uses the newest inventory products or items to calculate COGS. And FIFO uses the newest inventory products or items to calculate the value of ending inventory, whereas LIFO uses the oldest inventory products or items to calculate the value of ending inventory.
There are tax implications associated with FIFO and LIFO. Because LIFO can result in a lower net income, it can result in lower taxes. Not all businesses, however, are allowed to use LIFO for tax purposes, and some countries may prohibit the use of LIFO altogether. Under the Generally Accepted Accounting Principles (GAAP), for instance, only LIFO is allowed. If your business uses the GAAP, you should choose LIFO.
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How to Fix the ‘Insufficient Data for an Image’ Error in QuickBooks
Have you come across the “Insufficient data for an image” error when using QuickBooks? QuickBooks simplifies the process of accounting. Rather than hiring a professional accountant, you can track and record your business’s own finances using this popular accounting software. But QuickBooks isn’t immune to errors. Like all types of software, it can experience errors, one of which is the “Insufficient data for an image” error.
Overview of This Error
The “Insufficient data for an image” indicates a problem with an image. Forms in QuickBooks support images. When emailing, printing or saving a form, you may encounter this error.
Portable Document Format (PDF) files are used for forms. PDFs, of course, can feature embedded images. Whether you’re emailing, printing or saving a form, you may encounter the “Insufficient data for an image” error. Fortunately, you can fix this error; you just need to change the image format using your preferred editor.
Change the Image Format
To change the image format, start by accessing “Lists” and selecting “Templates.” Next, double-click the template that’s triggering the “Insufficient data for an image” error. You can then choose “Layout Designer” to modify it.
After selecting “Layout Designer,” you should be able to modify the form. Go ahead and remove the image from the form. QuickBooks will prompt you to confirm, at which point you’ll need to select “OK.” The image should now be removed from the form.
You aren’t out of the woods just yet. The form no longer has an image. Therefore, you should change the format of the image and then add it back to the form. Open the image in a separate editor, such as Microsoft Paint, and change the format. If it’s currently saved as a GIF, for instance, change the format to JPG or vice versa.
Once you’ve changed the format of the image, you can add it back to the form. Go back into the layout designer and add the image to the form. When finished, try to email or print the form. Assuming the error has been resolved, QuickBooks will successfully email or print the form.
In Conclusion
Discovering an error when attempting to email, print or save a form in QuickBooks is frustrating. The “Insufficient data for an image” indicates a problem with an image in a form. You can typically resolve it, however, by changing the image format and then resaving the form.
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What Is the Double-Entry Bookkeeping Method and How Does It Work
There are two primary bookkeeping methods used in accounting: single-entry and double-entry. While single-entry is typically the easiest, some businesses prefer the double-entry bookkeeping method. What is the double-entry bookkeeping method, and how does it work?
What Is the Double-Entry Bookkeeping Method?
The double-entry bookkeeping method is a business accounting method that records each financial transaction in at least separate accounts: a debit account and a credit account. It’s based on the fundamental accounting equation, which states that assets must equal liabilities plus equity. Every transaction affects at least two accounts with the double-entry bookkeeping method. The total debits must always equal the total credits, ensuring that the business’s books are always in balance.
How Does the Double-Entry Bookkeeping Method Work?
The double-entry bookkeeping method begins with identifying the transaction. Whether it’s a sale, purchase or receipt, the transaction must be identified. You can then determine which accounts are affected by the transaction. As previously mentioned, all transactions affect at least two accounts, including a debit account and a credit account.
Now you can record the transaction. This involves making entries in the general ledger. The general ledger typically has separate accounts for assets, liabilities, equity, revenue and expenses. When using the double-entry bookkeeping method, you’ll need to record the transaction in a debit account and a credit account.
The Benefits of the Double-Entry Bookkeeping Method
Unless you’ve used it in the past, you might be wondering what benefits the double-entry bookkeeping method offers. One of the main benefits of using the double-entry bookkeeping method is accuracy. Errors can occur with all accounting methods, but they are less likely to occur with the double-entry bookkeeping method. This is because each transaction is recorded twice, which helps to ensure that your business’s books are always in balance.
The double-entry bookkeeping method offers protection against fraud. With each transaction affecting at least two accounts, you can use it to identify both fraud and errors. It’s easier to identify discrepancies and inconsistencies when using the double-entry bookkeeping method. If you’re worried about fraud or errors, you may want to choose this alternative accounting method for your business.
Another reason to use the double-entry bookkeeping method is transparency. It offers a clear and comprehensive picture of your business’s financial health. You can use the double-entry bookkeeping method to closely track your business’s revenue, expenses, assets and liabilities.
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A Crash Course on QuickBooks ACH Reject Codes
If you use QuickBooks Payments to receive Automated Clearing House (ACH) payments from your
business’s customers, you should familiarize yourself with reject codes. ACH payments are essentially
direct transfers. Customers can pay their invoices by sending money from their bank accounts directly to
your business’s bank account. If an ACH payment fails, though, you’ll receive an email containing an ACH
reject code.
The Purpose of ACH Reject Codes
ACH reject codes are designed to notify businesses about a failed ACH payment. Assuming an ACH
payment is successful, you won’t encounter any reject codes. Rather, QuickBooks only uses them in
instances of failed ACH payments.
There are dozens of reject codes. Each reject code consists of a unique three-digit code, beginning with
the letter R. When a customer’s ACH payment fails, QuickBooks will send you an email. This email will
contain the reject code indicating why the reason for the failure.
R01
One of the most common reject codes is R01. It indicates an insufficient balance. If the customer doesn’t
have enough money in his or her bank account, your bank will reject the ACH payment. And QuickBooks
will send you an email containing the R01 reject code.
R02
The R02 reject code indicates a closed account. Customers may close their bank accounts. If the
customer’s bank account previously existed but is now closed, your bank will reject the ACH payment.
For rejections involving a now-closed bank account such as this, QuickBooks will notify you with an R02
reject code.
R19
While not as common as R01 or R02 reject codes, some ACH payments may trigger an R19 reject code.
The R19 reject code indicates an erroneous format. Customers who don’t use the correct format when
creating the ACH payment may have their payment rejected by your bank. For rejections associated with
an erroneous format, you’ll receive an email containing an R19 reject code.
R09
The R09 reject code indicates the customer has a sufficient total balance for the ACH payment, but the
collectible balance is insufficient. The customer’s bank can’t collect the necessary amount for the ACH
payment. Therefore, QuickBooks will send you an email containing the R09 reject code.
In Conclusion
If your bank has rejected a customer’s ACH payment, you should check your inbox. As long as you use
QuickBooks Payments, you’ll receive an email containing a reject code. Reject codes consist of an
alphanumeric string indicating the reason for the payment failure.
5 Small Business Survival Tips When Interest Rates Are High
Interest rates can have a direct impact on your small business’s performance and level of success. When interest rates are low, money is cheap and easy to borrow. High interest rates, in comparison, result in a higher borrowing cost. Here are five tips to help your small business survive during an era of high interest rates.
#1) Explore New Revenue Streams
Relying heavily on a single revenue stream can expose your business to significant risks during times of high interest rates. Consider diversifying your revenue streams to reduce your business’s reliance on any single particular market or customer segment. Explore new markets, products or services that can generate additional revenue and help offset increased the otherwise expensive borrowing costs associated with high interest rates.
#2) Prioritize High-Interest Debt Payment
Prioritizing loans and other forms of debt with a high interest rate can help your small business survive. Focus on paying down this debt before other, less-costly forms of debt. By making regular payments to high-interest debt, you can pay them off early. The sooner you pay them off, the less money you’ll have to pay in interest to the lender.
#3) Engage in Cost Control
Another tip to help your small business survive when interest rates are high is to engage in cost control. Review your business’s expenses and look for areas where you can cut costs without compromising the quality of your business’s products or services. Look for opportunities to streamline operations, negotiate more attractive terms with vendors and suppliers, and optimize your business’s pricing strategies to maintain profitability.
#4) Review Capital Expenditures
You should consider reviewing your business’s capital expenditures during times of high interest rates. Some purchases are essential to your business’s operations, meaning your business can’t survive without them. Other purchases, though, may or may not be essential. Delaying or prioritizing capital expenditures based on their potential impact on cash flow can help your business conserve cash and manage borrowing costs.
#5) Improve Customer Retention
What’s your business’s customer retention rate? Retaining existing customers is often more cost-effective than acquiring new ones. During times of high interest rates, focus on delivering value to your business’s existing customers and strengthening customer relationships. Provide excellent customer service, tailor your offerings to meet their needs and explore opportunities for upselling or cross-selling to maximize customer retention and loyalty.
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A Crash Course on Chargebacks: What You Should Know
You can’t ignore chargebacks when running a business. Assuming your business accepts payments in the form of credit and debit card transactions, you may experience chargebacks. Some reports suggest that a half-dozen out of every 1,000 card transactions involve a chargeback. What are chargebacks exactly, and how do you prevent them?
What Are Chargebacks?
Chargebacks occur when a consumer disputes a transaction made with a business. The consumer reaches out to his or her bank or card provider and, thus, initiates a request to reverse the charge. Chargebacks can occur for various reasons, such as fraudulent transactions, dissatisfaction with a product or service or billing errors.
Chargebacks can prove costly for businesses, as they often result in lost revenue, fees and additional administrative work. Your business will lose revenue from chargebacks. With each chargeback, money will be transferred from your business to the consumer. You may incur chargeback fees and other related expenses associated with them as well. To prevent chargebacks with your business, consider the following measures:
How to Prevent Chargebacks
Creating a clear and transparent billing policy can protect your business from, chargebacks. Consumers should know exactly how they will be billed when purchasing your business’s products or services. Otherwise, they may not recognize the transaction on their bank or card statement. This can lead consumers to initiate a chargeback — something that can be prevented with a clear and transparent billing policy.
Offering excellent customer service can help address complaints or concerns promptly and effectively, which may prevent chargebacks. When consumers have a positive experience with your business, they’ll be less likely to initiate a chargeback. Responding to customer inquiries, providing refunds or exchanges and resolving disputes in a timely and satisfactory manner can help prevent chargebacks as well.
Don’t forget to implement fraud detection tools. While chargebacks often have different causes, the most common cause of chargebacks is fraud. Fraudulent chargebacks typically result in a chargeback. The victim of the fraudulent transaction will initiate a chargeback with his or her bank or card provider Implementing fraud detection tools like address verification systems (AVSs), card verification value (CVV) checks and risk scoring models can help identify potentially fraudulent transactions and prevent chargebacks resulting from fraudulent activities.
In Conclusion
By following these tips, you can reduce the risk of chargebacks and protect your business’s revenue, reputation and customer relationships.
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