Tuesday, June 07, 2016

Y$10K - Use QuickBooks to Plan Ahead the Easy Way

Before anything else, let me get this out: If you own a business, you should be looking at your QuickBooks (or whatever) at LEAST once a week. If you want to really make money, you need to look at it every day. Being intimately familiar with your money will help you tremendously. I am shocked at how many people are in business but have no idea what their numbers look like.

Those numbers are your money, your profits, your losses, your payroll, your cash flow. They are also your extravagances, your priorities, and your commitments. My motto is: Nothing happens by itself. That's certainly the case with money. Money management doesn't happen by itself. Retirement doesn't happen by itself. Wealth doesn't happen by itself.

Here's one easy thing you can do in QuickBooks to begin looking at longer-term cash flow. QB has a function called memorized transactions. I encourage you to use memorized checks. Here's all you have to do. When you write a check for a regularly occurring payment, such as rent or a software subscription, right-click on the check in the bank register and choose to "memorize" it.

Fill out the form as in the illustration here. Set the payment to enter automatically. And set it to do so 30 days in advance. In the note field on the check, enter two stars (**) so you know that these entries are automatically generated. Many dates move around a bit based on the weekend, so enter it for the earliest day it's likely to occur.

Illustration 1 - click to enlarge

Enter these for all the recurring billing you can think of. And whenever you find yourself entering something that will recur in a month, memorize it.

When you look at your checkbook in QuickBooks, there's a line separating "today" from the future. After you've entered your recurring payments, you'll see all the double-starred entries for the next 30 days. It will look like the next illustration, although your future balance may change to red at some point.

Illustration 2 - click to enlarge

Don't worry - that's actually good. The two lines you have to be vigilant about are the today/tomorrow line and the point at which your balance does negative. Your motivation is to keep that balance in the black for the foreseeable (30 days) future.

This is extremely helpful with cash flow. You can literally see how much money you'll need to make payroll and what the squeeze is going to look like when you pay rent. Use a simple cash flow procedure (see http://blog.smallbizthoughts.com/2011/12/sop-friday-cash-flow-weekly-procedure.html) to also look ahead and see when money will flow in from manage service payments.

Note: You need to set these payments to use debit cards and not credit cards. That's a huge step toward moving away from credit cards and toward running your business on cash instead of credit. Set up the bill-pays on debit cards and then auto-schedule with with memorized transactions in QuickBooks.

Cash flow is king and this little technique will help you see it in real time.



  1. Teri Milligan11:30 PM

    This is great advice Karl. A quick way to see what's coming up. We also put in future non-recurring payments when we know what they are. Especially when we buy equipment, since we get paid up front. This way we don't spend that money on something else. Instead of putting asterisks in the check # field, we use letters such as "FP" for future payment. I've seen the asterisk cause data damage to Quickbooks files.

  2. Thanks, Teri. I haven't had that issue with QuickBooks, but I can see it happening. I might make that switch.

  3. Teri Milligan12:37 AM

    Your welcome!


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