Best practice on closing the books with QuickBooks

Overview

Reconciling your financial accounts can be time-consuming and complex without a proper workflow. This article outlines a best practice approach to simplify and optimize the process of reconciling your accounts or closing the books.  

Things to know

• Closing the books refers to gathering your accounts payable, accounts receivable, and inventory amounts and reconciling them with your actuals. This includes bank accounts, loans, cash, and more.

• Closing the books blocks changes from being made to the financials for that period. This helps you get better financial data accuracy and catch and reconcile mistakes properly.

• We recommend that you reconcile your accounts or close your books once every month. Some businesses close their books at the end of each month or mid-month. You can choose when you want to close your books, as long as you stay consistent each month.

Best practice workflow on closing the books

1. Backup your QuickBooks.

2. For Accounts Receivable:

   1. Verify that all ServiceTitan invoices for the month have been batched and posted to QuickBooks.

   2. Verify that all payments have been applied to ServiceTitan invoices for the month and have been batched and posted to QuickBooks.

   3. Compare the ServiceTitan AR Detail by Date Report to the QuickBooks AR Detail Report, Balance Sheet, and General Ledger. Make any changes or adjustments to ensure all records match.

3. For Accounts Payable and Inventory Quantities:

   1. If you’re using ServiceTitan Inventory, ensure all POs have been batched and posted.

   2. Double-check that all automatic bill payments and any recurring payments have been posted to QuickBooks. For example, check your loan payments or monthly car insurance payments.

   3. Post any outstanding bills to Accounts Payable.

   4. Reconcile outstanding vendor bills and vendor statements against the Accounts Payable Reports and Balance Sheet.

4. Perform monthly reconciliations. In ServiceTitan, use the Accounting Detail Report and Batch Detail Report. In QuickBooks, use the Deposit Detail Report and Register.

   1. Reconcile Bank Accounts: Reconcile all bank accounts using the monthly bank statements and monthly credit card merchant statements. When finished, print and file the reconciliation reports and bank statements.

   2. Reconcile Loan Balances and Lines of Credit: Reconcile loan balances and lines of credit against your monthly statements. When finished, print and file the reconciliation reports.

   3. Reconcile Petty Cash: Reconcile balance with all collected receipts where cash was used. Enter receipts that have not been recorded before reconciling.

5. Track and update fixed accounts:

   1. Record any monthly depreciation and amortization for goodwill or long-term liabilities.

6. For prepaid income and expenses adjustments:

   1. Record monthly journal entries to allocate prepaid income and expenses.

7. Write off bad debt:

   1. Write of any uncollectible invoices to bad debt payment in ServiceTitan and make sure these invoices have been included in the posted batches.

   2. If the invoices are written off to Bad Debt Expenses in QuickBooks, record this in ServiceTitan and bypass these invoices so they’re not exported to QuickBooks.

   3. Mark the customer as Do Not Service or handle future work as you see fit.

8. Verify that all checks are accounted for:

   1. Checks are generated in numerical order. If any checks are missing, figure out why and record the missing transactions. If they were voided or deleted, keep a record as to why they were voided or deleted.

9. Review your financial statements:

   1. Income Statement: In ServiceTitan, there is no default report but you can use the Accounting Detail Report for Total Revenue. In QuickBooks, check the P&L by Class Report.

   2. Balance Sheet: In QuickBooks, use the Balance Sheet Report.

   3. Statement of Cash Flows: In ServiceTitan, there is no default report but you can use the Accounting Detail Report for Cash Receipts and Net A/R Change. In QuickBooks, use Statement of Cash Flows.

   4. Look for any unusual balances, missing items, or mistakes. If anything looks or feels off, look into it and figure out why the balance seems odd. Make any corrections or necessary adjustments.

10. Update the budget:

    1. Update the budget and review the Budget vs Actual numbers. Determine why some budget amounts are off for the month.

11. Print and file the final Financial Statements and Financial Reports from QuickBooks: 

    1. Print the Profit and Loss, Balance Sheet, Trial Balance, and Statement of Cash Flows.

12. Close the books to prevent back dated entries:

    1. In QuickBooks, use the Closing Date feature. This feature allows for locking the previous month and protects it with a password. This keeps anyone from accidentally changing previous months information. The Closing Date feature can be found under the Company dropdown. Any errors found later will require corrections in the current period.

    2. In ServiceTitan, update the Minimum Post Date. This should be done three to five days before the actual close date for all QuickBooks entries to be performed without disruption for ServiceTitan.

13. Backup your QuickBooks.

Want to learn more?

• See QuickBooks Online

• See QuickBooks Desktop

• See Create QuickBooks backup file to your ServiceTitan account

• See Batch, post, and export transactions