Keys to Success in the Office
The end of the month "closing of the books" can be something everyone dreads. With a solid plan for the entire process, from forecasting to reaching the bottom line — plus the help of Quickbooks’ integration with ServiceTitan — eases the burden.
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Most trade companies go through certain periods throughout the year that require a “closing,” or a finalized financial performance. The most common one is month-end, but there are quarter as well as year end financial performance.
To clearly define what most companies call “the month-end close process,” there are a set of accounting tasks done at the end of each month (or period) to officially close out the accounting. Month-end closing procedures may include reconciling discrepancies of General Ledger income and expense accounts between the two systems, reconciling inventory, processing payroll and posting the correct entries, balancing and reconciling the bank (deposits and withdrawals), depreciating fixed assets, setting outstanding liabilities, posting billing documents, and other responsibilities relating to account maintenance and record-keeping.
If a company has inventories, the monthly close will be more challenging as the business will have to be certain that the costs are recorded in the same month as the goods are added to inventory.
In short, the accrual of expenses becomes immensely important when goods are received and are sold. Some companies may defer to do a quick count of monthly inventory and do a deeper analysis at the end of the fiscal year or every few quarters.
READ MORE: Pro tips for closing out monthly books
Common Monthly Close procedure steps (high-level)
Establish a Closing Date.
Pull a Trial Balance Report.
Throughout the month, transactions may differ from the time they were made. These adjustments account for the difference between what was originally entered and what the final transaction reflects.
When all transactions are accounted for and/or updated the balance for each account within the ledger must be calculated. Each account starts with the opening balance from the month prior. Deposits (revenue generated) are added, and debits (expenditures) are subtracted.
Review reports: The balances of all accounts will all be recorded on important reports to provide a snapshot of the company’s current financial position.
The Profit and Loss (P&L), also known as the Income Statement (I/S) will show the revenues, costs and expenses incurred over a specified period of time (from MM/DD/YYYY to MM/DD/YYYY).
General Ledger Activity Report
P&L Summary (WIP)
The Balance Sheet (B/S) will show the total assets, liabilities, and Shareholders’ equity at a specific point in time (As of MM/DD/YYYY). A=L+E
The Cash Flow Statement (C/F) will show cash in/outs over a specified period of time. This report is different from the P&L and B/S since it only takes into account cash activity; it excludes non-cash activity (Sales, PoC, depreciation).
The Accounts Receivable Aging (A/R) will show what customers owe the business based on the due date of the invoice.
The Budget vs. Actual (B/A) will compare what has been projected at the beginning of the period date, as well as explain why.
Common Monthly Close procedure steps (Detailed) with QuickBooks and ServiceTitan
Closing the books every month is an important bookkeeping task that should be part of the monthly bookkeeping routine. Closing the books on a monthly basis helps keep cleaner books, is more organized, and will lead to an easier time preparing the books for yearly taxes at the end of the year. Here is a 12-step process to follow to close your monthly accounting records.
Backup your QuickBooks
ServiceTitan Reports—AR Detail by Date
QuickBooks Reports—AR Detail
Verify all ServiceTitan invoices for the month have been batched and posted to QuickBooks.
Verify all payments have been applied to ServiceTitan invoices for the month and they have been batched and posted to QuickBooks.
Compare the ServiceTitan AR Detail by Date and to the QuickBooks AR Detail report, Balance Sheet and General Ledger.
Make any changes or adjustments to ensure all records match.
ServiceTitan Reports—Accounts Paid Report
QuickBooks Reports—Accounts Payable Detail
If using ServiceTitan Inventory, ensure all POs have been batched and posted
Double check all automatic bill payments and any recurring payments have been posted to QuickBooks (for example, loan payments, monthly car insurance payments, etc).
Post any outstanding bills to Accounts Payable.
Reconcile outstanding vendor bills and vendor statements against the Accounts Payable Reports and Balance Sheet.
QuickBooks Reports—Quantity on Hand by Site
To ensure quantities are accurate we must ensure either 1. Status is considered when reviewing ServiceTitan reports, or 2. Ensure AP and AR transactions are accounted for and reconciled
ServiceTitan Reports—Accounting Detail Report; Batch Detail Report
QuickBooks—Deposit Detail Report; Register
Reconcile Bank Accounts—Reconcile all bank accounts using the monthly bank statements and monthly credit card merchant statements. Print and file the reconciliation reports and bank statements when finished.
Reconcile Loan Balances and Lines of Credit—Reconcile loan balances and lines of credit against your monthly statements. Print and file the reconciliation reports.
Reconcile Petty Cash—Reconcile balance with all collected receipts where cash was used. Enter receipts that have not been recorded before reconciling
Track/update fixed accounts
Record monthly depreciation and amortization (for goodwill, LT liabilities)
Prepaid Income and Expenses Adjustments
Record monthly journal entries to allocate your prepaid income and expenses.
Write Off Bad Debt
QuickBooks Reports—GL Quick Report for the Bad Debt Expense Account
Option 1: Write off any uncollectible invoices to bad debt payment in ServiceTitan and make sure these invoices have been included in the posted batches.
Option 2: If the invoices are written off to Bad Debt Expense in QuickBooks, make sure to record this in ServiceTitan and bypass these invoices so it is not exported to QuickBooks.
Mark the customer as “do not service” or handle future work as you see fit
Verify all Checks Accounted For
Checks are generated in numerical order. If any check numbers 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 and/or deleted.
Review Financial Statements
ServiceTitan: No default report (Accounting Detail Report will provide Total Revenue)
QuickBooks: P&L by Class Report
ServiceTitan: No default report
QuickBooks: Balance Sheet Report
Statement of Cash Flows
ServiceTitan: No default report (Accounting Detail Report will provide Cash Receipts and Net A/R Change)
QuickBooks: Statement of Cash Flows
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.
Update the budget and review budget vs. actual numbers. Determine why some budget amounts are off for the month.
Print and File final Financial Statements and Financial Reports from QB
Profit and Loss, Balance Sheet, Trial Balance, and Statement of Cash Flows
Close Books (prevent back dated entries)
QuickBooks: Use the “Closing Date” feature. This feature allows for locking the previous month(s) and protects it with a password. This keeps anyone from accidentally changing previous months. The “Closing Date” feature can be found under the company drop down menu. Any errors found at a later date will require corrections in the current period.
ServiceTitan: Update the Minimum Post Date. This should be 3-5 days before the actual close date to all for QuickBooks entries to be performed without disruption for ServiceTitan.
Back Up Again
Back up your QuickBooks post-changes
Adding these tasks to the monthly bookkeeping routine will help ensure cleaner books, better organization, and an easier time preparing the books for year-end taxes.
Table of Contents
2. Building a Company for Success
3. Setting Your Company Up for Success
4. Driving a Company Culture
5. Setting a Path to Maximum Profitability
6. Billing Structure: Determine Your Pricing
7. Marketing Practices
8. Call Center Practices
9. Call Center + Field Practices
10. Best Practices in the Field
11. Field + Office Best Practices
12. Keys to Success in the Office
13. Management and Office Best Practices
14. Human Resources
15. Preparing Your Company For Sale