Catch Up

One of my clients owns and operates a retail boutique in a busy section of town. They utilize a cash register point of sale system with a separate QuickBooks Desktop software to serve as their back-office bookkeeping system.

For the first year or so of their operations, there were some major problems festering that resulted in consistently skewed figures, which included their Balance Sheet and Income Statement.

After reviewing their processes and systems, I found four major issues that were contributing to the problems this client was having. The first issue was that the integrations between the point of sale (POS) check-out system and the back-office QuickBooks software were not being maintained consistently or correctly. The second issue was that the client was not receiving their purchased inventory into their point of sale system correctly, which resulted in their stock-on-hand statuses being incorrect and the merchandise being expensed immediately upon purchase. The third issue was that the client’s consignment inventory wasn’t being processed properly in the bookkeeping system. The fourth issue was that the client had not implemented a consistent schedule of physical inventory counts in order to reconcile them with the point of sale and bookkeeping systems. All of these issues contributed to the client’s Cost of Goods Sold, Profit Margins, and other financial data giving less favorable data than was actually the case.

Their entire system was woefully behind and had to be caught up properly and in a timely manner in order to submit the books to the CPA for tax filing.

To begin resolving their issues, I started with a review of all the bank statements from the inception of the business. I verified the information that was in the QuickBooks system with the actual bank statements to ensure that the records were properly recorded. Next, the client and I went through all past receipts for purchased inventory and I trained the client as we re-entered all the purchases into the POS system correctly. This step enabled us to ascertain the correct stock statuses and thus capitalize all the inventory in stock. The consignments were corrected by assigning them a stock status in the POS, but with a zero value. The client and I then performed a physical count of the entire store inventory. We completed the count in one evening (rather than over a period of several days) to ensure the most accurate stock statuses for the system to take over with automatic adjustments.

Once all the data in the POS system was verified to be correct, we needed to import the data that had not yet been entered from the POS system into QuickBooks. To accomplish this, we chose a cut-off date for the data import and made sure to manually enter all the corrections into QuickBooks that we had made in the POS system. The good news here was that their QuickBooks does not track individual items in stock – only the aggregate total of the entire inventory asset value of the store. This made it possible to make journal entry adjustments to update the inventory asset value and cost of goods sold.

Taking the time to communicate effectively, assess the problems causing the issues, make a plan of action, and then implement that plan (while training the client), enabled me to right the client’s books and ensure that he is able to maintain them properly in the future.

Want to know more? Still have questions? Email help@accurabooks.com. We are happy to help!

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