In this mini-series Murph and I are looking at QuickBooks Cash Flow. Last week he started our look by giving you a lot of details about QuickBooks Cash, Intuit's new bank offering1 that will create a new Business Bank account right inside your QuickBooks Online subscription. QuickBooks Cash is just part of the Cash Flow changes that Intuit is progressively rolling out to QBO users that began most recently on April 3, but some aspects began even as early as last November.
'Get Started with QuickBooks Cash and Envelopes'
I'm going to begin where Murph left off. And let me say first of all... "thank goodness, Cash Flow Forecasting is getting the much-needed attention it deserves." Managing electronic funds is extremely difficult, and until recently, there has not been a suitable method for doing so.
As Advisors, we help guide our clients through an understanding of their financial health. What makes this difficult is the tracking of electronic funds. When the sums of money received and paid are all electronic, management and forecasting is a difficult task.
What has changed? QuickBooks has introduced machine learning to assist in delivering insights for planning purposes. The more input the system has, the better the results. What’s possible is creating a closed system to manage both the accounts receivable and accounts payable. If both A/R and A/P are being tracked in QuickBooks, even electronic funds can be managed, and cash flow planning is possible.
QuickBooks Cash Flow can deliver insights for planning purposes. QuickBooks Cash Flow Planning, will help businesses know if they can meet payroll, cover accounts payable, and other expected financial obligations. With this knowledge, accountants can empower companies to plan for the days ahead.
Although cash flow is always a concern, now is the perfect opportunity to grab your client’s attention and teach them about cash flow planning using the QuickBooks Cash Flow features to make better decisions for financial health.
There are Four Main Features of the new QuickBooks Cash Flow:
- QuickBooks Cash
- Envelopes
- Planner
- QuickBooks Debit Card
So, let's take a closer look at both those Envelopes that Murph left off with, and QuickBooks Cash they are a part of, because you can't really understand one without the other.
QuickBooks Cash (Recap)
New Cash Flow Tab inside QuickBooks Online showing 'New' QuickBooks Cash (Bank Account) with 'Envelopes'.
QBO_Cash_(Account)
In reviewing QuickBooks Cash please remember:
- QuickBooks Cash is an FDIC-insured business bank account
- No monthly fees
- ATM withdrawals and foreign transactions may include a fee
- QuickBooks Cash will be the default deposit location of merchant services for new QuickBooks Payments Customers
- Funds can be transferred to external bank accounts
As this program is being rolled-out in phases, we will continue to keep you up to date on these exciting releases. Here is what we know so far about QuickBooks Cash. QuickBooks Cash will be available in QuickBooks Online Simple State, Essentials, Plus, and Advanced.
For existing QuickBooks Payment merchant services customers, their existing default bank account will be used for existing customer payments. But for new QuickBooks Payment merchant services customers, QuickBooks Cash will be the default bank account unless otherwise directed to an external bank account.
For new QuickBooks Payment merchant services customers QuickBooks Cash will be the default bank account by default.
QBO_Cash_Extra
QuickBooks Cash 'Envelopes'
One of the new features of QuickBooks Cash is something called 'Envelopes'. I think Murph compared these (last week) to what Dave Ramsey2 has been teaching his followers with 'paper envelopes' for years in his 'cash-flow system'.
QB Cash Envelopes enable clients to earmark funds like never before in QuickBooks Online! I love this new feature. I believe this will make such an impact on my clients because they need the ability to call out funds for specific purposes such as payroll, insurance, deposits, vacation pay, bonuses, and rainy-day scenarios.
Each Envelope is given a specific name to reflect its particular purpose. At any time, Envelopes can be edited, removed, and earmarked funds released if necessary. Because these funds never actually leave the bank account, they do not affect the bank balance. Instead, the funds within the envelopes are on-reserve for a given purpose. This means reconciling will not change because Envelopes are non-posting transactions which do not affect the actual bank balance. No change will be required for reconciling.
However, if you are using the QuickBooks Debit Card, the on-reserve funds within the Envelopes will not be accessible for debit card transactions. If needed, you could release the Envelope funds even on the go with your mobile. We will cover the QuickBooks Debit card in another part of this mini-series, so stay tuned.
Additional QuickBooks Envelope Information:
- QuickBooks Envelopes will not impact the chart of accounts
- If using a Payroll Envelope, the default funding source can be the Payroll Envelope
- QuickBooks Envelopes only work with QuickBooks Cash accounts (no other bank accounts)
- Funds can be transferred in and out of the Envelope at anytime
- Envelopes do not show up on reports (they are not a sub-account of any kind)
As you can see, there is so much to learn and discover, revolving around the new QuickBooks Cash Flow features.
You do not have to use all the features, and there is the flexibility to pick and choose. For example, you might have some clients who decide to only partake in the Cash Flow Planner (more next week) while others may want to participate in all four QuickBooks Cash Flow features. This could include signing-up for the QuickBooks Cash account, so they can use the Envelopes and QuickBooks Visa3 Debit Card in combination, with the Planner to get the most valuable benefits of all the features.
And speaking of next week, we will look at 'Optimizing QuickBooks Cash with the QuickBooks Cash Planner.' You really won't want to miss that.
Disclosures and Trademarks:
1 - QuickBooks Cash Bank Account is a joint venture between Intuit and 'Green Dot Bank', an FDIC insured banking institution. QuickBooks and related products and services refer to registered/trademarked products of Intuit, Inc. Green Dot, including Green Dot Bank, are registered trademarks of Green Dot Corporation.
2 - Dave Ramsey System (Envelope System) and related-products, and 'Dave Ramsey', are subject to terms of use by The Lampo Group, LLC, dba 'Ramsey Solutions'.
3 - Visa in regard to QuickBooks Visa Debit Card and any reference to Visa concern Visa U.S.A. Inc, the registered trademark of Visa International Service Association.