Years ago, I had set up a commercial printer client on QuickBooks. Things were going well. The employees in the accounting department had mastered the functions in QuickBooks they needed to use. I had done my job.
One day, however, the owner approached me asking for internal management reports they would like to extract out of QuickBooks. One example was a report on the costs of problematic jobs that required re-printing, and therefore resulted in a ton of waste.
They not only wanted to know in total over a financial period how much extra expenses they incurred, but also wanted it on a customer-by-customer basis so they could figure out how to deal with customers who were problematic over time.
How were we going to track that? The costs were already tracked on a macro basis: electricity, wear and tear on the machines, payroll, and of course, toner and paper. Entering the redone jobs to track these expenses would mean duplicating the numbers.
But there was a way to do it—reporting on cranky customers and their financial impact on the business, without skewing the financials. It required strategic use of zero-dollar transactions and a cost accounting frame of mind, but we made it work.
Here’s how this works in QuickBooks Online:
- Create a service item for purchasing transactions called “Waste” (the expense account is irrelevant, but I assigned it to a new expense account called “Waste”) and give it a unit cost of 0.
- Create a vendor called “Waste,” too.
- Create a Bank clearing account, which, as we know, should always have a balance of zero.
- Have the accounting department get the estimated cost of each duplicated/wasted job (based on the amount of paper and toner used, as well as a standard cost for machine use and employee time). Optionally, round it to the nearest dollar amount. Rounded or not, that figure would then become the quantity X in the next step.
- Use an Expense (or Check) transaction drawn on the Clearing account, buying X “Waste” items (where X equals the estimated cost of the wasted job) at a unit cost of 0, so that the Expense has $0 as the total amount. Use the vendor name “Waste.” Specify that these $0 items are being purchased for the problematic customer or sub-customer/job.
Finally, run a Purchases by Product/Service Detail report for the period in question and perform the following customizations:
- Filter for the vendor Waste
- Add the Customer column
- Remove the Transaction Type, Num, Vendor, Memo/Description, Rate, Amount and Balance columns (just make sure to keep the QTY column)
- Retitle the report Cost of Redone Jobs
- Sort the report in Descending order to get the highest cost jobs at the top
- Save the customization
If this is a long report with a large number of redone jobs, note that this report does not allow for grouping by customer at this time.
However, exporting to Excel and then manipulating (perhaps using pivot tables) would allow for that.
I’m sure there are other possible methods for tracking the cost of redone jobs in QuickBooks Online without skewing the financials. If you have an alternative, please let us know.
Esther Friedberg Karp is an internationally-renowned trainer, writer and speaker from Toronto, where she runs her QuickBooks consulting practice, EFK CompuBooks Inc. Consistently in Insightful Accountant's Top 100 ProAdvisors, she has been named to the Top 10 twice.
A ProAdvisor in three countries, she has traveled the world with Intuit, spoken at QuickBooks Connect in San Jose and Toronto, among other places, and has written countless articles for Intuit Global.
Esther has been named one of the “Top 50 Women in Accounting,” a “Top 10 Influencer” in the Canadian Bookkeeping World, and is a repeat nominee for the “RBC Canadian Women’s Entrepreneur Awards.” She counts among her clients many international companies, as well as accounting professionals seeking her out on behalf of their own clients for her expertise in multi-currency and various countries’ editions of QuickBooks Desktop and Online.
She can be reached at esther@e-compubooks.com or 416-410-0750.
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