Automatic Invoice Reminders

For some businesses, following up on past due invoices consumes a significant amount of time. But Xero makes it easy to automate what can be an awkward, time-consuming task.

Xero allows you to setup automatic email reminders for past due invoices. You can schedule the reminders using a certain number of days, or an upcoming due date. Messages can be tailored, and can also be switched off for specific customers.

Learn more about this feature on

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There’s An App for That

Did you know that both QuickBooks Online and Xero have numerous apps (or plugins) to extend their functionality? You can learn more about them with the links below.

But deploy with care! Be careful to thoroughly research any that sound promising, because not all of them work. Read the reviews, and ask several people who are certified in your program of choice (Xero or QBO) about the app in question. I am a member of several bookkeeper and accounting groups on Facebook and LinkedIn. These are excellent venues for seeking information on a particular app. Please note that the Paypal app has proven to be very dysfunctional for numerous people from these groups who have attempted to use it. The app also has negative reviews posted.

Download my free PDF report, Bookkeeping Myths.

Cloud Accounting Advantages

If you’re tempted to switch to a cloud accounting application, but you’re afraid you’ll regret it, this article is for you. Let’s briefly review the advantages of a cloud accounting application.

  1. Accessibility – desktop applications require licensing for each device on which you wish to use them. Then there’s the hassle of data transfer or access from more than one device. Cloud accounting eliminates all these problems.
  2. Operating System (OS) Compatilibity – cloud-based accounting applications accessed through an internet browser will run on any OS, independent of whichever OS you’ve chosen to use.
  3. Usability – Cloud accounting applications have a shorter learning curve and are more user-friendly. Computer-proficient staff will easily adapt.
  4. User management – Cloud accounting applications allow multiple users to collaborate on the same files simultaneously. Different levels of access (permissions) can be assigned to different users. This means you can control which parts of your accounting app each user can access, plus what changes they’re enabled to make to your data.
  5. Security – the two largest cloud accounting applications, QuickBooks Online (QBO) and Xero, both utilize 256-bit, bank-level, military-grade encryption.
  6. Support and backup – Cloud accounting applications typically offer free support via phone, chat, and/or email, depending on your subscription level. Your data is back up in multiple locations. And the provider handles all software updates and server maintenance.

Most cloud accounting applications offer free trials, as well as free tutorials and demos. If you’re even remotely considering the switch, I encourage you to investigate these further.

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Think Outside the Box

In a small business, because cash flow can be a challenge at times, you (the owner) must be very cautious with your expenditures. But balancing quality against cost efficiency can be its own challenge.

Which part of your company can best help you identify cost savings? Your accounting department, of course. That department tracks all your expenses  and, therefore, best understands where you can save money. In fact, the accounting department is key to keeping your financial operations on track. It has direct influence on the overall productivity of your company. Your awareness of these facts can, however, lead to overspending on bookkeeping and accounting functions, because the expenses seem to become a necessity.

There are ways to optimize the accounting processes and reduce costs, without degrading quality. Modern technologies and business practices allow you to reduce accounting expenses such as hardware and software, facilities, and manpower, while achieving the same level of quality. These technologies and practices allow you to easily outsource  outsource your bookkeeping and accounting functions.  Secure cloud accounting applications significantly reduce your hardware and software expenses. Such applications also give you real-time access to updated financial records, from any internet-connected device. (More on cloud accounting applications in my next blog post.) Other applications such as,, and Teamwork Projects streamline the handling of receipts and other important documents, bill payment, and financial project task management.

These technologies allow you to hire virtual bookkeeping and accounting staff on a contract basis, greatly reducing your expenditures on both manpower and office space, without sacrificing speed, convenience, or quality in your company’s accounting functions. To ensure your quality standards are met or exceeded, seek out qualified, experienced financial professionals who are certified in the application(s) of your choice, and who have verifiable references. It’s also important to take into account any language barriers and differences in time zones, especially if you want your virtual staff to be available via IM during your office hours.

Schedule a free consultation with me today and learn how easy it is to work with a virtual bookkeeper.


Cash or Accrual – WTHeck?

headacheIn regards to bookkeeping, businesses have a choice between two accounting methods: Cash or Accrual. Under Generally Accepted Accounting Principles (GAAP), the accrual basis should be used. Essentially, in a nutshell, this is the difference between these two accounting methods:

  1. Under the cash basis, revenues and expenses are reported on the income statement based on the date cash is received from customers, and for expenses, the date cash is paid out.
  2. In contrast, the accrual basis reports revenues when they are earned, and expenses when they are incurred (but not necessarily paid).

Businesses are required to use the accrual basis when they have sales of more than $5 million per year, or if they stock inventory for resale to the public and gross receipts are more than $1 million. The accrual method also shows the ebb and flow of business income and debts more accurately on financial statements. Here is additional information on the differences between these two methods.

  • Receivables are reported as assets under the accrual basis, but not the cash basis.
  • Revenues are reported when they are earned (accrual basis), or when they are received (cash basis).
  • Payables are reported as liabilities with the accrual basis, but not reported with the cash basis.
  • Expenses are reported when they are incurred (accrual basis), or when they are paid (cash basis).
  • The balance sheet is more complete with the accrual basis, because under the cash basis some assets and liabilities are not included. Equity also changes depending on whether you’re using the accrual or cash basis.

The accrual method has a distinct tax advantage if expenses incurred (but not paid) in 2016 (for example) can be deducted on your 2016 taxes. And income received but not earned (a customer payment in 2016 for goods to be delivered in 2017) can be reported on your 2017 return.

For guidance, contact a professional bookkeeper or CPA.

Free Report Bookkeeping Myths: Common Mistakes Small Businesses Make

Digital Mail Management

mailLadyDid you know there’s a way to receive your mail without having it actually come to your business (or home)? It’s called virtual mail, and the service is popular with small business owners and RV owners, among others. I use it for my business, and my husband and I use for our personal mail. It cuts down dramatically on junk mail, and converts all our “real” mail to PDF. That makes it easy to digitally file important mail items. A Google search reveals a comprehensive list of companies who provide the service. The two largest ones are Virtual Post Mail and Traveling Mailbox.

Here’s how virtual mail works.

  1. Select a virtual mail company and purchase a subscription.
  2. Fill out and send in USPS Form 1583.
  3. Update your address with senders of your mail and/or submit a Change of Address form to the USPS.
  4. The virtual mail company you selected in step one will scan envelopes of incoming mail and send you an email notification when new mail is waiting. You then log into an online dashboard, review each envelope, and decide whether you want it opened and scanned to PDF, shredded/deleted, or forwarded.

Virtual mail companies typically take stringent security measures to ensure their employees don’t steal vital personal information; these measures are different with each company. If the company’s website doesn’t explain those security measures, I encourage you to contact them and ask. It’s probably wise, however, not to have things sent there that contain bank account numbers, debit/credit card account numbers, etc. And if you do have them sent to your virtual mail company, request that they be forwarded to you rather than opened and scanned.

The larger virtual mail companies have locations in multiple states, and can therefore provide you a mailing address near where you live. In addition to virtual mail services, each company offers different add-on services, so it’s important to evaluate each one carefully in order to find the best combination of price and services you need.

Paper Nightmares

manPaperStacksBack in 2007 I took on a sign company client. It was a small business owned by a retired engineer who had bought the business from a relative, having never owned or run a business of any kind before. The books were several months behind–especially accounts payable. There were stacks of invoices and bills that were not filed or organized in any particular order. Even after I entered them into QuickBooks Desktop for payment, the owner refused to let me or anyone in the office setup any kind of filing system for them, and would not explain why. Because I was doing the books, it quickly became evident to me that the business had serious cash flow problems. The bank account balances were barely enough to cover payroll each week. Furthermore, even after entering all those bills and invoices into QuickBooks, few of them were paid, and most were seriously past due.

At the end of each week I sent the owner updates on what I had completed in relation to the bookkeeping and what information I needed from the owner in order to complete other bookkeeping tasks. All my emails were ignored. (I should note here that the owner was almost never in the office when I went there to work on the books.) After a few months I terminated the relationship. I could not properly do my job if the owner was not going to communicate with me. There is only so much a bookkeeper can do without that communication. Just a short time later, the company went belly up.

It is so important for business owners to know where they stand financially. In order to know this, they must be responsive to bookkeeper and/or accountant requests. They must have a filing system (digital or physical) for all types of documents including invoices, and to understand that bills must be paid on time. And they must keep the books updated so they can effectively make both routine and emergency business decisions.

Even more important, a business owner must be willing to accept when a business is no longer viable and take appropriate action.


femaleAccountantEthical bookkeepers and accountants strive to maintain strict compliance with the Generally Accepted Accounting Principles as defined by the Financial Accounting Standards Board. Here’s a more in-depth explanation from

There are general rules and concepts that govern the field of accounting. These general rules–referred to as basic accounting principles and guidelines–form the groundwork on which more detailed, complicated, and legalistic accounting rules are based. For example, the Financial Accounting Standards Board (FASB) uses the basic accounting principles and guidelines as a basis for their own detailed and comprehensive set of accounting rules and standards.

The phrase “generally accepted accounting principles” (or “GAAP”) consists of three important sets of rules: (1) the basic accounting principles and guidelines, (2) the detailed rules and standards issued by FASB and its predecessor the Accounting Principles Board (APB), and (3) the generally accepted industry practices.

If a company distributes its financial statements to the public, it is required to follow generally accepted accounting principles in the preparation of those statements. Further, if a company’s stock is publicly traded, federal law requires the company’s financial statements be audited by independent public accountants. Both the company’s management and the independent accountants must certify that the financial statements and the related notes to the financial statements have been prepared in accordance with GAAP.

GAAP is exceedingly useful because it attempts to standardize and regulate accounting definitions, assumptions, and methods. Because of generally accepted accounting principles we are able to assume that there is consistency from year to year in the methods used to prepare a company’s financial statements. And although variations may exist, we can make reasonably confident conclusions when comparing one company to another, or comparing one company’s financial statistics to the statistics for its industry. Over the years the generally accepted accounting principles have become more complex because financial transactions have become more complex.

While smaller companies may not feel GAAP compliance is a necessity, it can greatly enable audit survival.

Take the Money and Draw

One of the most common mistakes small business owners make is in how they record personal withdrawals of money from their business. One incorrect approach is to include their personal bank account in their business books, and when they take money out of the business, they record it as a transfer to their personal bank account.

Such withdrawals should actually be recorded as a draw, and should be posted to an Equity account. (You should have one of the following on your Chart of Accounts in your accounting application):

  • Owners Draw (Sole Proprietorship)
  • Members Draw (LLC)
  • Shareholder Distribution (S Corp)

This approach requires a bit more work, but it brings you into compliance with Generally Accepted Accounting Principles (GAAP).

Current vs. Long-Term

Have you ever looked at your Chart of Accounts (COA) in your accounting application? Did you notice that some assets and liabilities are classified as current, while others are classified as long-term? Why is that? Well, this is standard accounting practice.

Quoting the definition, “Current assets are balance sheet accounts that represent the value of all assets that can reasonably expect to be converted into cash within one year.” Conversely, as explains, “A long-term asset is an asset that will not turn into cash or be consumed within one year of the date shown in the heading of the balance sheet.”

As for current liabilities, again turning to, “Current liabilities are a company’s debts or obligations that are due within one year, appearing on the company’s balance sheet and include short term debt, accounts payable, accrued liabilities and other debts. Essentially, these are bills that are due to creditors and suppliers within a short period of time.” Long-term liabilities “form part of a section of the balance sheet that lists obligations of the company that become due more than one year into the future. Long-term liabilities include items like debentures, loans, deferred tax liabilities and pension obligations.

And there you have it!