Cash vs Accrual Accounting Method

Cash basis accounting is used by a business that generally does not stock inventory but rather provides services. Taxable income is not recognized until money has been received. Expense that reduces taxable income is not recognized until money has been paid out.

Accrual basis accounting is used by a business that maintains inventory. In this type of scenario, it may take a while to turn inventory into a sale. The taxing authority allows the business to reduce the taxable income at the time the vendor’s invoice is received even if it will take a while until it is paid. To offset this graciousness, a sale regardless if paid or not becomes taxable
income at the point the customer invoice is generated.

Why doesn’t every business just uses the cash basis method of accounting? It is because the government prefers that income be recognized sooner than later.  They want the tax money as quickly as they can grab it.

QuickBooks let you establish the preference for how you want to run subsidiary A/R and A/P journals as well as look at the General Ledger trial balance and Profit and Loss statements. You simply tell QuickBooks you want Cash or Accrual method and it does the rest.

Many more expensive accounting systems are written presuming that businesses that purchase their software have inventory and therefore need the Accrual method. Customization may be required to generate cash basis reporting. In some cases, it may mean setting up a separate company GL and have the subsidiary data flow into it on a cash basis via ancillary processing.

If you run a business that is service oriented rather than turning over stock, you may still consider the accrual method. If you wait to accumulate a customer’s invoice and collect the fees rather quickly, it will be to your advantage to use the accrual method especially if you are given a full thirty days to pay your regular expenses. You are using the tax break even when you haven’t paid the piper.

You are looking for someone who understands your business and will help you navigate your needs. It’s your money and business on the line. Give us a call at (773)502-5771 to get you on the right track.

click here to return to home page

Accounting Software Pricing Options

In today’s ever-changing business climate, a new pricing option has emerged for the purchase of accounting software:

This new rental or monthly subscription concept has emerged due to the utilization of the “cloud” as the storage device of preference. The “cloud” is not a special place. It is just another name for web-based servers. Rather than maintain one’s sensitive business data on a local computer or server, space is rented on a remote server addressable via Internet protocol addressing. The benefit is that the cloud host is responsible for making sure access is available twenty-four hours a day. The cloud people maintain your data backup as well.

Try to purchase Microsoft Office® or Intuit’s QuickBooksTM today. You are steered to an online, cloud hosted solution. For Office 365, the pricing goes from $5 to $15 a month. Extended to a full year, it can be a $60 to $180 expenditure. This may not seem like much but until a short time ago, you could buy an Office product for no more than $150 and use it forever until your computer crashed and needed a new one. With the subscription model, the moment you give it up, you lose access to the program. Microsoft has you locked in. They save money on distribution costs such as dvd’s and retail outlet stores sharing the profits.

Quick Books on-line cloud model is priced from $10 to $40 a month subscription depending on how many features you need and whether it has to be multiuser capable.

The limitation of QuickBooks is that it is not customizable. Well, maybe it is but the source code is made available only to those software consulting firms that are producing add-ons for a large base of users and not just one user’s enhancement need.

The jump in pricing from QuickBooks to a more robust accounting software product can be quite dramatic. With QuickBooks you are spending less than $500 a year. Getting a more involved accounting product may cost a business from $10,000 on the low end to $200,000 on the upper reaches.

The vast majority of small businesses can get away with using QuickBooks. At such a relatively low expense, they can better afford to pay for someone to help them set up their in-house accounting system and seek this outside advice when needed. The outside help more likely will not be the regular cpa as his or her hourly rate may be more expensive compared to an experienced business computer consultant.

Those businesses that need the customized solution have usually already sold themselves on the emotional aspect of spending more than they would like to. This is akin to buying a new car. You know when you need one and you bite the bullet as best as possible.

You are looking for someone who understands your business and will help you navigate your needs. It’s your money and business on the line. Give us a call at (773)502-5771 to get you on the right track.

click here to return to home page

 

Reordering Inventory for a Distribution Company

There are three standard methods for re-ordering to replenish stock on a timely basis. They are: EOQ, MIN/MAX and FORECAST

EOQ Economic Order Quantity presumes that there is no delay in getting the item quickly from a supplier. Typically one orders the largest quantity possible in order to get the best price reduction. The ideal quantity in such a case is the total ordered the previous 12 months. The system looks at the total sales less returns from the previous 12 months and recommends it as the EOQ. It reduces the amount by the current quantity available.

MIN/MAX Measures current quantity available against minimum quantity on hand established for the item. It makes sure that it does not exceed maximum on hand. If a quantity is determined to be re-ordered, it is padded if less than the minimum order quantity.

Quantity available = on hand less committed to booked orders but not yet shipped plus existing purchase on order. If there is 20 on hand, with 5 committed and 3 on order, the available is 18.

If item has 10 available with a max of 30 and a min of 12, it recommends to order 2. But if the minimum order quantity is 4, it recommends to order 4.

FORECAST Use a sales forecast factor (see below) to establish quantity needed to replace calculated monthly sales. This monthly sales figure is weighted against the lead time and reorder point.

If an item has a lead time of 5 business days and an average monthly sale of 11, it is indicating a need between 2 to 3 a week each month. This is factored against the re-order point. The re-order point should be set to at least 2 as it takes an entire business week to get the merchandise and you need at least 2 each week.

If there is more than two or more available, there is no need to re-order. If there is zero available, then 2 should be immediately re-ordered.

 

Re-order Factors:

Lead Time how many business days it takes to receive goods after ordering.

Forecast Factor percentage of sales from specified range of previous months sales.
e.g. take 9% of each of the previous 4 months and 8% for the rest of
the 8 months to come up with average monthly sales

Item: ABC123

Month Sales

December 10
November 12
October 9
September 15           = 46
August 2
July 13
June 11
May 28
April
March 10
February 15
January 7                   = 86

Total: 132      (9% of 46) = 4.14       (8% of 86) = 6.88
4.14 + 6.88 = 11.02    or a weighted factor of 11 pieces sold per month

 

You are looking for someone who understands your business and will help you navigate your needs. It’s your money and business on the line. Give us a call at (773)502-5771 to get you on the right track.

For more information, call (773) 502-5771 .

click here to return to home page

Automating a General Contractor Workplace

You are a General Contractor.  A typical day has you on the phone negotiating a mechanics waiver of lien, procuring updated W9s from vendors and subcontractors, evaluating work in process, and resolving job site issues.

Now you have upgrading your office automation on your mind as well.  For what should you be looking?

 

HAVE NEED
Accounts Receivable Software but… AIA Billing or

Job Phase Billing or

Cost Plus Billing

A/R Aging Report by Job

Accounts Payable Software but.. Expense History tracking linked to job/phase
A/P Aging Report by Job
Retainage Invoicing and Control
Subcontractor Reporting
Email to Subcontractors of To-Do Tasks
Job Cost Software but… Job Profit Reporting
Estimate vs. Actual Cost
Change Order Tracking

 

You are looking for someone who understands your business and will help you navigate to the right system. It’s your money and business on the line. Give us a call at (773)502-5771 to get you on the right track.

For more information, call (773) 502-5771 .

click here to return to home page

Email Attachments Vs. Inline HTML Text

Attachments                                                                                                Inline  HTML Text

Recipients are suspicious of malware or viruses Recipients are wary of tracking links
Recipients are lazy and don’t bother to open them Not effective for transmitting newsletters, instruction manuals, invoices, purchase orders, other multi-page etc.

Attachment naysayers state that inline text with fancy HTML framing is the way to go. It gets past the default corporate level spam controllers set to filter out attachments and html is designed to attract curiosity. If you agree with this, it sounds like a slam dunk.

Attachments, however, do solve a need and often are a better solution than inline text. Not everything you email has to be for the purpose of marketing a product or service or to get you to visit a website. Instruction manuals, invoices, purchase orders, newsletters, pictures, and other multiple page communiques are better served being sent as an attachment. Of course the naysayers will again argue that these are warranted to be saved on an ftp server and accessible by a link in an html formatted inline email message.

Sometimes that does make sense if you are anticipating that visitors to a website page will download the document as needed. But, the originator of an invoice or purchase order needs to make sure that the document goes directly to a specific recipient in a timely manner. The same may apply to a topical newsletter or updated policy guideline or even a request to customers to fill out an updated form.

Bottom line- email attachments are just as useful as fancy inline texts. In fact, sometimes recipients of html embedded inline text will be wary of clicking on the hyper link for it becomes apparent that they will be clicking to a path of response tracking. That can be as obtrusive as being asked to take a survey. With an attachment, either you decide to click and download it to your computer or ignore it. The attachment usually is labeled with a file name that identifies its purpose.

 

Open Systems Accounting Software (OSAS) and Email

Open Systems utilizes the attachment concept for email delivery of customer invoices and statements, vendor purchase orders, as well as for reports such as A/R aged trial balance, sales journal, etc. Older versions of the software gave the user the option to send a report (not a form such as invoice or statement) as inline text. However, it created formatting issues and the more recent versions now only allow for attachments.

 

Customer Communication Add-on

We have expanded the email capability in OSAS for users who need to send the same document to multiple recipients with our Customer Communication Add-on.

Here is how it works:

1. User assigns email type code for customers to receive the group document. e.g. MARKETING
2. User places the document or file into the OSAS ..\document\forms folder.
3. User accesses group email routine.
4. Identifies the document or file.
5. Enters the subject line.
6. Enters the email type code. Computer displays the list of customers who will receive the file.
7. User may optionally delete customers from the list.
8. User may add inline text to body of message.
9. User processes the batch. If system is flagged to send emails immediately, they are sent.
10. If system is flagged not to send  immediately, user goes to EMAIL QUEUE in Resource Manager, reviews            and processes.

Transmissions are captured to OSAS Email History. As part of the enhancement, a VIEW CUSTOMER EMAIL HISTORY screen is made available.

For more information, call (773) 502-5771 .
click here to return to home page

OSAS Customer Communications Add-On

Larry Teren & Associates has customized SO/AR modules to offer a receptacle to generate emails with and without attachments that are in addition to the standard invoice, quote and statement delivery.

Customer_Comm_1

Features include:

Group Email processing ideal for sending newsletters to customers.

Adding Inline text to emails.

Interfaces to OSAS customer list

View Email History Inquiry Screen

Click here to view the pdf

For more information, call (773) 502-5771 .
click here to return to home page

Credit Card Payment Processing in OSAS A/P

Credit Card Payment Processing in OSAS A/P

1. Create a method of payment (MOP) called VIS that has payment type of 1 CASH and a bank id

and cash account isolated for credit card balances.

osas_cc_1

In the above example, GL account 10030 will be a running balance of what is owed
by the credit card payments. The value will show up as a negative balance in the GL.

In addition, create a vendor called VIS001 (Visa) and on the Vendor Codes screen
assign the default GL ACCOUNT as 10030. This will ensure that whenever you select
to enter an invoice for VIS001, it will make 10030 the expense account.

osas_cc_3

2. Enter regular vendor invoice and when paying either marked as PREPAID before
posting or reflagged as PREPAY after posting, make sure that the MOP is VIS.

osas_cc_2
After posting payment for this invoice in the PAY INVOICES menu, a credit of
33.17 will post to the 10030 GL account.

3. When you are ready to pay the Credit Card Company, enter an invoice for VIS001,
make sure that on the line item the expense account is 10030 (the Credit Card GL Account).
When paying this invoice, make sure that you use the MOP for check and enter a check
number or print the check and the computer will assign the number.

When the VIS001 invoice is paid, the debit to 10030 will bring down the balance of the
outstanding credit already there. The GL will show a net affect of crediting the regular
cash account for the check given to the credit card company and debiting the expense
account for the original vendor invoice.

For more information, call (773) 502-5771 click here to return to home page

OSAS 8.0 Jasper iReports Output

OSAS Open Systems Accounting Software 8.0 now uses Jasper iReports for most of the non-form reporting. The report selection criteria screen has now taken on a new look. (see below)

monthly_sales_jrl

Here is an example of a customized Print Preview of a Monthly Sales Journal. Jasper iReports 5.1 toolkit is used to create it. It runs transparently from an OSAS menu task:

monthly_sales_jrl_view

Font type and size, portrait or landscape as well are programmable using the Jasper iReports toolkit. All Print Previews may be saved as a pdf.

 
Here is an example of the same report output to Microsoft Excel.

monthly_sales_jrl_ss
For more information, call (773) 502-5771 .
click here to return to home page

Can Accounting Software Be Put on a Cloud and What is a Cloud Anyway?

The ‘cloud’ is the current darling of the high tech world. It is creating jobs for some and taking away for others. Think of the cloud as a rented web server. Instead of maintaining your own equipment, you rent an ip addressable server at a remote location.


Businesses put their computer systems on clouds for two main reasons:

1. Less maintenance cost.
2. Equal access to all.

Less Maintenance Cost

Software applications are installed and run on a computer located in a remote location rather than on your property. No need to own and maintain expensive equipment.

You will need, though, a high speed and large bandwith internet connection to satisfy the reliability of access. No need to hire a staff of expensive hardware support employees for on-site assistance. Hardware and network services are taken care of by the cloud hosting company.

Equal Access to All

Less need to be concerned what type of computer the user has. Everyone uses similar scripts to access the same software.

When the new version of Excel or Word or Access is made available, the remote cloud support personnel install it hassle free.

What are the negatives?

If your internet connection goes down, you cannot access the cloud. If your software is installed on a local computer, then whether the internet is working or not is a moot point.

You need to make sure that your application can be loaded readily onto the cloud. You should never accept a cloud service that tells you that you need to send the installation cd to their location. The cloud service must give you a way to insert the cd in a local workstation and mount it (or connect) to their server.

Do not expect the cloud support staff to have knowledge of your business applications. Their job is to support and maintain the server and network services on which it is hosted.

Accounting Software

Accounting software can be put on the cloud. Don’t expect the cloud support personnel to help you unless they also happen to be authorized support for the accounting system. The advantage of putting your accounting system on the cloud is when you have many users who are at different locations and need a simple way to access it as readily as anyone else.

For more information, call (773) 502-5771 .
click here to return to home page

What Is a Computer Consultant?

By Larry Teren

What Is a Computer Consultant?

A computer consultant is someone who advises a client on their computer system for the best way to get the most out of the software. A consultant at times has to be a business analyst. A consultant is told of a request or problem. He (or she) is then obliged to come up with one or more solutions and offer them to the client. The client may or may not accept the solutions. But, from the advice given by the consultant, the client is better informed so that they can either accept a solution or devise their own.

A good consultant should be one who can then follow through and enact the solution. Advice is cheap. A client doesn’t need to just get advice. It may be that the consultant is capable of solving the problem or following through on a new request. Sometimes the consultant will not be able to roll up the sleeves and do the work but will know how to communicate the need to someone else who can. This is important as well.

Our expertise is such that when it comes to accounting systems, we understand the situation and are more often able to provide a solution. If something is broke, we fix it. If the client wants to understand how an inventory item posted a certain cost to the general ledger, we are usually able to do the forensics and figure out what took place. We understand how to do the research.

If a customer asks how they can export information in a different way into Microsoft Excel or extract selected data based on special selection criteria, we know how to get the results that is wanted.

If a customer needs to have one software product interact with another, we know how to cut through the red tape and get the answers that will tell if it can be done or not.

In short, the computer consultant facilitates the efficient usage of a computer system.

You are looking for someone who understands your business and will help you navigate your needs. It’s your money and business on the line. Give us a call at (773)502-5771 to get you on the right track.

click here to return to home page