October 2001

Here is your complimentary copy of The Desktop Accountant, our periodic newsletter with tips and tricks for using QuickBooks and QuickBooks Pro. If you wish to subscribe to the Desktop Accountant, register on our website.

If you wish to be removed from our mailing list, send an email to remove@sleeter.com and add the word "remove" in the subject line.

For a printable (pdf) version of this newsletter, click here (oct2001.pdf - 361 KB).

News and Views

The Intuit Developer Network – At our upcoming conference on Managing and Marketing Your Software Consulting Practice, Intuit will present their strategy for opening up the QuickBooks database to developers. In discussions with Intuit, The Sleeter Group learned that this initiative is in keeping with Intuit's new "Right for My Business" strategy developed by Intuit's Small-Business Division. This new strategy represents a major shift for Intuit, and it will have a dramatic impact on how consultants will integrate a wide range of complete solutions for clients. This will be especially good news for those companies desiring to design solutions compatible with QuickBooks' popular standards tailored for vertical markets. More information on the Intuit Developer Network can be found at Intuit's website.

The Sleeter Group's 2001 Conference on Managing and Marketing Your Software Consulting Practice - To compete in today's QuickBooks consulting market you must stay on the cutting edge. This conference addresses the full range of management and marketing aspects of your QuickBooks consulting practice. Attendance at this conference will yield a great return on your investment measured in increased client business and a growth in your client base. Take this opportunity to increase the tools in your "professional toolbox" and use these tools to build your total business.

A highlight of some of the topics include: The Changing Accounting Technology Market, Client Management Techniques, Engagement Flowcharts, Advertising Campaigns, Using Seminars to Grow Your Practice, and many others. The Intuit Developer Network and the expansion of QuickBooks to the Internet are two areas that will have a major impact on your QuickBooks consulting practice. We will also address these topics and will have a representative from Intuit available to discuss their Developer Network. For a complete list of topics, location information and to register, visit our website.

Did you miss our conferences this year? The Sleeter Group's 2001 QuickBooks and Accounting Technology Conference Series is now available on Video! Purchase the entire conference series (10 video cassettes and workshop manuals) or purchase each day individually. Earn up to 17 CPEs! New QuickBooks features and Financial Reports, Non-Profit Solutions, Construction Setup and Job Costing are all covered on these videos. For complete details visit our website.

Robin Hall of VARC Solutions in Houston, Texas contributes this month's newsletter topic. Robin is a member of The Sleeter Group's Certified Consultant's Network.

The topic of this newsletter is "Merchant Credit Card Chargebacks and Refunds." We explain a special trick to send refunds to Undeposited Funds in order to combine the refunds with the sales for the day, thereby facilitating the matching of the daily deposits with the bank statement.

I hope you enjoy the newsletter! Drop me an e-mail with your comments to doug@sleeter.com

Merchant Credit Card Chargebacks and Refunds

One of the most challenging tasks in QuickBooks is bank reconciliation. This is especially true when you have several merchant credit card transactions and you have to match deposits on the bank statement with the combination of deposits and chargebacks in QuickBooks.

Under most circumstances, merchant credit card processing companies combine total sales with total chargebacks (credit card refunds) in each day's deposit. If chargebacks are issued as separate transactions, as you are instructed to do in the QuickBooks documentation, reconciling the bank account can be a challenge. This challenge occurs because QuickBooks shows a deposit for the total sales for the day as well as separate check (CHK) transactions representing each chargeback (refund). When you reconcile the bank account, you must manually net out the chargebacks each day against the total deposit, and then check off the appropriate items on the reconciliation screen. This is a tedious process, and it can make a bank reconciliation take hours when it should take only a few minutes.

If you process credit card chargebacks as instructed in the QuickBooks online help, or if you use the refund button on credit memos as recommended in most training materials, you end up with separate transactions for deposits and chargebacks. This makes the bank reconciliation process tedious and time-consuming.

Below is the actual text from the QuickBooks online HELP on how to record chargebacks.

QuickBooks "HELP" Instructions to Record Chargebacks

We strongly recommend against using the following method because it fails to affect items (e.g. inventory, sales tax, etc.). In addition, this method causes the problem we would like to solve of having separate refund transactions in the check register.

Online HELP Instructions:
A chargeback can be recorded in two ways. You can process the transaction as a return/refund or you can record it as a business expense, such as a bad debt or return expense. Either way, a chargeback transaction shows up on your bank statement as a separate item.

To record the chargeback as a business expense:

1. Display the Write Checks window.
2. From the Bank Account drop-down list, choose the bank account that is used by your merchant account processor for your credit card transactions.
3. From the Pay to the Order drop-down list, choose the customer name that was used for the original credit card payment transaction.
4. Delete the check number. In its place, enter a note to indicate that this check is actually a chargeback, such as CB.
5. Enter the total amount of the chargeback item.
6. Clear the "To be printed" checkbox.
   On the Expense tab, choose the account that you are charging for the transaction.
7. Save the check.

A Better Way: Using Credit Memos to Record Chargebacks

A better method for recording chargebacks is to use credit memos to record the complete detail of the chargeback. For example, if your customer is returning inventory, you must indicate which inventory item is being returned along with the sales tax information. The method given above does not provide this important detail.

The example below lays out a method of recording chargebacks that records all the details of the items in addition to providing for the "netting out" of chargebacks against the total sales for the day. This method not only gives the item detail, but it also facilitates more efficient bank reconciliations.

Example

A customer has paid an invoice with a credit card and is requesting a refund. To provide for the goals set above, follow these steps:

Step 1.            Create a new "Payment" item in the item list called "CC Refund". Select "VISA" from the Payment method list. Check "Group with other undeposited funds" so that each time you use the item on credit memos, it will credit the undeposited funds account.

Notes: The item must be a payment item.
You can use the VISA payment method for all types of credit cards, or you can set up a separate item for each card type (e.g. Amex, Discover).
Set the payment to group with other undeposited funds.

Step 2.            Issue a credit memo using the same items that were originally invoiced to ensure QuickBooks credits back the inventory correctly.

 Step 3.            After entering all of the returned items, add a final line on the credit memo using the "CC Refund" item. In the Rate column, enter the total amount of the credit as a negative number (see Figure 2).

The CC Refund item is added after all of the other items so that you'll know the total amount to be refunded.
Important: You MUST enter a negative amount in the RATE column.
Note: The sales tax item will automatically calculate based on the taxable items in the body of the credit memo.

Step 4.            Verify that the total on the credit memo is zero, and record the transaction.
This transaction reverses the original sale, including sales tax. The CC Refund line creates a negative amount (credit) in the Undeposited Funds account, which will be combined with other sales transactions for the day, thereby netting the total sales against total credits to match the actual deposit to the bank from the credit card processing company.

Note: If your credit card company processes merchant discount fees with each transaction, add another item to your item list called "CC Discount." This item should point to your merchant discount fees expense account. Enter this item on the credit memo just above the "CC Refund" line and enter the negative amount of the discount fee. Adjust the "CC Refund" line to force the credit memo to zero.

Note: If, on a given day, you only process chargebacks, or if the total dollar amount of sales less chargebacks is negative, you cannot use the method described above. This is because QuickBooks does not allow you to make a negative deposit. In this case, use the "Check Refund" option and enter "CC VISA" in the check number field.

Note: If you use the QuickBooks Merchant Account Service, you will have to manually process chargebacks using the "Manage Merchant Account Service" function. This means that chargeback transactions (credit memos) won't be directly linked to the actual transaction processed, as they would normally be if you did not use this method. However, since this method makes the bank reconciliation so much easier, the benefits should outweigh the costs.

Step 5.            When the credit card machine is batched out at the end of the day and you make your daily deposit, the credit charges (sales) and the credit card refunds (chargebacks) will show in the Payments to Deposit screen (see Figure 3).

Step 7.            Notice that on the Make Deposits screen (Figure 4), the chargeback reduces the deposit. Click Save and Close.

This new method of handling credit card refunds and chargebacks will help you at the end of each month when you reconcile the bank account because the amount in QuickBooks will match the amount on your bank statement.

The 2001 QuickBooks Consultant's Reference Guide - Upgrade Today* - If you haven't already seen our best-selling Consultant's Reference Guide, check out what others say about it. The Sleeter Group's 2001 QuickBooks Consultant's Reference Guide is now available.

This is the definitive how-to guide for setting up, troubleshooting, and supporting QuickBooks and QuickBooks Pro software. Written with accountants and consultants in mind! In this comprehensive, detailed reference guide, QuickBooks expert Douglas Sleeter provides inside information that cannot be found in the manual, through on-line help, or anywhere else! All examples and recommendations are carefully designed to result in proper accounting entries and detailed reports for management. *$20 discount for owners of the version 2000 Consultant's Reference Guide.

Introduction to QuickBooks Pro 2001 - College Textbook - Available from Glencoe/McGraw Hill and The Sleeter Group. Now in its third year, Doug Sleeter's text includes well-illustrated step-by-step instructions for each accounting task. Each Chapter includes a list of objectives, computer practices, and a chapter summary. Accounting "behind the scenes" margin notes explain how QuickBooks works. The text contains a comprehensive appendix, index, and helpful glossary of terms.

The Sleeter Group is pleased to announce a new relationship with Gear Up, who our clients say is the best provider of tax update seminars in the country. Frequently, we have heard praise from our clients for the high quality tax seminars Gear Up provides. We, too, recognize their expertise in this area and have taken steps to make their seminar services and products more easily available to our clients.

Gear Up and The Sleeter group have agreed to offer some of their most popular products on each other's web sites and in their catalogs. We encourage you all to check out our website (www.sleeter.com) frequently and the web site of Gear Up (www.gearup.com) for updates regarding this development and the benefits this provides to our clients.

The Sleeter Group's Certified Consultant's Network - The Sleeter Group's Certified Consultants Network is a national network of highly qualified QuickBooks and accounting software consultants.

If you need help with installation, setup, troubleshooting, or reporting, turn to one of our expert consultants in your local area. Search our website for a professional or call us at 1-888-484-5484 and we'll help you find a consultant in your area.