Enter QuickBooks Bank Transactions the Easy Way

Who doesn’t want to save time on nonprofit bookkeeping? And who wouldn’t like to have more accurate financial reports ready more quickly each month? The trick lies in putting systems in place that enable you to work efficiently.

The interesting thing about putting a system in place to do something efficiently is that you usually end up doing it better, too. Today we are going to talk about how to improve your bookkeeping efficiency and accuracy by improving the way you capture, record and reconcile cash transactions.

Capturing Cash Transactions

Sooner or later, most of your transactions flow through cash. If you can easily capture in QuickBooks the cash amounts coming into and going out of your bank account, then your bookkeeping process will proceed more efficiently.

You want to push transactions impacting cash into QuickBooks (or any accounting system) as efficiently as possible. In some cases, especially for an operating bank account with a lot of transactions, that means electronically importing the transactions into QuickBooks and then posting them to the proper accounts. If you have to manually type in each transaction, you may be in for a lot of work. Also you run the risk of data entry errors.

Options for importing bank transactions into QuickBooks are different based on whether you are using QuickBooks Desktop or QuickBooks Online.

With QuickBooks Desktop, you can set up a “direct connect” link with your bank to download transactions. This approach usually involves a bank fee. Then you can periodically download transactions that have arisen since the last download. As an alternative, you can login to your bank account online, export a QuickBooks file of transaction activity for a given date range, then import that file into QuickBooks Desktop. This approach is free and isn’t as hard as it sounds.

With QuickBooks Online you link your bank account in Quickbooks to the bank account online. Then bank transactions feed directly into QuickBooks Online, usually continuously, though with some accounts you need to click to refresh the feed.

Once the transactions are downloaded into QuickBooks, whether in Desktop or Online, you can set up rules to help with transaction coding. For example, if the utility payment to Edison Electric is always posted to the Utilities account, then set up a rule to tell QuickBooks that any transaction including the words “Edison Elec” (or whatever wording normally accompanies the downloaded bank transaction) will be named “Edison Electric,” a vendor name already set up in QuickBooks, and will be coded to the account named “Utilities.” You can also specify a class and a description, if desired. In QuickBooks Online you can even go one step farther and check a box in the rule setup window to automatically post the transaction to your books. How’s that for efficiency!

Sometimes it may be easier to NOT bring in transactions electronically. An example would be a bank account set up to fund payroll. The way cash is pulled from the bank account does not align with how payroll activity needs to be entered into your books. Therefore it may be more efficient to not import the bank activity and simply make an entry to record payroll.

Reconciling Cash Transactions

After you have posted the downloaded bank transactions, the way you make sure you have recorded all the transactions affecting cash is by doing a bank reconciliation. Use the bank reconciliation feature within QuickBooks or QuickBooks Online. When you complete a bank reconciliation, you are ensuring three things:

  1. That you did not miss recording any transactions that cleared the bank.
  2. That you did not record any transactions twice or make other erroneous entries to cash.
  3. That any transactions which did not clear the bank are valid outstanding transactions.

Notice we did not say that you ensure all the transactions were posted correctly. The bank reconciliation only checks the cash side of the transaction. If you posted a client fee as a contribution, or postage expense to the travel account, the bank reconciliation is not going to help you with that. But it is important from the standpoint of making sure you have all the “pieces of the puzzle” and that you do not have duplicate or erroneous pieces.

For detailed information on how to download and reconcile bank transactions in QuickBooks Online, see the Banking Transactions Tutorial by Veroica Wasek at 5minutebookeeping.com.  Also see Intuit’s bank reconciliation tutorial.

To export/import transactions into QuickBooks Desktop, login in to your bank online and, assuming your bank supports this service, create a QuickBooks file of transactions for the desired date range. (The file will have a .iif extension.) Export the .iif file to your computer, then import the .iif file into QuickBooks. See steps here to import .iif files. For reconciling in QuickBooks desktop software, see Intuit’s detailed instructions illustrated here.

When it comes to pushing transactions affecting cash into QuickBooks, technology is your friend! Discover the power of importing bank transactions and using QuickBooks rules to facilitate coding transactions properly. Then be sure to reconcile the operating account monthly, as well as any other bank account with a lot of activity. Let us know how it goes!

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