QuickBooks

Must I Integrate Point of Sale with Financials?

QuickBooks POS Desktop

This integration is broad and deep and has a lot of options. There are nuances, and if processes are not followed to a tee, the information in QuickBooks can be inaccurate. QuickBooks POS Desktop only integrates with QuickBooks Financials Desktop, the Windows version.

The integration typically occurs during the end of the day on the POS Server (or HQ) computer. It can be initiated outside of EOD but each exchange will create a new set of transactions for those POS transactions that have yet to be sent. It won’t duplicate the transactions but can be a bookkeeping hassle.

QuickBooks POS can send summary, detail, or hybrid. With multi-location a QuickBooks class will be assigned to each transaction line based on a class designation for each store. There are so many options and transactions that I decided not to include screen shots but could do so possibly in a future article.

Summary

  • One sales receipt is sent per day as a $0 transaction – taxable sales, non-taxable sales, sales tax (one for each POS sales tax location), gift card, et al, transactions are offset by payment methods that are negative numbers.
  • Each individual receiving document is sent to QuickBooks. The items on the bill do not list the individual items.
  • Customers are not listed on the sales receipt but it is posted to a QuickBooks POS customer.
  • On Account charges come across as an invoice with the customer name.
  • A summary journal is created the COGS/Inventory entry. This is helpful but uses the Average Unit Cost value in POS so if it is not accurate, COGS and Inventory can be off.
  • Inventory adjustments are sent in summary.

Detail

  • Each sales transaction is sent as its own sales receipt with the customer’s name, if included on the sale. Each item sold is listed as a line item on the sales receipt.
  • Receiving documents are sent with each of the specific items. Same issue applies with regards to dates.
  • All new items processed are added to QuickBooks as an inactive item. This can mean a lot of items are added without even knowing.
  • On Account charges come across as an invoice with the customer name.
  • The COGS/Inventory journal is the same, except each receipt is listed on the journal along with the receipt number.
  • Inventory adjustments are sent in summary.

Hybrid

  • Functions the same as summary except for on-account sales.
  • Sales on-account (house sales) are sent as individual invoices, the POS Customer is assigned (and added if new), and each line item reflects the particular item and item description.
  • This allows the sending of invoices and/or customer statements from QuickBooks Financials. This is a handy capability and widely used.

QuickBooks POS Desktop provides a lot of flexibility. It can be cumbersome and can cause issues with the financials. Here are some examples (this is not an exhaustive list but food for thought):

  • COGS and inventory can be off between the two systems if items are sold before they are received or if on hand quantities go negative.
  • Inventory asset value. The invoice date entered on the receiving document (as compared to the date on the document itself) is used as the bill/bill credit/item receipt date in QuickBooks, so if these are different the inventory values will be reflected on different days.
  • GL accounts are assigned overall or at the item level. This provides some flexibility to assign different sales, COGS, and inventory accounts by item, e.g., shipping, services versus product, etc. There is an inherent limitation in that if you want to assign the same item across a group of items, e.g., assigning a different income account for services versus product or different ones for Accessory versus Jewelry versus Clothing sales, you have to assign as such on each of the items and cannot do as group. This means the POS person adding items needs to be diligent about the assignment.
  • Posting in detail results in all items being sent to QuickBooks. This can be an issue with the item list maximum in Pro and Premier. Each sale is sent to QuickBooks, which will grow the file size dramatically.
  • Sending in detail can be challenging as each payment is posted separately to Undeposited Funds which adds complexity to the bookkeeping effort.

Revel Systems

Revel has a number of options. The QuickBooks Online integration happens all by itself in the middle of the night. QuickBooks Desktop integration uses a custom sync engine.

  • Sales
    • Sends a summary invoice with entries ala Revel’s Sales Summary Report. One entry for taxable sales, non-taxable sales, discounts, sales tax, payments by payment type, etc.
    • Summary by class. Same as above but with one entry (QuickBooks item) per Revel product class. This is not the same as a QuickBooks class but is a POS category/department, e.g., Women’s Clothing, Accessories, Food, Beverage, etc. Helpful of you want to break out sales by different groupings on the P&L.
    • Summary by Product. Same as above but instead of one entry for taxable/non-taxable or one per class/category, there is one entry per product. Inventory is not tracked in the accounting system but helpful if you want to run financial reports by product. This is the least popular summary selection.
  • Payments
    • Cash payments are always summarized.
    • Payment reconciliation option turned on. When using Intuit Payments, it will auto reconcile customers’ accounts from Undeposited Funds to the banking deposit. Sounds good but some are experiencing a few challenges.
    • Payment Reconciliation option turned off. Will send one summarized payment transaction for each credit card. This is the most common.
  • Inventory/COGS. This happens regardless of whether it is summary or detail, if inventory is selected in the integration setup.
    • One bill will be created in QuickBooks when inventory is received in Revel.
    • COGS/Inventory. The value of what was sold will be transferred via a journal entry. Of course, this is only as accurate as the inventory cost in Revel.
    • Inventory adjustments will be transferred as a journal.

As you can see, there are many options and settings and resulting transactions.

Third Party Integration Such as Shogo

The one example noted here is the Shogo tool, which works with Breadcrumb, Cake, Lavu, Lightspeed, Micros, NCR Silver, ShopKeep, Square, Toast, TouchBistro. It can send data to QuickBooks Online, QuickBooks Desktop, or Xero. We have only worked with the Lightspeed and Square integration for both QuickBooks Online and QuickBooks Desktop. Each POS system is different depending on the capabilities of the POS application and what information the POS system allows to be accessed by a 3rd party. However, I presume the integration capabilities are relatively common across the applications and the account system.

Shogo brings the ability to transfer activity in detail or summary; map each location/store to a particular QuickBooks company (which means you can have the same or different QuickBooks files for across stores); map to class and/or location; income account by category; COGS and Inventory by category/department or the like, if inventory is available; discounts, returns, payments, cash drawer activity by item; receiving activity by PO or bill; etc.

Pretty powerful stuff but it, too, is not always perfect. For example, some of the integration falls short with certain types of inventory adjustments, which require some reporting out of the POS and an adjusting entry in accounting to compensate.

Other POS

Many POS systems tout integration and there are too many to go into here, but suffice to say it is important to better understand the integration capabilities and what processes are required on the financial side to ensure that data is being updated appropriately.

Manual

And then there is manual entry. As you can see from all the above, numerous activity in a POS can impact the financials. And, in some cases, it might just be easier (or less problematic) to manually enter the activity in the accounting system than rely on the integration and the diligence of process adherence in POS.

Let’s say the business doesn’t track (or doesn’t want to track) inventory. Most POS systems can generate a daily sales report. The entry can be as simple as:

  • Credit to Income. Some might break out by freight or other income types.
  • Credit to Sales Tax.
  • Credit to Tips Payable, if appropriate.
  • Credit/Debit to other miscellaneous accounts like Gift Cards, et al.
  • Debit to Undeposited Funds or the Bank for credit cards and/or cash.

Pretty straightforward. And even for inventory, bills can be booked to inventory and then periodically adjusted for COGS based on a physical, or they can be booked to COGS and create a periodic summary entry to adjust inventory in the financials to match what is in POS. Or the inventory can be entered daily as well.

There are many factors that can make manual entry complicated and time-consuming, but for the straightforward businesses a daily manual entry with periodic inventory reconciliation is quite simple and not very time-consuming.

This is a whole other topic on its own.

IMHO

The answer to the question of whether POS should/should not sync with the accounting systems is … yes, but depends. Not the ideal response, granted, but it is the reality. The deeper the integration, the more critical it is to adhere to the certain processes in POS. The lighter the integration, the more manual effort is required, which raises the question of whether it should all be done manually — and if the integration is any good.

We have clients that follow the particular POS processes for that POS system quite well and, as a result, their financials are pretty good. Most still require some reconciliation or adjustment, but minimally in most cases.

Those that work well on the sales side should be integrated, as long as it doesn’t mess up other areas of the financials. The inventory side will require manual intervention regardless.

We consultants can preach all we want. but if the reality is that the way the retailer operates doesn’t jibe with the necessary processes (does negative inventory ring a bell?), it might just be best to minimize or even eliminate the automated integration and do periodic entries into the accounting system instead.

Bottom line is the usual: Consult with someone who understands the integration between the products to understand the strengths and weaknesses of the integration so you can make an educated decision on the best approach for your client or your retail operation.


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About the author

David Glantz

David Glantz is the principal at Business Cents, a six person, eleven year-old, San Francisco Bay Area business systems consulting practice and long-time Intuit Reseller.  In his prior life, David enjoyed a successful 20+ year career as consultant and professional services executive for accounting and technology software companies.  Following the dot-com roller coaster, he decided to leave the creature comforts of the corporate world and carry his passion of helping companies solve business problems to his own platform.  David has all the certifications Intuit has to offer, including being a Certified Advanced QuickBooks ProAdvisor.  Business Cents' focus is on the implementation, business process design, integration, and on-going operations of business systems – accounting, retail/POS, eCommerce, CRM.  David's first love is his family.  He and his wife have raised their four children in the SF Bay Area, and he is now enjoying the next generation as the loving grandfather of two adorable girls.

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