- How much should you have in cash reserves? In standard
QuickBooks Online. It’s beautiful concept: your financials at your fingertips. It’s mobile. It’s sleek.
…but we don’t recommend it for our clients.
Here’s the thing… once you pull back the curtain on the mega-marketing campaign that Intuit is putting against QuickBooks Online (QBO), you’ll find a software that falls short on important features.
Do we wish we could recommend QBO? Sure.
It would make our lives and our clients’ lives a lot easier. The online access is very convenient. It seamlessly integrates with many more apps than the desktop version, and the automation available to streamline data entry is fantastic.
However, if you want to manage your business by the numbers, QBO falls short on some important features that drive efficiency in your accounting department and provide better insights into your business’ performance.
Our clients tend to be multi-million dollar service-based companies, with in-house accounting staffs, with large jobs they need to track and have more sophisticated reporting and analytical needs.
QBO, in our opinion, is good for simple, serviced-based businesses, under $1MM in revenue and for owners who only want to use their financials to keep an eye on total profitability and use their financials to file their tax returns.
For everyone else, we recommend QuickBooks Desktop.
In this two-part blog post we’ll explore certain features of the desktop that aren’t available in QBO and why they are important.
This is our # 1 complaint about QBO. Job costing is important for companies who want to understand who their most profitable clients are, what’s making others unprofitable and take action to fix them. Understanding job profitability is critical to getting better at pricing, and buoying your bottom line.
QuickBooks Online does not have a robust job costing feature. This means that it is not easy to track revenue and expenses against jobs and then do reporting on job profitability. There are workarounds in QBO to get some semblance of job costing but it requires manipulation of the accounting processes, that, frankly, would be hard for many of our client’s in-house staffs to maintain.
In the Desktop version, the reporting on Job profitability is robust. There are reports which summarize every job’s profitability on one screen or you can dig deeper and look at profitability at a detail level. These reporting features are not available in QBO.
We often work with clients who started a business with inventory and signed up with QBO. In nearly all cases we convert them to QB Desktop because the inventory features in QBO are very weak. If you want to properly handle inventory, QB Desktop has important features to help maintain and manage inventory.
In the Desktop version, you can do inventory builds, set reorder points and partially receive items against a purchase order. While there are many add-ons to QuickBooks that are more robust inventory management systems, the functions in QB Desktop inventory serve many smaller businesses that don’t have super-sophisticated inventory needs, but need more than the basics that QBO provide.
For clients with jobs billed over a period of time, Sales Orders is a critical function not available in QBO. Sales Orders allow you to track progress billing against a client order. Without this feature, many clients would be relegated to spreadsheets, tracking remaining balances of a client’s purchase order.
As with job costing, progress billing can be done in QBO with a lot of manual manipulation to make other features in QBO act like sales orders.
QBO works for many small businesses, but once a company reaches a certain sophistication point (often $1MM or more) their needs change. Is the Desktop version of QB perfect? No. But for most of our clients it serves 95% of their needs.
In addition, if you have to do “workarounds” in a system to get it do what you need it to do– you have the wrong system. It might be time to rethink if you have QBO and want some of the features above. The good thing is it is easy to convert.
These are just a few things that prevent us from recommending QBO. More to come in our next post.
If you need help determining which version of QuickBooks (including the various Desktop versions) is right for you, please contact us, we’d be happy to help.