New Business Direction LLCMany small business owners focus on 
generating more revenue every year, and that’s a great objective. But not all revenue is created equally. If you sell more than one product or service in your business, then you can benefit from looking at your revenue mix.
Although it’s fun to watch our revenues grow, it’s the profit number that really matters. If your expenses grow faster than your profits, then you have a lot of activity going on, but you don’t get to keep as much of what you make, which is what really matters.
An insightful exercise to try is to take a look at your revenue mix. Then you can ask “what if?” to optimize your profits.
Your Revenue Mix
Let’s say you offer three different services: Services X, Y, and Z. Your revenue pie looks like this:
X: $1.4 million or 70% of the total
Y: $0.3 million or 15% of the total
Z: $0.3 million or 15% of the total
Total: $2.0 million
In this example, Service X is clearly the service making you the most revenue in your business. But is it making you the most profits?
The profit you receive from each of these service lines is as follows:
X: $160K
Y: $20K loss
Z: $60K
Total: $200K
While Service X is generating the most profit volume for your business, it’s actually Service Z that’s the most profitable. Earning $160K on $1.4 million yields 11.4% return on Service X, but earning $60K on $300K yields nearly double the return at 20%. Service Z generates the most return. And if possible, Service Y may need to be discontinued or turned around.
Optimizing Profits
Your strategy for a more optimum revenue mix might be to sell as much of Service Z as possible, while eliminating or fixing the problem around Service Y.
It’s fun to experiment with different revenue mixes. And of course, there are many more variables besides profit, such as:
Which service do you prefer to work on?- Are you able to sell more of the most profitable service or are there marketing limitations?
- Is one service a loss leader for the others?
- Are you able to adjust price on the lower margin services to increase your profits?
There are many more questions to ask and strategies to consider to make you more money, which is why we love our job!
A New Year, A New Mix
We hope you’ll spend some time analyzing your revenue mix and having fun asking yourself “what if?” If we can help you expedite the process or add our perspective, please reach out anytime.
Depending on the situation, there’s more than one way to record a customer payment in QuickBooks. Here are your options.
There are undoubtedly some QuickBooks tasks that are more enjoyable than others. It’s no fun paying bills, for example, and making collection calls on unpaid invoices can be downright unpleasant.
But you probably don’t mind recording customer payments, sending invoices or statements, and generating reports to make sure you’re on top of it all.
QuickBooks offers more than one way to document customer remittances, and it’s important that you use the right one for the right situation.
Defining the Destination
Figure 1: Uncheck the box on the farthest right if you think you may want to direct payments to other accounts sometimes.
Before you begin receiving payments, you need to make sure they’ll end up in the correct account. The default is an account called Undeposited Funds. To make sure that this setting is correct, open the Edit menu and select Preferences, click Payments and select the Company Preferences tab. Use Undeposited Funds as a default deposit to account should have a check mark in the box next to it.
If you think you’ll sometimes want to deposit to a different account, leave the box unchecked. Then every time you record a payment, there’ll be a Deposit to field on the form. Talk to us if you’re planning to use any account other than Undeposited Funds, as you can run into serious problems down the road if payments are earmarked for the wrong account.
The Right Tools for the Right Job
Probably the most common type of payment that you’ll process will come in to pay all or part of an invoice or statement that you sent previously.
To do this, open the Customers menu and select Receive Payments. In the window that opens, click on the arrow in the field next to RECEIVED FROM to display the drop-down list, and choose the correct customer. You’ll see the outstanding balance. Enter the amount of the payment you received in the AMOUNT field and change the date if necessary. Click the arrow in the field next to PMT METHOD, and then select the type of payment.
If you established a credit card as the default payment method in the customer record, the card number and expiration date will be filled in. If not, or if a check was submitted, enter the information requested.
Any outstanding invoices will appear in a table. Make sure that there’s a check mark in front of the correct one(s). If the customer only made a partial payment, you’ll have to indicate how you want to handle the underpayment. Here are your options:
Figure 3: You can select how to handle partially-paid invoices here.
When you’re done, save the payment.
Instant Income
There may be times when you receive payment immediately, at the time your products or services change hands. In these cases, you’ll want to use a sales receipt. Open the Customers menu again and click Enter Sales Receipts.
Select a customer from the drop-down list or add a new one, then fill out the rest of the form like you would an invoice, selecting the items and quantities sold, and indicating the type of payment made (cash, check, credit).
Other Scenarios
These are the most common methods of receiving payments from customers, and you may never have to do anything other than simple payment-recording and sales receipts.
But unusual situations may arise that leave you stumped. For example, a customer may want to make a partial, advance payment before you’ve created an invoice or at the same time you’re entering it. In a case like this, you’ll have to create a payment item so that the money you’ve just received is reflected on the invoice. Or you may get a down payment on a product or service, or even an overpayment.
Let us help you when such situations occur. It’s much easier -and more economical for you – to spend some time with us before you record a puzzling payment than to have us track it down later on. We’ll help ensure that your money makes it to the right destination.
This article of QuickBooks Tips and Tricks was based on the 2013 version of QuickBooks.
With the holiday season just around the corner, it’s a perfect time to get your financial records in order. Tax moves you make now can mean finding more “green” to spend on family gifts and festivities. Here are five quick tips for you to feel more prepared about your financial status as you go into year-end.
1. Avoid Penalties
This time of year is ideal to double-check your tax payments, both federal and state, to make sure enough has been paid in, and even more important, to avoid overpaying so your money is not tied up unnecessarily. If you’re not sure of your 2013 tax liability, check with your tax preparer.
2. Balanced Books
Rather than wait until the busiest time of year for accountants and bookkeepers, you can get a head start now on catching up your books. You’ll have more of their attention and you may even avoid a rate increase if you get your books done early. Completed bank reconciliations are a very important part of catching up.
3. Forms
It’s not too early to get your orders in for the forms you need at year-end like your W-2s, W-3s, 1099s, and 1096s. That way, your forms will be onsite when you’re ready. If we do not process your year-end forms, you can order the forms you need online and save 20% using code PAPWBKC.
4. Records
Information that’s missing at the last minute can take up extra time and be costly. It’s a great idea to do an audit now of W-9s to grab missing addresses and tax ID numbers of your sub-contractors. Also do a scrub of your employee payroll records so that your W-2s will be complete and accurate.
5. New Tax Changes
Be sure to check with your advisors on new laws affecting individuals and businesses next year. One of the biggest ones making news is avoiding the fine involved regarding the new health care requirements for individuals. And there are many more you’ll want to get up to speed on so that you’ll know how they affect your situation.
We know it’s early to be talking about taxes, but we’re also all about saving you money and time. Try these five tips so you’ll have better peace of mind and be more prepared for year-end.
We are pleased to announce that Wayne Kukuruza has joined the team at New Business Directions.
Wayne attended Salem State College and graduated with a BA in Business Administration from Campbell University, Camp Lejuene, NC. He received his Certificate of Engineering in Microsoft and Novell from Clark University in Braintree, MA.
Wayne has extensive knowledge of accounting, computers, human resources, financial and management reporting. He is proficient with QuickBooks as well as other small business accounting software including Peachtree and Great Plains.
“We are delighted to have Wayne as part of our team!” Says Rhonda Rosand, owner of New Business Directions. “His talents and skills complement those of our other team members and he will be a great asset to the company and our clients!”
At New Business Directions we help small business owners streamline the process of making money. If you would like to create order out of chaos and improve your bottom line, call us at (603) 356-2914 or visit our website.
Kristen has earned her designation as a QuickBooks Certified User on November 4, 2013. Kristen has attended extensive training courses on QuickBooks and has been with New Business Directions since December of 2011.
In addition to being a Level One Bookkeeper for New Business Directions, Kristen is also our in-house Marketing Coordinator, and has recently created a blog on our website which features helpful Tips and Tricks in QuickBooks. If you would like to submit a QuickBooks related topic to be covered in our blog, email Kristen at Kristenp@newbusinessdirections.com.
At New Business directions we help small business owners streamline the process of making money. If you would like to create order out of chaos and improve your bottom line, call us at 603-356-2914 or visit our website at www.newbusinessdirections.com.
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Tips & Tricks in QuickBooks®
