5 Signs your QuickBooks is in trouble

How to recognize when something in your QuickBooks isn't working quite the way it should.

1. Your accounts don't match your statements when you reconcileReconciliation is how you confirm that the transactions in QuickBooks agree with your bank, credit card, or loan statement for the same period. If you regularly finish a reconciliation with a difference, need to make an adjustment to force it to balance, or can't reconcile at all, something may need attention.What to look out for:

  • Your QuickBooks balance doesn't match your statement as of the reconciliation date.

  • You have old transactions that have never cleared.

  • Previous reconciliations suddenly show a difference.

  • You regularly enter adjustments just to make an account reconcile.

  • Credit card or loan balances are consistently different from the statements.

  • You're not sure when an account was last successfully reconciled.

2. Your income looks way too high or too lowYour Profit & Loss should give you a reasonable picture of how your business is actually doing. If the income in QuickBooks seems wildly different from what you know is happening in your business, there may be transactions being recorded incorrectly, duplicated, or left out.What to look out for:

  • Your income is much higher or lower than you expected.

  • Sales appear to be recorded twice.

  • Deposits are showing up as income when you don't think they should be.

  • Refunds or returns don't seem to be reflected correctly.

  • Your sales reports don't come close to the income showing in QuickBooks.

  • Your Undeposited Funds balance is surprisingly high and you don't know why.

  • You look at your Profit & Loss and think, “There is no way that's right.”

3. You have old invoices or bills that are open and should be closedYour Accounts Receivable and Accounts Payable should show what customers actually owe you and what you actually owe your vendors. If old invoices or bills are still showing as open when you know they've already been paid or resolved, those balances may not be giving you an accurate picture.What to look out for:

  • Customer invoices from months or years ago still show as unpaid, but you know you were paid.

  • Old vendor bills show as outstanding even though you know they were paid.

  • Your Accounts Receivable balance is much higher than what customers actually owe you.

  • Your Accounts Payable includes vendors you know you don't owe.

  • You have old customer or vendor credits sitting open.

  • Payments are sitting unapplied instead of being matched to the correct invoice or bill.

  • You aren't confident that your A/R or A/P reports are accurate.

4. Your Balance Sheet has balances you don't understandYour Balance Sheet should show what your business owns, what it owes, and the equity in the business. You don't need to be an accountant to read it, but the balances should have some connection to reality. If accounts have been accumulating strange balances for years, it may be a sign that transactions aren't being recorded correctly.What to look out for:

  • Bank, credit card, or loan balances don't look right.

  • You have asset or liability accounts that you don't recognize or understand.

  • Accounts that should be zero still have balances.

  • You have large balances in Opening Balance Equity.

  • An asset or liability account has a negative balance and you don't know why.

  • Old accounts you no longer use still have balances.

  • You look at your Balance Sheet and have no idea what some of the numbers represent.

5. You're using workarounds to make QuickBooks workQuickBooks has built-in ways to handle most everyday business transactions. If you're regularly using journal entries, adjustments, or other workarounds just to get balances where you think they should be, you may be fixing the symptom instead of the underlying problem.What to look out for:

  • You regularly use journal entries to correct balances.

  • You make reconciliation adjustments because you can't find the difference.

  • You change transactions from prior periods to make current numbers work.

  • You're using journal entries for transactions that could be entered through normal QuickBooks workflows.

  • You aren't really sure what some of the journal entries in your books are doing.

  • Fixing one balance seems to make something else wrong.

Final ThoughtsIf you recognize a few of these signs in your QuickBooks, it doesn't necessarily mean your books are a disaster. Small issues can build up over time, especially as a business grows or the way you use QuickBooks changes. The important thing is identifying what's causing the problem and getting things cleaned up so you can trust your numbers again.Warmly,
Isabel Squire