We have promoted workflow and process improvements for the past year that will significantly reduce non-value-added activities. In this series of articles, we have consistently referenced two concepts. These are the Snowball Effect of improving operational efficiencies and applying Total Cost of Ownership analysis when making what is traditionally called a “make or buy” decision.
The following will highlight three TCO and Snowball decisions and the actions you should just stop doing. Right now. Stop it. (Insert Bob Newhart skit here. OK, here it is).
“Stop It!” From The Bob Newhart Show.
Decision 1 - Stop issuing 1099-Misc tax forms
How do you do that? First, you stop writing checks internally. Instead, pay vendors or contractors via credit card, or if they refuse to accept credit card payments, then use a third party to write a check. With both payment forms, the payor must issue a 1099-K that eliminates your responsibility to file a 1099-Misc.
It is much cheaper to pay electronically than to write a check. When you add that savings to the savings resulting from no longer filing 1099-Misc, you will realize you should have made this change yesterday.
Except in QBO Advanced, Melio may not meet your internal control requirements. If so, upgrade to QBO Advanced or sign up for bill.com with Peak Advisers. Peak has the lowest available pricing for each.
Don’t believe that you will no longer need to file 1099-MISC? Ask your accountant or research it yourself.
Decision 2 - Stop accepting check payments
Or at least reduce the number of checks received. Think about it this way. For Peak Advisers to receive a check payment, these are the steps processing requires:
Send an invoice
Go to the mailbox
Enter a Receipt of Payment in QBO
Scan a check
Confirm the bank download to the receipt of payment
These are the steps required for Peak Advisers to receive a payment via ACH or credit card:
Send an invoice
Confirm the bank download to the deposit. Sometimes. Usually, QBO will make its own match.
How much would your business save if it strove to eliminate receiving check payments? What would a TCO analysis look like?
Decision 3 - Stop agonizing over credit card processing fees. Strive for efficiency, accuracy, reducing fraud risk, and reducing non-value added work.
Instead, only use a Merchant Processing Service that integrates with QuickBooks. If you don’t do this, here is what the Receive Payment process can look like:
Send an invoice.
Receive permission to pay with a credit card or ACH.
Go to the credit card machine, process payment, or type the card or bank information into QBO. (Which creates all sorts of security and fraud risks).
Receive payment when paid.
Create a Deposit.
Match the bank download with the deposit.
Doesn’t this seem like a great deal of additional manual activity subject to human error (and fraud) versus a 100% accurate automated process?
This brings in the accuracy factor that needs to be recognized in many TCO reviews. How much do errors cost? In some businesses, the inaccuracy costs are minimal, but in many, the processes are so loose that the rework resulting from human errors pays for the automation itself.
OK, that’s it for now—next month, why you must switch to QBO Advanced.