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QuickBooks Quarterly Review

Don't Leave Money on the Table

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I'm not a natural marketer. Cross selling makes me cross-eyed. As far as I'm concerned, client support is the foundation of my business, and I've left selling behind to focus on service.

Except that I've learned that one kind of cross-selling significantly improves the service and support you can provide to your clients, and requires surprisingly little effort to present to clients. And that's the quarterly review.

For our purposes, a quarterly review is a periodic review of financial statements which provides a cursory overview. It is somewhat informal, certainly not on the level of an audit.

Unwelcome News

Recently I got a call from an acquaintance who had just been asked by her tax preparer to write out a check to the IRS for just shy of twenty thousand dollars.

The request had come out of the blue. Without that kind of money in her bank account, she had put the payment on a credit card. Even more shocking; it was 100% of her tax liability, due the very next day. The tax preparer had given her less than 24 hours to come up with tens of thousands of dollars!

Immediately I realized the solution to this kind of untimely surprise: a quarterly review.

The "Review" Gap

For many of my clients, I am one among several professionals who support the client. I don't do taxes, and I'm not a CPA. Some clients have a CPA; others have a CPA and a tax preparer. But what I discovered is that in most cases all of us have been focused on transactions or compliance. In most of these settings, no other professional is helping the client review their status in any sensible, periodic way.

That wasn't the biggest shock. Even more surprising, once I identified and offered the service, it was an easy sell.

Looking back, it was simple. All I had to do was to get over the assumption that someone else was taking care of the job and then seize the opportunity.

If I were more of a hard-driving business type, I might have seen this simply as a means to increasing revenue. For me, the increase in revenue is the silver lining to helping my clients achieve more control over their finances. But it is true. On average, this service could generate hundreds of dollars per quarter, per client. In addition the service spreads income throughout the year.

Marketing Quarterly Services

We all know there are two views of accounting. The first is the "necessary evil" opinion held by many small business owners because of the convoluted regulations mandated by multiple tax agencies. In the industry we sometimes talk about "compliance" to cover tax filings and other required activities.

However, more enlightened administrators, especially those demanding real-time accounting, find the process a vibrant tool to get performance statistics. Quarterly reviews can help educate the former type of client on the benefits of fiscal management, while the later are quite easy to sign up for the service.

When you promote a quarterly review, you will encourage an atmosphere of constructive, proactive, and economically sound empowerment. Clients will be moved to obtain realistic data, enabling better decisions, and fiscal stability. If positioned correctly, you can get most of your existing customers on board based on these ideals.

Is Timing Is Everything?

How you deliver this marketing message is up to you, but timing may play an important role in how well the message is accepted. Your clients may be more receptive when they have experienced some kind of large, unforeseen expense or a difficult financial event. Seize this moment to offer your client a more stable financial environment. You might want to use the words "check up". After all when we go to the doctor, he's likely to run a few tests before expressing an opinion. Most clients will be receptive to this kind of approach. Take the jargon out of the offering and phrase it in terms of their needs to manage their business finances. Remember to describe this service from your client's point of view. This simple approach will make it easier for both of you to discuss his pain relief. Later when you send the engagement letter or memorandum, you will be able to detail all of the particulars and legal disclaimers.

Service Motto: No Surprises

With a new client the best timing is when you have completed the first round of services. Set up an appointment, deliver the paperwork, and discuss short and long range goals. After you have listened (make mental notes) you can offer a quarterly review tied to his long range needs. Base the reasonableness of your services on simple cost vs. benefit. Talk about your "No Surprises" approach to accounting which focuses on proactive rather than reactive services.

Your Best Patron

If there is a profile of the most vulnerable client, it would be one lacking resources to manage their bookkeeping or with little practical knowledge of accounting. Administrators in this group have little time, patience, or inclination to manage accounting controls. A quarterly review is ideal for them as they can rely upon an accounting professional to have a more sophisticated approach to managing their finances. These targets may not want to admit their weaknesses yet you can emphasize the importance of this regular service especially to pre-empt problems, omissions, lack of compliance, or other shortcomings regarding best practices.

Preliminary Considerations Regarding Quarterly Reviews

Most quarterly reviews are sold as flat fee arrangements and based upon an hourly fee and estimated time. In my practice, I set the price as low as possible. I like to "make them an offer they can't refuse."

While I don't recommend losing money on the engagement, remember that the service allows you to develop a much deeper connection with your client. You will provide that personal attention and learn of other services that you may be able to provide. After a period of time, you can always raise the fee after your client becomes inured to the benefits. (In my experience many clients resist value-based pricing until you can demonstrate that value to them over time.)

Importance of the Engagement Letter

For me one of the more challenging parts to providing these services is defining the scope. Even if you consider this to be an informal arrangement, do take time to either draft an engagement letter or send a memorandum confirming your discussion. It is vital to make clear the limits of the services and to have a mechanism (change request or new engagement) to deal with project creep. Since the review is not an audit, and many of us are CPAs (who are licensed for attestation work like audits, compilations, and attestation reviews), you need to state clearly a disclaimer so clients won't be confused.

For more on the use of engagement letters, start with Engaging Clients Using QuickBooks Financial Software for Ongoing Services. This article includes a sample engagement letter for you to use and adapt as needed. See the letter here.

Avoid the Correction Pitfall

Frequently I encounter clients with issues that require extra effort. Some have incomplete data, personnel problems like frequent turnover, inexperience QuickBooks staff, insufficient knowledge of accounting, or cut off or accrual issues which undermine a simple review. To keep your relationship wholesome, define your agreement to specifically exclude extensive accounting corrections.

Set up an annual schedule in advance. And advise your client that you will require the cooperation of the staff to adhere to that time line.

Delivering a Meaningful Quarterly Review

Practically speaking, your client will benefit from both a data centric and financial review. So build a matrix to deliver both aspects. Although there's no one-size-fits-all checklist; here are a number of points to consider when planning your process.

Quarterly Review Suggested Services

Data & Records Review
• Is the data accurate with full detail?
• Adherence to filling custom fields and class coding?
• Does staff comply with data entry best practices and company policy?
• Are source documents filed and is archive storage appropriate?
• Verify the backup policy is being followed.
• Is there a current Disaster & Recovery Plan?
• Check audit trail to verify separate User passwords and logins used.
• Set closing date for prior periods.

Financial Review
• Use the Portable Company file to generate reports.
• Check that credit card and bank reconciliations are reasonably current and without long outstanding, uncleared transactions.
• Verify Retained Earnings have not changed from past year's filing
• Check to see if zero balance sheet accounts have appropriate balance (e.g., Exchange, Clearings, Undeposited Funds and Opening Balance Equity)
• Forecast tax liabilities.
• Inform client of proactive strategy to minimize tax liabilities.
• Verify timely tax payments/filings are made.
• Financial statement cursory review
• Check for seasonal impacts

Design an agenda in accord with your client's goals. Avoid the checklist, shortcut mentality. Checking off items on your list does not necessarily keep you in touch with unique, perhaps idiosyncratic aspects. Attune yourself to management's goals. This will increase the perception of value of your quarterly review.

Practical Tips for Execution

• Use default QB reports, e.g., Missing Checks, Voided/Deleted Transactions Detail.
• Generate Missing Check Report which is useful for both bank accounts and Accounts Receivable to show invoice sequence break.
• Set up customized reports, memorize, and group them to automate your process.
• Verify/reconcile bank and credit card accounts; and check outstanding items for old transactions.
• Post/review journal entries.
• Review Aging A/R & A/P for old outstanding items.
• Line by line review of Profit and Loss (use % of income). Make note of significant amounts and/or changes
• Inventory: Check for negative units and review procedures.
• Customer Deposits: Check for timely clearing.

Face to Face Reporting

Whenever possible meet with your client to review your findings. It is also better to visit their location too, remember the adage; a picture is worth a thousand words. Face time will help you connect, understand, and better align with your customer. As you go over, line items listen to your client's concerns. Pay attention to concerns regarding external factors affecting the business (exchange rates, economy, competition, regulation, and accounting practices). Bring up internal factors especially restructuring, new product lines, significant changes in operating revenue, expense or debt restructuring.

Ancillary Benefits

Providing the Quarterly Review has other advantages for you. By keeping in touch on a more frequent basis with your clients, you will have better insight into your client's needs which will help you cross sell services. If specialization is one of the ways you are developing your practice, you will have early heads up on your clients needs. Even if you do not provide the service your client desires, you will have the opportunity to make referrals to strengthen your contact networking base.

Victoria Marechal has been a QuickBooks Pro Advisor since 1997. With a background in software, she specializes in data integration and technically challenging IT assignments. Based out of Los Angeles, she is also a database designer, technical writer and contributor to the Intuit® ProConnection® newsletter. You can reach her at vmarechal@marshallassocs.com.

Last Updated: 01/29/2007