This blog post is a summary of a Skimmer Webinar co-hosted by QuickBooks expert Sharon Burch and Skimmer’s Niki Acosta. Click here to watch the full webinar on demand.
How’s your pool service business doing? It’s a simple question, but before she started Pool Service QuickBooks Consulting, Sharon Burch noticed too many pool pros struggling to come up with a concrete answer.
The truth is, unless you have access to real-time financial information, you’ll never really know how healthy your pool service business is. During this webinar, Sharon shared her top tips for how to set up your pool company software and customize Quickbooks, track accurate financials year-round, and get the data pool pros need to stay informed and be successful.
Why it’s important to capture accurate financial metrics
Capturing financial information throughout the year helps your business in both the short and long term. Tracking the right financial metrics will:
- Tell you how your business is doing. It’s impossible to know whether you’re truly profitable unless you're accurately tracking your revenue and expenses. When you have a clear snapshot of what you’re spending to make your revenue, you can make informed decisions.
- Make year-end tax reporting a breeze. The headache of preparing annual taxes doesn’t have to be an inevitability. When you set up the right activities throughout the year, you can complete your taxes with just a few clicks.
- Prepare you for potential buyers. If a potential buyer looked at your financial records right now, what would they see? When you set up your numbers in a way that’s legible and attractive to top buyers, you’ll always be ready to sell.
Three reports you should monitor monthly
What does it actually look like to track financial metrics on a month-to-month basis? Sharon recommends that pool pros generate three reports every month:
1) Balance sheet. This report gives a snapshot of your assets set against your liabilities and equity at a fixed point in time. In other words, it tells you what your business owns and what it owes so that you can make better business decisions.
2) Profit and loss (P&L) statement. This statement tells you how much money your business made and spent over the month. It’s a snapshot of your gross income minus your expenses. It shows your true profitability, and looking at it each month can help you adjust your pricing, spending, or sales efforts in the months to come.
3 Statement of cash flow. This statement shows whether your business has enough liquidity or cash to pay its expenses. Ultimately, it allows you to forecast how your business will do—and how much cash will be flowing into and out of it—based on what’s already happened.
Custom reports for pool service businesses
If you’re preparing to sell your pool service business, you can present your financials in a number of ways.
If you’re only selling your routes, your potential buyers will be interested in the numbers and little else. If they’re buying your business, however, they’ll want to see more. You can customize your financial reports into any of the following, depending on what you want to show:
- Pool cleaning labor income and expenses
- Pool maintenance labor income and expenses
- Pool chemicals income and cost of goods sold
- Pool repair parts income and cost of goods sold
- Owner add-backs and one-time business expenses
Overall, it’s helpful to present your financials in a way that lets potential buyers see the operation of your business under normal circumstances. Let’s say, for example, that you bought some billboard space as an experiment. By customizing your reports, you can pull that off to the side into a one-time business expense to show your true operating income.
The trick to customizing your reports is setting up your QuickBooks correctly. Being able to classify everything correctly allows you to show your true operating income.
How to set up QuickBooks to create accurate financial reports
You need the right data to create accurate financial reports. To get the right data, you need to set up your QuickBooks to capture every transaction.
Setting up income
Especially if you’re using Skimmer Billing, tracking income is easy. You’ll need to set up two things to make sure your income is tracked automatically: Skimmer Online Payments and Automated Payout Integration.
If your business has different income streams that you want to keep them financially separate (for example, repairs and service), you can set that up in Skimmer with product listings. For example, you can set up one line item for labor and one for chemicals. This will allow you to see the totals for each in your P&L reports. Once your products and services are set up in Skimmer, you can assign an income and expense account for each.
Setting up your payments in Skimmer so that they’re going into “Undeposited Funds” makes it easy to reconcile your income each month. When your customers pay their invoices, QuickBooks will create a digital bank deposit with all the invoices that have been paid in Skimmer. It will also subtract the processing fee to match the amount that’s deposited to your bank account. You just have to click “match” to reconcile it.
Setting up expenses
Many business owners are so focused on income that they lose sight of expenses, which is a mistake. You need to monitor your expenses and assign a class to every transaction. If you don’t account for everything, you can’t see where you might be losing money.
This up requires some training, but setting up these expense-tracking processes will allow you to capture everything:
- Scan physical receipts with the QuickBooks app. If the business owner has the QuickBooks app on their phone, they can scan and automatically upload receipts to QuickBooks.
- Auto-forward email receipts to a custom QuickBooks email. For monthly payments that generate an automated receipt, you can set up a rule to automatically forward that receipt to a QuickBooks email so that it’s captured.
- Upload receipts to your computer and add them to your Google Drive. You can scan and upload new receipts, then connect to your QuickBooks to easily access them.
- Create rules in your bank and credit card transaction feed. You can create rules for recurring transactions to be categorized automatically. For example, your monthly Verizon payment can be added as a cell phone expense. Sharon warns that you should not turn this on as an auto rule until you’ve manually added it first. Once you know you can trust the automation, you can let it run.
- Create recurring transactions. If you have automated payments set up (such as monthly loan payments), you can set up a recurring transaction on the QuickBooks side so that each month, you just need to review and approve it.
Tips for consistently accurate financial reports
Setting up your income and expenses in QuickBooks will make it much easier to create accurate reports each month. From here, you’ll want to set up some automation and a few regular tasks to keep everything moving.
- Make sure your initial setup is customized for your pool service business. There is no one-size-fits all approach, and depending on how you want to report on your financials, you’ll need to tailor your reporting in a way that makes the most sense for you.
- Update QuickBooks weekly. Don’t let expenses and receipts pile up! The longer you leave it, the more you’ll dread—and avoid—it. You’ll have inaccurate books. Set a reminder every Thursday to go through your receipts and make sure everything is captured.
- Reconcile monthly. Look at your key financial reports each month and reconcile them with your QuickBooks to make sure everything matches. You should also reconcile the cash that’s coming into and leaving your bank account with QuickBooks.
If you do the above, you’ll be able to easily automate your reports to be emailed to your inbox each month. Then, when the end of the year rolls around, you can generate your year-end reports with just a few clicks.
QuickBooks is for business owners
Bookkeeping can feel like an obligation for many business owners—something that has to be done for accurate records rather than something that makes it easier to run a successful business.
Setting up your QuickBooks and financial reports correctly is a game-changer. Many of Sharon’s clients are amazed at just how much setting up their pool business software with QuickBooks helps to make better business decisions and change the way they view their business.
If you’d like to learn more about Pool Service QuickBooks or set up some time with Sharon to learn more about how to set up QuickBooks for your pool service business, visit her website to get started.
