Square - QBO Workflow
What's up colleagues?
I’m a bookkeeper for a retail business that uses Square and QBO, and we’ve hit a workflow roadblock that I need advice on.
My client wants to maintain absolute control over their AR, so they’ve decided against any automated integrations (like Synder, LinkMyBooks, etc.) and they don’t want monthly aggregate journal entries (based on the Square summary report). This is because it skews theire reports. They already enter AP, which mostly hits COGS, so their revenue is understated when using Square summary journals and integrations which do not sync revenue earned, but not yet paid out.
Instead, they want me to manually mirror every Square invoice inside QBO to keep them perfectly synced because they want to be able to reflect proper AR balances in the books, which the two latter options do not cover.
While I can handle the data entry, I’m concerned about maintaining an accurate accrual-based set of books regarding Square processing fees, sales tax nuances, and deferred revenue (like gift cards or deposits) that aren’t explicitly detailed when just copying an invoice over. Does anyone have a streamlined SOP or a specific Clearing account workflow that ensures these transaction costs and liabilities are captured accurately at month-end without losing the granular AR detail the client is looking for?
Right now, we are utilizing a hybrid approach.
- They enter AP directly into QBO to capture COGS
- We make weekly Square JEs to capture gross sales and all relevant items from the Square summary report.
- We post all Square deposits to a clearing account.
To summarize I need to:
- Manually enter each invoice from Square to QBO. The invoices must include products/services, tax calculations, discounts, and any other similar elements.
- I want to maintain the workflow through a Square clearing account.
- I need deferred sales, fees, liabilities and any other line items typical for Square to fit into this workflow.
- I need to set a cutoff date for switching to this approach. My idea is to pick a date and make a single journal entry to capture the outstanding ARs at that moment. I am still not sure what the journal would exactly look like, since it would probably include recognizing a lot of revenue at once, so I am not sure about that. After the journal entry is made, we'd continue entering invoices normally and any adjusting JEs that might be required.
Has anybody had a similar challenge before. Am I the only one who finds this a bit confusing. I don't have a ton of experience, but still.... Open to any suggestions.
Thanks!