Recommended procedure for reconciling vendor inventory receipts to vendor invoices when you using the Springboard to QBO Integration
When Springboard is integrated with QBO, the following Springboard financial events create Journal Entries in QBO:
- Purchasing Receipts. A completed purchasing receipt of product from a vendor sends over a Journal Entry which debits an account for the cost of the product received (typically an increase in your inventory account) and credits and account for the cost of the product returned (typically an other liability clearing account which represents product amounts received that need to be reconciled to a vendor invoice).
- Purchasing Returns. A completed purchasing return of product to a vendor sends over a Journal Entry which credit an account for the cost of the product received (typically a decrease in your inventory account) and debits an account for the cost of the product returned (typically an other liability clearing account which represents product amounts returned that need to be reconciled to a vendor credit memo).
In Springboard, under Settings > Financial > Item classes tab> new, you will need to map the following to your QBO Chart of Accounts to tell Springboard Retail which accounts you want to debit or credit for the cost of product received from vendors or returned to vendors.
- INVENTORY ON HAND (ASSET)
- INVENTORY PURCHASES RECEIVED (LIABILITY)
- INVENTORY PURCHASES RETURNED (LIABILITY)
We recommend the following:
- INVENTORY ON HAND (ASSET): Inventory Asset
- INVENTORY PURCHASES RECEIVED (LIABILITY): A liability account that acts as a clearing account, could be called Accrued Receipts Payable' so you can keep track of the cost of product received that you need to reconciled to a vendor invoice.
- INVENTORY PURCHASES RETURNED (LIABILITY): A liability account that acts as a clearing account, could be called Accrued Returns Payable' so you can keep track of the cost of product returned that you need to reconciled to a vendor credit memo.
Set up in Springboard and QBO for Invoice Reconciliation
Recommended steps to set up the Springboard to QBO integration to reconcile product receipts to vendor invoices.
(1) Create a GL account to credit when product is received
Create a liability account in your QBO chart of accounts, perhaps you can call it, “Accrued Receipts Payable”. Make sure this account is included in your account import from QBO to Springboard. In Springboard go to settings > financial >item classes tab > account mapping: ‘INVENTORY PURCHASES RECEIVED (COGS) and ‘set’ this to the new liability account you created. When you do this, when a purchasing receipt is completed in Springboard, a JE is created in QBO that hits the following accounts:
Debit: \tInventory OH (Asset)
Credit: \tAccrued Receipts Payable (Liability)
Below is what the JE will look like in QBO when it comes over from Springboard.
Date: \tDate receiving was done in Springboard
Entry #: \tREC104263 (this is the purchasing receipt number in Springboard)
Debit: \tInventory on hand $______ (Memo: Purchasing Receipt #104263)
Credit: \tAccrued Receipts $_____ (Memo: Purchasing Receipt #104263)
JE Memo: \tPurchasing Receipt #104263
(2) Create a Custom Field on Purchasing Receipts
When you are receiving product into Springboard, we recommend you create the following custom fields to assist in reconciling purchasing receipts to invoices:
- ‘Invoice (or Packing Slip) #’ This should be a free form field that is completed when the product is being received in. Typically the product comes with an invoice or a packing slip number. This will later assist in tying the receiving to an invoice.
- ‘Reconciled in QBO’ - We recommend a checkbox that is used once the invoice has been compared to the receiving and the receiving is entered into QBO.
(3) Create a Transaction Report in QBO for your new Liability Account.
A credit balance in your liability account (Accrued Receipts Payable) will represent all product that has been received into Springboard for which you have not matched (or entered) to a vendor invoice in Quickbooks. You will want to watch the balance in this account. If it is $0 then you have entered all invoices for which you have received product. When you create the report, you should make sure to include the ‘balance’ column (to get a running account balance) and sort it by the ‘Memo/Description’ field. We recommend setting this report up for the time period of 1 month so you can watch the activity.
The Invoice Reconciliation Process
When you have an invoice, go into Springboard > Purchasing Receipts and find the purchasing receipt that goes with the invoice you have in hand. You can search on vendor name, PO#, and use the invoice field on the receipts to assist in finding the corresponding receipt. Take note of the purchasing receipt # in SR that matches your invoice. As described above, when a purchasing receipt is completed in Springboard, the JE will come over into QBO with the purchasing receipt # in the Memo/Description. Go into QBO and find the JE (by searching on the purchasing receipt #) that matches the invoice you have in your hand. Either add a bill payable to that vendor as follows or add the below lines to the JE:
Debit: Accrued Receipts $____ (product amount on the invoice)**
Debit: Shipping Exp or COG Freight $____ (if shipping amt is noted)
Credit: Accounts Payable $____(amount due to the vendor)
(Note: You may have to add additional JE lines for discounts on product, COGS JEs, etc. This can be discussed with your Accountant).
** On the Accrued Receipts line you will need to add the exact same memo description that is in the purchasing receipt JE. This will allow your memorized transaction report to to group purchasing receipts and the related invoices together. The ‘balance’ column in QBO should net to $0 for one receipt after an invoice has been entered.
If the product amount on the invoice does not agree with the product amount received in Springboard, you will need to further investigate. Is there a product discount on the invoice? Is there an item cost change/difference? Did I receive an extra item? Was I short shipped an item? How you want to handle these differences should be discussed with your accountant.
Once an invoice is reconciled to Springboard and entered into QBO, go to the purchasing receipt and check the custom field, “Reconciled in QBO”.
Missing and Duplicate Invoice Controls
After you have entered the invoices you have onhand to enter in QBO as per above, run the memorized report in QBO for the time period that you would like to review. Make sure it is sorted by the memo field so that all purchasing receipts for product receipt are with purchasing receipts for invoices entered. Look at the ‘balance’ column to pinpoint the date or purchasing receipt # that is off (does not net/balance to $0). This will show you all product that has been received into Springboard for which an invoice has not been entered into QBO.
What if your Accrued Receipts Payable account is not at $0 and you believe you have entered all invoices? Once you have determined which purchasing receipt is not matched to an invoice using the memorized transaction report for the account, sorted by the ‘memo description field’ and the running ‘balance’, go into SR> purchasing receipts and search on the purchasing receipt #. The custom field ‘Invoice #’ that you previously set up will tell you which invoice or packing slip # has not been entered into QBO yet.
Purchasing Returns (Vendor RTV/Return to Vendors)
A purchasing return can be handled in the same manner as above, however the Journal Entries will be reversed and you will enter a credit memo instead of an invoice.