In Pursuit of Profit
Read our expert article below or sign up to get articles sent to your inbox.
However, outdated or erroneous transactions can linger, muddling financial records and hiding the true value of the business.
In situations when businesses add employees, expand product/service lines, update billing policies, use new shipping channels, or change the timing of their invoices, financial records can become muddled. While the business may look the same externally, its inner financial shortcomings can undermine operational efficiency.
When the transactions get more complicated or increase in frequency, existing employees’ financial skills and capacity cannot necessarily keep pace. The result is an unorganized ledger that can affect the balance sheet and cash flow statement.
In other scenarios, a business’s future needs may not be fully understood, thwarting planning efforts and creating a case where accounting functions end up falling short of these unforeseen expectations even when executed by more experienced personnel.
Purging old transactions removes distracting clutter and improves reporting accuracy while increasing financial accountability. The result is improved confidence in decision-making for more sustained growth.
Maintaining data indefinitely can slow down report generation and ongoing management. Once the required retention window for data has passed, financial transactions should be removed for the sake of good housekeeping. Before performance issues arise, save historical data as an archived copy and then clean up old transactions to make everyday use easier. Get financial accounts in order to prepare for upcoming activities like loan applications or investor funding rounds and what-if scenarios like audits or owner disputes.
QuickBooks stores the details of each credit and debit transaction, but these can be deleted or voided as needed. The process to do so is fairly straightforward, but many business owners get confused about the operational difference and subsequent business implications.
Deleting a transaction removes it entirely from the platform, and although the Audit Log may still contain some details, it cannot be restored. Voiding a transaction reduces it to a zero-dollar value and removes any associated payments. After the transaction is voided the details are retained within QuickBooks without affecting financial reporting or account balances.
While both are irreversible, deletion should only be used when the transaction was created in error. Otherwise, the transaction should be voided to abide by good accounting practices and keep the associated transactional details for future reference. Unfortunately, estimates, deposits, vendor credits, purchase orders, delayed charges, delayed credits, and bills cannot be voided. Transactions also cannot be voided in bulk, making it a potentially time-consuming process depending on how many need to be voided.
The Condense Data Tool is a way to address old transactions that streamlines the process for higher volume businesses. Condensing removes all transactions before a certain date and consolidates these older transactions. This tool is helpful for business owners that need to manage outdated transactions at scale.
Business owners looking for an easy way to clean up their books have several options:
Need help with cleaning up your QuickBooks? We can help! Contact us today!