The most basic – but incredibly important – managerial skill you need to develop in your business is the ability to make intelligent, data driven decisions. The challenge with this goal is your decisions are only as good as the data you have available, meaning data quality control is a fundamental component in your ability to master (unemotional) business decision making. To put this in context, Larry P. English, an international expert in data quality, says in his book, Information Quality Applied, poor data is costing the average organization 20% to 35% of its yearly revenue (not chump change by any means 🤯)!
So where does the above leave us? Well at Check The Level (“Level”) we use your financial data to help you with the most important decision in your business, pricing your jobs! So, we’ve built the Daily Report to ensure your financial data meets world-class quality standards, leading to more confident business decision making within your business, and improved profits. Here’s how the Daily Report works...
Who receives the Level Daily Report
Your Level Daily Report is emailed every weekday at 6pm your local time, and if there has been activity in your Level account over the weekend, it will also be emailed during the day in which there was activity.
Like with the Level Scoreboards, the Daily Report includes some of your QuickBooks Online ("QBO") data, so this means only users with Company Owner (⭐) and Bookkeeper (📖) permissions receive the Daily Report email. Bookkeeper permissions are reserved for Level Bookkeepers, but if you’d like to give someone on your team Company Owner permissions or have questions about your Daily Report, email us support@checkthelevel.com and we’d be happy to help.
Level Activity for the Last 24 Hours
The first section of the email details all the new Leads, Projects and Financial Transactions that have been created or uploaded to your Level account in the last 24 hours.
There are 2 components to high quality data: Accuracy, and Timeliness. This section of the report is a great way to monitor if your team is uploading financial transaction data into Level in a timely manner.
Level Time Entries for the Last 24 Hours
In this section of the report we show you the total crew hours added to Level within the last 24 hours, the total number Time Discrepancies within the last 24 Hours, and crew members who are still clocked into Level projects at the time when the Daily Report is generated.
Seeing the total hours your crew has worked in a day, helps you monitor how busy you are keeping your crew, or whether someone has forgotten to clock-in for the day.
Time Discrepancies refer to instances where the time on the timesheet is different from the time at which the time entry was created. For example, if someone forgot to clock-in and their timesheet is subsequently edited, this edit would count toward your Time Discrepancies within Level. Time Discrepancies are a great way to see whether your team needs any additional support or training on how to use the time tracking processes you’ve set up within your organization. You can find more information about your Time Discrepancies in the Time Tracking admin module (see image below).
QuickBooks Online Activities for the Month
IMPORTANT: This section of the Daily Report email and the sections that follow are based on the data that has been booked within your QBO account. For example, any bank transaction data that has been brought into your QBO account, but not booked/categorized to a cost code, will not be counted in this report. If you are signed up for Level Bookkeeping, any transactions in your Requests For Information (“RFI”) will also not be included in the QBO sections of this report until you've provided responses to your RFI.
Staying on top of the invoicing and collections within your business helps you make sure you have cash coming in at the end of the day. So, the QuickBooks Online Activities for the Month section of the Daily Report helps you monitor your business’s sales activities by providing you with the following information:
The amount and number of sales invoices issued for the month
The amount and number of invoices you’ve collected payments on for the month
The amount and number of credit memos and refunds you’ve issued for the month
QuickBooks Online Transaction Volume for the Last 60 Days
QBO transaction volume refers to the number of transactions booked within specific QBO reports. This helps you monitor how up-to-date your QBO account is.
The General Ledger is a report that details every single transaction in your QBO Account. The Profit & Loss report details all the revenue, cost of sales (“COS”), and expenses incurred within your business. The bank account and credit card sections of the Daily Report shows you how often cash is being transferred within your business.
QuickBooks Online Health Check for the Last 60 Days
Okay so strap on your accounting seat belt, this section is going to get pretty nerdy, but just know it provides incredible surety that your QBO data and Level Scoreboards are accurate and complete. With this in mind, use this section of the Daily Report for process improvement within your organization. If you have any questions about this section of the Daily Report, feel free to reach out to your Level Accountant or email us at support@checkthelevel.com.
Given the importance this section of the Daily Report has on the reliability of your numbers, before we dive into it, it’s worth mentioning again all QBO sections in the Daily report are based on the data that has been booked to financial codes within your QBO account. For example, any bank transaction data that has been brought into your QBO account, but not booked/categorized to a cost code, will not be counted in this report. If you are signed up for Level Bookkeeping, any transactions in your Requests For Information (“RFI”) will also not be included in the QBO sections of this report until we’ve received your responses to the RFI.
Below we’ve outlined information about each of the line items in QuickBooks Online Health Check for the Last 60 Days section of the Daily Report. Your goal should be to keep each of these line items as close to zero as possible, and if they are not at zero, a reason as to why should be researched and noted. By keeping each line item as close to zero as possible, you can be confident in the accuracy and completeness of your QBO data and Level Scoreboards.
Transactions Booked to Parent Customers
Job costing (also known as back-costing) within your accounting software has proven to increase the likelihood of your business succeeding by up to 90%. This is because job costing within your accounting software provides insight into how you are managing cash flow on your jobs, and whether you are pricing your jobs correctly.
The challenge with job costing within QBO is it’s only possible through sub-customers or projects. What this means is when transactions are booked against parent customers in QBO, they aren’t included in the job costing calculation. So the purpose of Transactions booked to Parent Accounts line item in the Daily Report is to highlight any transactions that have not been properly included as part of a job’s revenue or costs.
The most common errors we see are estimates and sales invoices being applied to parent customers as opposed to sub-customers or projects within QBO. It’s an easy mistake to make, but thankfully there is an easy way to prevent it by double checking the customer name has a “:” when you create the estimate or sales invoice. This is because QBO’s naming convention for sub-customers or projects is “Parent Customer:Sub-Customer”, e.g. Thomas Shelby:Estate Renovation.
To learn more about the different types of customers in QBO, and how to fix transactions booked to parent customers in QBO, watch this walkthrough video.
To pull a report of all the transactions that make up the Transactions Booked to Parent Customers follow these steps:
Log into your QBO account and click “Reports” on the far left
Scroll to the bottom, and under the heading “For my accountant”, click the “General Ledger” Report
Scroll to the top of the report and click the “Customize” Button
Customize the report by:
Setting the “Report period” to “Since 60 Days Ago”
Setting the “Accounting method” to “Accrual”
Click on “Rows/Columns” and check the “Customer” box
After customizing the report, click “Run Report” on the bottom right of the screen
Scroll to the top of the report again, click “Save Customization”, name the report “General Ledger with Customers” and click “Save” (the report is now saved so you have quick access to this custom report in the future)
Export the Report to Excel
Open the Excel document, and delete the first 4 rows of the report
Highlight columns A to K, right click and select “Copy”
Create a copy of this GSHEET called Transactions Booked To Parent Accounts, and follow the instructions within the document to get a breakdown the the transactions booked to parent customers
Transactions Booked to Parent COS Accounts and Transactions Booked to Parent Expense Accounts
If you use sub-accounts in your Chart of Accounts (see Active QuickBooks Online Accounts Created in the Last 7 Days for a Chart of Accounts definition), these line items in the Daily Report keep track of transactions booked to parent expense and cost of sales (“COS”) accounts. This is helpful if you don’t want any transactions booked to parent expense and COS accounts.
Journal Entries Added
Journal entries are a required transaction type in most businesses, but when you get audited, one of the first things the auditors do is pull a report of all the journal entries posted in your accounting software. This is because journal entries are a great way for hiding messes and fraudulent activity in your books. This is why it’s always important to keep journal entries to a minimum in your accounting software, and this line item in the Daily Report helps you monitor this.
Unspecified COS Transactions
Cost of Sales (“COS”) is defined as any direct costs spent on delivering a good or service. Direct costs in construction are defined as costs that can be easily and conveniently traced to a project or job. So what this means is all transactions booked to COS in QBO should be assigned to a sub-customer or project because these are costs that can be easily and conveniently traced to a job through your estimates. Examples of direct costs include field staff wages, material, and subcontractor costs.
With the above in mind, the Unspecified COS Transactions within the Daily Report identifies any COS (i.e. direct costs) that have not been assigned to a customer or project within your QBO account. The primary benefit of this is that it prevents the understatement of costs within your job profitability reports.
If you’d like to see a report that provides a breakdown all your Unspecified COS Transactions, please follow these steps:
Log into your QBO account and click “Reports” on the far left
Under the heading “Business overview”, click the “Profit and Loss by Customer” Report
Scroll to the top of the report and click the “Customize” Button
Customize the report by:
Setting the “Report period” to “Since 60 Days Ago”
Setting the “Accounting method” to “Accrual”
Click on “Filter” and from the dropdown menu next to “Customer” select “Not Specified”
After customizing the report, click “Run Report” on the bottom right of the screen
Scroll to the top of the report again, click “Save Customization”, name the report “Unspecified COS Transactions” and click “Save” (the report is now saved so you have quick access to the QBO report in the future).
After completing the above steps, you’ll have a report that details all the transactions in the last 60 days that have not been assigned to customers or projects within your QBO account. Only focus on transactions that are part of Cost of Goods Sold, because transactions classified as “EXPENSES” are not required to be assigned to customers or projects.
Uninvoiced Cash Collected
Best practice is to have all sales invoices or sales receipts in your QuickBooks Online account, because (here's that scary word again) if you get audited, you will be asked to provide the sales documents for the amounts captured as sales within your business. Uninvoiced Cash Collected in the Daily Report highlights all cash collected in your business that has not been applied to a Sales Invoice or Sales Receipt within QuickBooks Online. So to keep this number immaterial, make sure you are creating sales invoices or sales receipts within QBO, and applying the customer payments to those documents.
Uncategorized Transactions
QBO comes with several suspense accounts. As the name suggests, suspense accounts are accounts in which transactions should only be temporarily posted to. The Uncategorized Transactions within the Daily report provides a summary of the transactions posted to the following suspense accounts within QBO: “Uncategorized Asset”; “Uncategorized Income”; “Uncategorized Expense”. The primary benefit if the Uncategorized Transactions in the Daily Report is it helps you keep track of transactions that have not been accounted for in your QBO account correctly, letting you know how reliable your reports are.
Unapplied Cash Bill Payment Expense
Unapplied Cash Bill Payment Expense is an account that only shows up when you run the Profit & Loss report in QBO using the cash accounting method, and one of the following events has happened within QBO:
You’ve paid a supplier before you’ve received or input the bill into QBO
You’ve entered a bill payment in QBO but not applied it against a bill
Paying suppliers before you receive the bills is a cash flow risk, and if bill payments are not being treated correctly within QBO it will skew your accounts payable aging summary. To see how to correct Unapplied Cash Bill Payment Expense amounts, checkout this article from QuickBooks.
Unapplied Cash Payment Income
Like the Unapplied Cash Bill Payment Expense account, Unapplied Cash Payment Income is an account that only shows up when you run the Profit & Loss report in QBO using the cash accounting method, and one of the following events has happened within QBO:
A customer prepaid you and you recorded the payment before creating the sales invoice or sales receipt
You entered payments without matching them to a sales invoice or sales receipt
The major risk Unapplied Cash Payment Income has on your accounting data is that it compromises the accuracy of your accounts receivable aging summary, meaning you can’t use QBO to reliably determine what invoices are outstanding from your clients. To see how to correct Unapplied Cash Payment Income amounts, checkout this article from QuickBooks.
Active QuickBooks Online Accounts Created in the Last 7 Days
When you sign up for Level Bookkeeping we set you up with the Level Chart of Accounts, which is built for construction. What is your Chart of Accounts? Your Chart of accounts is an index of all the financial codes within your accounting software. You can think of your Chart of Accounts as the financial dictionary for your business, because it provides context to all the financial transactions your business incurs. If you’ve ever looked at your Profit & Loss statement and thought “this makes no sense to me”, it’s very likely it’s because you are not using a Chart of Accounts tailored to your business or industry (it’s like going to an English class with a German dictionary, of course the dictionary won’t make sense).
Since your Chart of Accounts provides context to all the financial transactions within your business, it’s the foundation on which your financial reporting and analysis is built upon. For example, the Level Chart of Accounts clearly separates job costs and overhead costs to allow for quick insights into whether you are correctly pricing jobs. Given the importance your Chart of Accounts plays in your ability to make intelligent business decisions, adding any new accounts requires careful thought. For this reason, the Active QuickBooks Online Accounts Created in the Last 7 Days section in the Daily Report helps you stay on top of any unapproved accounts created within your QBO account.
In Summary
We all strive toward running our business by the numbers, because it helps remove the emotion from business decision making, and makes our business more predictable. The challenge you face in trying to do so is being confident in the accuracy of the numbers on which you are making decisions from. By implementing data quality control processes, like this Level Daily Report email, you can sleep easier at night knowing your data is accurate, and if the Daily Report is telling you it's not, feel free to email us at support@checkthelevel.com, and someone on our team would be happy to help you out.