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Listener Mail: Revenue Recognition & Uncategorized Expenses · Unofficial QuickBooks Accountants Podcast

• Warning: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Hector: Welcome to the unofficial QuickBooks accountants podcast. I am joined by my good friend Alicia Katz Pollock, the original, the one and only Rockstar CEO and founder of Royal White Solutions. Alicia: And I have the privilege of collaborating with Hector Garcia, CPA, the founder of Right Tool for QuickBooks. Hector: And on this episode of the unofficial QuickBooks accountants podcast, [00:00:30] we're going to talk about listener mail. We got a couple of emails from our listeners, which we love to get, and we're going to break down those answers. We're going to start with the first listener mail, which says, Dear Hector and Alicia, love the podcast. I have a question, not sure if you plan to cover it now. We are. And the question is, what's the idea behind this revenue recognition feature inside QuickBooks Online Advanced? Thank you Elizabeth. [00:01:00] So I actually know that Alicia uses revenue recognition with her company file all the time. So let me ask you upfront. How do you use revenue recognition, Alicia? Alicia: I'm using revenue recognition for my subscriptions for my subscribers that I have three different levels of subscription for people who want to take all of my courses, but then they pay annually. And what that does is it gives me these giant lump sums all in one month, when I would like to see how much [00:01:30] money I'm making per subscriber throughout the year. And so I was really happy when they introduced this feature because especially for subscription based services, it's really a game changer. Hector: There are some technical definitions that I would love to go through as a CPA. It's like it's like I feel like I have to talk about this stuff. Yeah, having. Alicia: The context for this is pretty important before we go into the nuts and bolts. Hector: Exactly. So in accounting there's these things called the accounting principles. And they're the guiding. [00:02:00] They're the guiding principles, for lack of a better term, to allow an accountant make a decision in terms of how does a particular transaction get recorded in the books there is a principle called the matching principle, which is best known as for expenses. So when you have a cash outlay, you make an expenditure, you pay for something is to make sure that if you paid for that service or product and it's used and consumed during the particular period in [00:02:30] which you received revenue sort of matching that expense, then you recognize that during that same period. But if you prepay for something, you're not supposed to record that as an expense. You're supposed to record that as an asset, as a future investment, that later on is going to turn into an expense when it matches the revenue. That's the matching principle. Most accounting professionals know that pretty well. The revenue recognition principle is sort of the same, but for the sales side, revenue gets recognized when it's earned [00:03:00] and not when cash is received. These two things the matching principle for expenses and the revenue recognition for sales. These two things are sort of 90% of the accrual accounting principle. Now what does earned mean now there's tons of ways we can go in terms of describing what earned means. But I think the easiest way to explain it is you received money and you're liable for providing a service. If you don't provide [00:03:30] that service, you can refund that money, or you can be sued and the customer can get the money back. That means that the company cannot take ownership of that money. You're basically holding it. You have custody of it temporarily until you, as a company, have recognized that you have performed the service or delivered the product. What do you think, Alicia? Alicia: Yeah, it's kind of like if somebody pays you a deposit, you haven't earned it yet, so you have to hold it as [00:04:00] a liability until you've actually provided the service or done the work. So that way, if maybe the job gets canceled, you give them the money back. So it's not a liability. It's a liability. It's not revenue until you actually do the thing that's getting paid for. Now, like I said, this is accrual based that if your cash based, you take the money. When you get the money and you think about it as maybe a prepayment or a retainer to hold the holds the spot on the schedule for the services, in that [00:04:30] case, it would go straight to income. But in construction in particular, you know, we're looking at works in progress. And so it's important that your customer deposits really are held as liabilities and temporarily. Hector: Yeah. And some people some people say stuff like, well Hector, does it really matter? Because if you receive a bunch of money in December for next year's services, the IRS is going to want you to recognize that as income anyway. So, you know, why would you want to defer [00:05:00] that income? You know, if the IRS is going to want you to pay taxes on that income immediately? Well, the reality is not necessarily. And this is why there is a cash basis type of tax filing and an accrual basis type of tax filing, because you're supposed to have a consistent and it's supposed to make a change every year. It's supposed to be consistent. And as your business grows and your business moves year over year, you're supposed to have a a consistent treatment of this, but without like even like worrying about tax for a second. Think [00:05:30] about if you're going to sell your business. Right. If I call all my customers and say, hey, prepay next year services all in advance in December and I'll give you a huge discount 50%. And then I show my financial statement for last year, and I use that to try to sell my business for a higher price. I would be technically committing fraud or I would be, you know, overstating my income on purposes. I would be gaming the system. So the purpose of accountants and auditors and. [00:06:00] Accounting principles is to make sure that you go across businesses, businesses, and regardless of what the personal preference of the owner is or whatever happens to be, that you actually recognize your income when you've earned it. So you can have fair financial statements and a fair valuation of your business. Now, you talked about the subscription business that you have, Alicia, what are the industries you've found that use this this system? Alicia: Well, the whole idea with customer [00:06:30] deposits, you're going to find those in contracting. You're going to find those as retainers for law firms anytime that you're doing prepayments. And so that's where the bigger concept comes in. But this specific tool for this, this deferred revenue and for revenue recognition really falls into place for subscription based models, because with the other ones, it's determined by when you do the work. This revenue recognition tool is an automation. So you set it, you forget [00:07:00] it. And so it has to happen with periodic recognition, not based on actual service dates. Hector: Exactly. So we're going to talk about the revenue recognition feature in QuickBooks Online Advanced. But if you don't have QuickBooks Online Advanced I like to and you have to, you have to imagine QuickBooks in front of you. I want to walk you through the entire process on how you would set this up. Let's say, for example, with a consulting firm or a law firm. Okay. Let's just think about that for a second. [00:07:30] So a law firm, we'll start with the law firm. So a law firm that takes in a retainer and then one month works two hours. Another work month works for four hours. Another month works six hours. They're going to manually recognize those to those 4 to 6 hours in the month or the week or whatever happens to be that they perform the work and they're going to make an entry in that in that particular event, in order to move the money from the liability into revenue, okay. In a different [00:08:00] type of business, let's say you have a consulting business where you don't charge by the hour, you just charge a flat fee for all sorts of sort of advisory, and then you charge an annual, let's say you charge $10,000 annually for an unlimited advisory for the whole year, and you charge all that stuff in January or in December. Well, you don't have to manually create an invoice every single month to recognize a 12th of that every month. Right. You don't need to, because essentially, you know exactly how much to recognize every month, because it's [00:08:30] all based on this prepayment for a whole year, for 12 months. And you can create a journal entry every single month manually, or you can create a single journal entry and set it up for it to be a recurring journal entry. Hector: And you can essentially automate this process. Now, if you don't have QuickBooks Online Advanced and you have Simple Start or Essentials or plus, this is how this how it will work. Step one, you're going to go into your balance sheet and you're going to create an other current liability. You can call it customer deposits. You can call it retainers. [00:09:00] You can call it customer prepayments. You can call it deferred revenue. All of these terminologies should be understood by most accountants. But the key thing it needs to be a other current liability. So that's step number one. Step number two we're going to make the assumption that you're going to use the invoicing system inside QuickBooks online to get a payment okay. So you're going to send an invoice to a customer for that entire, you know, years worth of services or [00:09:30] for that retainer or whatever happens to be whether you're, you know, this flat fee consultant or if you're an attorney, you're going to send an invoice saying, hey, send me these $5,000, this $10,000 as a retainer, as a customer deposit. And in order to do that, you're going to have to create an item, a product or a service. Specifically, it needs to be I recommend we recommend it needs to be a service. An inventory item wouldn't work. Non inventory item would be confusing. So create a service item inside QuickBooks online. Call this service item customer prepayment [00:10:00] or annual payment or something like that and then point it or map it to this other current liability account. Hector: Then you create the invoice to the customer for whatever dollar amount it is you receive the payment. The minute you you create that invoice in QuickBooks, it's going to now going to debit your liability account, debit your customer, deposit your deferred revenue account. And it's going to credit your accounts receivable or your bank when you get paid. Okay. Perfect. Now that's sitting [00:10:30] there on the balance sheet. Then if you're going to use like a lawyer, where in a particular month you're going to charge two hours against a liability account, you go create a different item to recognize your revenue. So it could be called hourly fees or whatever. And that service item is going to be pointed. Or mapping to a revenue account to an income account like you normally would. And then inside that same invoice you can have two mechanisms. You can go inside the same invoice, you can use the same. Aim [00:11:00] customer deposit item as a negative and zero out the invoice. That's one way of doing it. That way you create an invoice with $0 amount. It shows up in the. It shows up in the in the statement as a $0 amount invoice. If you send it as a $0 amount invoice, depending on how your customer understands or interacts with those documents, with those invoices, they may understand that or not. So you have to be very careful about the presentation of this to make sure you don't confuse your customer. You told me, Alicia, that there's an alternative [00:11:30] way of doing this with credit memos. Like, what would be the way you would do with a credit memo? Alicia: Yeah, you could also give somebody a credit memo for that deposit and then apply it to the invoice as an initial payment. So that's a second way of really doing the same thing. Hector: But you would use a particular item in that credit memo. Right. Alicia: Same item that same customer deposits that points to the liability, which just basically takes the money back out of the liability. The difference with the two methods, if you're doing the subtraction [00:12:00] method, then you have a $0 invoice and you don't see how much the service was for the month. If you do it with the credit memo, you see the actual invoice for the monthly portion of the payment, and it shows as an invoice that the money was received on all your reports and in the in the customer list everywhere. And then the credit memo just acts as a payment. Hector: Right? And to be clear, with both methods, they would show up exactly in the profit and loss. This is more about how it shows up in maybe [00:12:30] in a customer detail transaction report or in a customer statement or in your customer center. This is more like presentation about being able to look at the history of it. Yeah, mostly. Alicia: It depends on whether you want to see the amount of the invoice or not. If you did want to see the amount of the invoice like you were about to say on the statement or on a transaction history list, then do the credit method credit memo method. If having a $0 invoice is not an issue, then the subtraction method is simpler. Saves us time. And there's. Hector: A [00:13:00] third. There's a third method for this, which I'm not the biggest biggest fan of, but it works just fine, is you would create a journal entry where you reduce that liability. You you debit that liability by whatever dollar amount you're consuming on that invoice and then you increase, sorry, you decrease by crediting your accounts receivable, making sure that you use that that customer or project in that journal entry on their customer project. Make sure you put that information in there. You create that journal [00:13:30] entry. It will create the same effect as as that negative item on the invoice or a credit memo. But then you have to go into the invoice manually, and then you have to apply that journal entry into the invoice, which is the part that most people forget to do. Alicia: I was going to say that that leads to Pebcak problem exists between chair and keyboard. It's a common problem I see because people will see that their customer has no R it, it'll show zero R, but it will show that they have open invoices. So that's the drawback. Unless until you make [00:14:00] that last step of applying the payment. Right. Hector: And as much as we dislike that method, that's actually the method that QuickBooks uses with the revenue recognition with the journal entry. The difference is it doesn't require you to go apply it. It does the application automatically. And it also locks the transaction in. And it disallows you from sort of fudging with that connection, which is sort of the key thing. So now that we understand that entire process, I do want to add one little caveat to that, which is because you're [00:14:30] running everything through a liability account, and QuickBooks doesn't have like a monitoring system to take a look at the value of that account and or how much of the specific amounts belong to a particular customer or job. There's no mechanism to warn you if the funds in that liability account have run out. Like you literally have to open up that report first. So you have to go into your balance sheet, double click on that and that customer deposits liability account, group it by customer. Take a look at the subtotal [00:15:00] for each customer. And if that customer or project happens to have credit or available balance in there, then you can use it. But there's no system that will prevent you from essentially bringing that balance to negative or that specific customer balance to negative in the liability account. Alicia, you run into that. Alicia: I actually have a little hint to add to what you just described, you know, drilling into the balance sheet in that category and sorting it by name. But here's something else [00:15:30] you can do. And I teach this in my projects class. I actually demonstrate how to do it. When you finish using up somebody's retainer or deposit, go in and reconcile the account to zero and match all of their individual payments with their lump sum payment and mark them as reconciled, which tells the system that they're complete. Then in that report you just described, add another filter to make sure that it's filtered for unreconciled. And then you only see people who have current activity, and [00:16:00] it doesn't include anybody whose deposits have been used. Hector: Now. Good thing you brought that up. I have a kind of a. Theoretical question here for you is, would you do that? If you create every sub account under the other current liability for every single customer or project, would you still do that, or would you only do that when you use a parent sort of liability account for all customer [00:16:30] projects? Alicia: Yeah, I because I've had this method of doing it, I don't make separate liabilities for each project, although I can see in some circumstances where it would be nice to be able to see it client by client or project by project. But that's not my favorite way of running a balance sheet. So that's why I have just one customer deposits liability account and then I filter it or no, I'm sorry, I group it by the customer name and then I filter it by non reconciled. So I can only. [00:17:00] So that gives me a list of only open deposits. And I can see them all in one category. Hector: Yeah. Because otherwise that list gets really really big really really fast. Yeah. Exactly. Okay. So now let's talk about QuickBooks Online Advanced and the revenue recognition feature inside QuickBooks Online Advanced. Walk us through Alicia how that works. What it does, what it doesn't do. And at the end maybe we'll chat about like what type of clients we recommend that for sure. Alicia: So I've been using the revenue recognition feature. [00:17:30] I'm actually cash based, but since we do have a subscription model, I implemented it and it gives me a chance to get my hands dirty with trying it out. So the feature has been released. I personally still consider it in beta because they're still building out some of the features about it, but basically what you do is you create a service item. It has to be a service. It can't be non inventory or inventory only services. And then down at the bottom of the product [00:18:00] there's a section for revenue recognition. So you put a check mark in it that says I recognize revenue for this product. And then you have a choice of whether it's going to be monthly or. Now I believe that they are changing the frequency so that you can have it daily as well, although most of the time you're going to want to do this on a monthly basis, for sure. It creates a liability account called deferred revenue. So slight different name for the same liability account that we've been talking about. And then you set your service [00:18:30] interval. You say okay I want this comes in monthly or it comes in annually. How often do I want to recognize it. And then you can also set the duration. So like let's say I say that I'm going to take my one annual lump sum. I want to break it up into 12 monthly installments. And then what it will do is it will put the every time that service is purchased, the entire amount of the purchase is going to go into deferred revenue. [00:19:00] And then at the end of every month, I'm going to stick with this monthly 12 month thing just to not get it confused. At the end of every month, it'll take 1/12 of it and move that to income. And it all happens automatically behind the scenes. So I'm really liking the way that it works. Hector: So it saves the journal the last journal entry adjustment essentially, or it saves creating that negative item in an invoice [00:19:30] or it saves doing that credit memo. So essentially you all you really need to do is create the one invoice. And then when you set up the item, you tell it whatever frequency you want and how to recognize it. And it does all these things for you behind the scenes. Now question how does that look like on the statement? Does it change the statement or the statement just shows the annual payment and that's it? Alicia: Well, the invoice itself just has the one lump sum payment and I actually just import ours. I have my learning management system connected [00:20:00] to stripe, which is connected to center which imports it. So whenever somebody signs up for a subscription, I don't even see it as revenue. It goes all straight to this deferred revenue liability account. And so this is one of those cases where looking at your reports, cash based versus accrual based really does matter. Because if I run my profit and loss cash based, I'm going to see the full amount of the payment as revenue immediately. [00:20:30] If I run my report accrual based, then I only see the amount that has been recognized at the end of each of the months, and the rest of it is on the balance sheet with that balance. And so, you know, for those of you who haven't explored, there's a button up under the accountants toolbox, the little briefcase up in the top that says reports options. And you can set your default, your report defaults so you can have your reports [00:21:00] run as accrual basis, even if your cash basis, which is what I do, I'm reporting to the IRS as cash based. But I want to be able to see. My annual subscribers and how much services I'm providing on a monthly basis. So I'll flip my reports back and forth to see how much money my company has made cash based, and how much I have earned accrual based. Hector: Oh, that's really interesting. So if you were to use the manual method we spoke about earlier, that's always going to go [00:21:30] to the liability account no matter what. Then you have to recognize it. The manual method is always going to be an accrual principle. Whereas with QuickBooks online advanced from what I understand is it will only revenue do the revenue recognition split if you show an accrual base? Yes. But if you switch to cash basis, it will ignore all that. And it will assume that that item hits the revenue account. Alicia: Which I love. Hector: Absolutely. Now how does it know what revenue account to hit? Um, that's. Alicia: Also part of [00:22:00] the products and service because the product and service has already been mapped to an income account. This deferred revenue is a whole separate activity underneath. Hector: Oh, okay. So when you when you create this the revenue recognition item, you you're going to map it to an income account and a liability account anyway. So it's going to use that income account that's being mapped to okay. So which which clients would this be a bad idea to try to use it for. Even if they use prepayments and customer [00:22:30] deposits, even, you know, like which would be a bad idea for like I'm thinking about this lawyer. Right. That does bespoke retainer right where it takes a couple of hours from retainer here and there. So is there another type of client you could think of? Alicia: Yeah. I mean, I would say anybody who is whip based works in progress based where you want to recognize it. You know, when the work that you're doing is not systematic. You know, you're on a retainer. And I'm going to use some of it now and some of it later, or, [00:23:00] you know, you want it. I don't think it doesn't have quarterly yet in deferred revenue. So you'll have to wait. Wait until they build that in for that one. So if it's if it's just regular automatic, that's when you would use the revenue recognition. If it is activity based then this isn't the right tool. Hector: So you want to recognize it either monthly or daily, which are the two options that it gives you. So whether you whether whether you receive [00:23:30] the money now and perform the work somewhere in the middle of the year, or it doesn't really matter if the contract states that you're paying for a whole year's worth of service, and you want to spread that evenly and automatically through every month or every day. So your your profit and loss kind of follows suit with your expenses using the matching principle and the revenue recognition principle. If a client is like that, that's perfect. But if you have to, if you if there's external events [00:24:00] like a particular activity or a completion of a project, and at that point in time you're going to trigger the revenue recognition and this is not good for them. Alicia: Yeah. Now something super, super critically important is that when you make your invoice or your sales receipt, you have to use your service date field. So you have to have service dates turned on and you have to have a date in that service field. That's what it's using to recognize the period, the initial payment. So it's not the date of the invoice. I'm going to [00:24:30] repeat that. The date of the invoice or sales receipt doesn't matter what. The only date that matters to initiate the process is the service date on the line item next to the service. So you have to turn it on to make it work. And the sender. And for sender, I've actually had to create rules to apply that, like it wasn't part of the natural import. I had to actually manipulate my sender settings. Hector: Perfect. So there you have it, Elizabeth. Hopefully we answered your question. Probably a much longer answer that you wanted, [00:25:00] but but that's that's that's our revenue recognition story. Alicia: I've got one more thing to say about it at the moment. There's no mechanism if somebody gets a refund on that service at the moment, there is no way to turn off the revenue recognition component of it. You'll have to go into the liability account periodically and manually delete the transactions, which is why I say it's still kind of in beta, but I know for a fact that they are working on that and that will [00:25:30] be available soon. Hector: Kind of in beta. That's a that's an overstatement. Yeah. I mean, these things happen sometimes. I mean, again, we're making the assumption that people prepaid for the whole year and that's it. There's no cancellations or partial cancellations, that sort of thing. There's no mechanism to manage that. Right. Perfect. Yeah. We need absolutely. So we have another question from Robin. Do you want to read that okay. Sure. Alicia. Alicia: Yeah. So another piece of listener mail from Robin. I'm loving your new podcast. It's excellent. Thanks, [00:26:00] Robin. I have a question. What's with all of the default categories that Qbo adds to the chart of accounts like unrecognized expenses and uncategorized assets? No PNL or balance sheet should have these, so why can't I delete them? That's a great question. And actually, I saw a related conversation on Facebook in one of the groups where somebody had taken their uncategorized expenses report and changed the name of it, like to no, no, no, do not use this. And there [00:26:30] was a big rousing debate afterwards, like 25 of the percent of the people totally agreed with them, and 25% were mad that they couldn't delete this account that they shouldn't be using. And the rest of us actually offered great reasons that you could use them. But what no one talked about was the actual purpose of them. And when you see uncategorized expenses, uncategorized income, uncategorized assets in your chart [00:27:00] of accounts, those are related to your banking feed. They're part of the mechanism for the banking feed. They're the default categories. If you forget to actually categorize the expense or transaction and you just click add, those are where they're going to show up. And the idea is that now you can see where they are. Because if it just happened to pick something random, if these categories didn't exist, it would be putting transactions anywhere and you might never find them. So if you see something in uncategorized [00:27:30] expense or uncategorized asset or uncategorized income, you know that somebody wasn't paying attention and they were on autopilot, and then you can go in and actually categorize the transaction properly. Hector: I might have a different take on this. So specifically on on categorize assets, I want to specifically talk about on categorize assets. And I'm going to be with that 25%. That's mad that they can't change or delete that account, because QuickBooks has a very [00:28:00] quirky mechanism for sort of like undoing a transaction that was entered through the bank feed. And many times people will take a legitimate expense, a legitimate expense type of transaction, and categorize it as uncategorized asset because that's what QuickBooks suggested and hit okay or accept. Unfortunately, QuickBooks creates a transfer transaction type, and the problem with transfer transaction types is that they don't contain a payee name, and [00:28:30] you can only use balance sheet accounts. So if you are an accountant correcting or trying to fix a problem with an uncategorized asset, there is a simple mechanism for you to say, okay, I got it. This is really an expense. Turn this magically into an expense that's not a thing. So we will have to literally delete that transaction, go back into bank feeds, and then enter it again as an expense. Alicia: And then you have to re reconcile. Hector: So there's a couple of problems with that problem. Number one, if for whatever reason somebody [00:29:00] attached a document to that, you have to manually save that document and re upload it to the new transaction you created. Problem number one. Problem number two, let's say we overlooked that uncategorized transfer on categorize asset as a transfer. The bank accounts were reconciled. Then when we delete the transaction and reenter it you got to go back and re reconcile. So until Intuit builds a built in mechanism for easily converting transfers to expenses, then I'm actually going to be 100% [00:29:30] against uncategorized assets because of this specific transfer mechanism that we have in place on categorize income and uncategorized expenses. I love those accounts. I have absolutely nothing, nothing wrong with them. And they actually also serve a higher purpose specifically when it comes to using the books review. So I know you use books review, Alicia, like how do you use books review and uncategorized expenses. Alicia: Yeah. So the Books Review has a section for finding those uncategorized expenses. And [00:30:00] in fact, you can ask your client what they are using the books review mechanism, which is really cool. So that way it sends a message to your client. They can tell you what it's for, and you can give them the ability to update the category themselves. Or you can do it. But I have a super, really cool secret for making that work. One of the problems with uncategorized expenses is it doesn't actually show you the bank detail or who the payee was, and so if you wanted to bulk assign those uncategorized [00:30:30] expenses, you would. Still have to click on each one and open it up and look at it. But if you in your banking feed, go to the tiny little gear in the upper right corner. Not of the whole screen, but just of the banking grid itself, there's an option to copy the banking detail to the memo of the transaction, and I want everybody to go in and just do that right now, that now your banking detail is in the memo of every transaction. So even if you have a restaurant [00:31:00] and you're using the payee restaurant, you can still see who the restaurant is for in your reports. And when you're doing this thing with the books review and uncategorized expenses, it does show the memo. So if you have it turned on to put the banking detail in the memo, when you go to uncategorized expenses tool in Books Review to categorize them, you can. It's a pretty cool workaround. Hector: Now, as much as I like the uncategorized expense workflow in book review, [00:31:30] one thing I don't like about it is uncategorized income doesn't show up in there. So even though it says uncategorized transactions, it's only on categorized expenses. And technically you should be able to use the same mechanism for income. Well, so that's that. Part of this like I think is a missed opportunity from Intuit. Well, but. Alicia: Think about how complex that would be, because if you have something in uncategorized income, it's one of two things. It's either a refund for an expense or it's income that did not match to your sales receipt and invoice [00:32:00] workflows. So if you have something in uncategorized income, it's a guaranteed error. And so a refund, if it's a refund, it should always just be categorized right back to the original expense that it was for. And if you're using sales receipts and invoice payments, then you should go up to the plus new button and go look in bank deposit, because there's probably a matching combination of transactions that equal that dollar amount. Hector: No, I'm with [00:32:30] you there. But if the account exists in the chart of accounts and you can't delete it, that means it serves a purpose. And if the higher purpose is to to be able to recategorize them using the the books review, but they don't show up in books review, then I kind of have a challenge with, with the logic at the end, you know? So like I totally get it for uncategorized expenses, you can't delete it because we're going to use book review for it. But if you can't use book review for income, why can't we just disable uncategorized income? That's just my comment on that. Yeah. Alicia: Well, I mean, I [00:33:00] kind of agree what it would be nice to see in the banking feed is that if it doesn't, if it's not actually categorized, then you can't add it like the add button is grayed out so that you can't just add things without actually reviewing them. So you would need some sort of logic there. Hector: That would be interesting. The challenge I see with that is if you are telling your customer that in order to interact with them as their accountant, that they have to use a chart of accounts category, [00:33:30] and it might make it harder for you to review the books, whereas if they don't know what it is, they just put it on their own categorize and you know for sure you're going to review those unless you are in the business of of auditing every single move your your customer makes, right. The uncategorized expenses could be an interesting mechanism for you to communicate with your customer. Hey, can you tell whatever you're sure about categorize here, whatever you're not so sure about. Categorize in uncategorized. Alicia: Yeah. And by doing that, you're helping [00:34:00] create a communication structure with your client. And one of the things that I've noticed is that some of the app developers are taking advantage of these categories, like there's one called Cat and keeper. Both will look at these uncategorized categories for you and bring it to your attention if something is in them. And Cat goes so far as to even give you a client portal to allow your clients to communicate with you about them, about those tools. Hector: Like keeper know keeper does it away, keeper does it as well. Yeah, actually we use keeper [00:34:30] in our firm. And what's really nice about this is the book review and it works. It works okay. But what's nice about keeper is that you have this sort of prefix questions you can ask. So you have a bunch of things under uncategorized expense. And instead of just asking your client, hey, this is uncategorized, what is this? You can give them hints like you can have sort of like pre-populated questions like, is this business or personal? Because asking someone, What is Starbucks? It'll [00:35:00] make you look pretty stupid if they don't understand the context of the question. Right? So $17 in Starbucks asking somebody, what is this customer is going to go, really? You don't know what Starbucks is. What you're really asking is, hey, is this related to the business or not? So, you know, like I never use on cats, I don't know how on cat works in that category. And with books review, the problem that I have is you can ask these questions, but you have to type it each time with with keeper you can. You have this sort of like preset bank of questions you can ask, [00:35:30] depending on the context of how you're interacting with your customer about figuring out this uncategorized expense. And so we answer Robin's question. Alicia: Yep, I think we have given Robin the information that she needs to move forward now. We love getting these questions from the audience. So if you would like to submit a question, please email us at ask at UK Podcast.com that's ask at UK Podcast.com UK, of course, stands [00:36:00] for the unofficial QuickBooks Accountants Podcast, so send in your questions and we'll address them in a future episode. Hector: Awesome. So, Alicia, what's going on in your world? Alicia: Well, I am about to release a new course that I have like practically not talked about at all QuickBooks desktop. I published a book with Kristeva Consultants that used to be used in colleges and high schools, that was part of the Intuit Education program, [00:36:30] and because Intuit Education stopped offering QuickBooks desktop subscriptions as or files as part of their program, we couldn't keep releasing the book. So Kristeva handed it over to me. So I built a brand new QuickBooks desktop course that comes with a 600 page book or PDF, and it's step by step to learn it. And I have videos of me actually teaching all of the work, so we're really excited. It's [00:37:00] it's ironic, but we are completely excited to be releasing a QuickBooks desktop course. And how about you, Hector? What's going on in your world? Hector: Well, we are very excited about QuickBooks connect. We have a right tool party, really a meetup on Sunday before the event starts, we did a Eventbrite invitation for up to 100 people, a quote unquote sold out. There was no price on it, but. So we should have a full house of right to use. Officers hanging out [00:37:30] at QuickBooks connect in in the Aria Hotel. So excited about that. And since we're talking about this actually technically not new, but since we're talking about this uncategorized expense concepts, we a couple of months ago would say, like right before summer of 2023, we released a feature Inside Right Tool Pro where we can ask ChatGPT. So like if you're categorizing something and you're not 100% sure how to categorize it. And again, I'm not saying that ChatGPT is better than an accountant, not in any way, shape or form. [00:38:00] But sometimes you have this like random vendor name where you have to do some deep googling to try to figure out, decipher what it is, and sometimes by clicking ask ChatGPT and only the payee information and the amount gets sent to ChatGPT with no other context about the business. And it asks, hey, what might this be? And then sometimes ChatGPT can have an interesting answer and help you categorize that. I'm all for sending our clients questions about, hey, what could this be? Help us out because it should be a collaborative approach. [00:38:30] But in my experience with a bookkeeping firm, some customers get annoyed, you know, like they in their mind, it's like, why am I paying this bookkeeping firm? If every month I get 25 questions, it feels like I'm doing the work, even though even though contextually like they're the only ones that could tell us why they spend the money, but in their mind, they're paying for somebody else to take over that responsibility. So sometimes as a bookkeeper, as a power user, I prefer to try to figure things out on my own, [00:39:00] or at least have a good best guess prior to asking the customer. So that's why we created this built in feature to ask ChatGPT for expenses. Alicia: Pretty cool. Yeah, that's pretty handy. All right. I think we're good to go. Anything else to add for today? Hector: That's it. Thank you for tuning in. Send your listener mail and we might answer it at the unofficial QuickBooks accountants podcast. Bye, everybody. See you at the next one.