A CNN Money web article published on 4/5/12 states:
“QuickBooks and TurboTax are near monopolies, with a retail market share of more than 90%, according to NPD Group, a market research firm.”
(Click here to read the article titled “How Intuit Rules Your Books”.) Intuit has over 4 million customers using Quickbooks®. Although there are other very good small business software available such as Sage 50 (formerly Peachtree), Quickbooks® is the dominant player. (Thus this article will focus on Quickbooks® and use this term to include editions from Quickbooks Pro to Enterprise.)
Intuit has been very successful with Quickbooks®, as indicated by the size of its market share, due to providing a lot of functionality for a very low price; thus a great value. In my opinion, Quickbooks® primarily services businesses with revenues below $15 million with the majority being below $10 million.
In my prior corporate career (before being a CFO 4 Small Biz TM Consultant), the companies for which I worked utilized much higher level (ERP) software to run the business. Even using higher level software, there was still a need to use separate financial reporting software because the report writing software provided so much more capability than that included in the ERP software.
This is no different with Quickbooks®. The basic reporting in Quickbooks® for businesses with revenues below $2 million is probably adequate and in many cases is being done on a cash basis. However many businesses in the $2 million to $15 million range have greater financial reporting needs. This can be accomplished by using Intuit Statement Writer (ISW) which is available in the Accountant and Enterprise editions. See for ISW requirements. However you don’t need to own ISW if you are a CFO 4 Small BizTM client using the monthly financial management service (gold or platinum level).
It is important in running a business to get cost and expense information to be properly classified. Certain expenses, such as facility cost, business insurance, etc. can pertain to several different functions. Facility cost can pertain to operations, sales and marketing, and administration. To properly analyze the results of a business, it is necessary to have these expenses properly classified. One issue with Quickbooks® is that an account’s subaccounts must have the same account type. You can have a primary account called facility expense with three subaccounts for the three different functions (Operations, Sales & Marketing, Administration). The problem is that all of the three can only be a type “Expense” or “COS” depending on the account type of the primary account. The solution is using Intuit Statement Writer because ISW allows for the ungrouping of subaccounts. Then the subaccounts can be placed in any row area on the statement. This also allows for the use of allocation accounts. I have always used allocation accounts during my career to get a proper costing flow for financial reporting.
Also income statements should not be longer than one page. (Most Quickbooks® income statements are a dump of the P&L accounts with too much information. My eyes glaze over looking at them since only two numbers in the data dump have meaning that stand out – revenues and net profit.) ISW also allows for the combining of accounts making financial statements easier to use.
Using Intuit Statement Writer, I can provide financial reporting in a manner used by larger companies with the resulting benefits. Financial information becomes useful in making decisions to operate the business. The primary use of financial statements is for internal purposes; providing information to the bank should be a secondary purpose.
As I noted above, my clients do not need to have the Intuit Statement Writer software because I can generate their statements using ISW. Being a Quickbooks ProAdvisor, I have the Intuit Statement Writer. Thus I can upload a client’s database through a secure server, generate a full financial reporting package including analysis and have a financial results meeting with the business owner either on-site or using technology such as WebEx or Go to Meeting.
Using Intuit Statement Writer allows Quickbooks® users the ability for excellent financial reporting. I am not affiliated with Intuit other than being a ProAdvisor for which I pay a fee. I am a supporter of ISW because I am a proponent of using financial information for running a business to maximize profits. I serve businesses below $25 million in revenues.
Every Company Needs Financial Guidance®
Is yours exceptional?
If not, contact me.
Dave Mayo, CPA, CGMA
Founder & Partner
CFO 4 Small Biz TM