Integration vs Journal Entry
In previous articles I made the case why handling “client facing” accounting transactions in Studio Manager is a great benefit to the studio and the clients. That said, you still need to produce financial statements and tax returns from your accounting system. So how is this best accomplished?
I often get asked if Studio Manager “Integrates” with third-party accounting systems like QuickBooks. In practice this would mean an automated process to export transaction level data from Studio Manager and import it into an accounting system.
It’s not technically difficult, but I question the underlying premise. Why does the transaction level data need to exist in two systems? Is it important to have identical Client lists in Studio Manager and the accounting system? Is it important that every invoice exists in two systems? There is no accounting reason, as long as the transaction detail is available somewhere.
When you maintain transaction level data in two systems you create a work requirement to keep them in perfect sync.
Applications like QuickBooks are not designed for integrations because they lack features like “Batch Import”. Batch import allows a block of transactions (like a month of invoices) to be imported on a provisional basis. You can review the import before posting and reverse the import if there is a problem. In QuickBooks you import transactions and they post immediately. If there is a problem, you may have to manually reverse every transaction.
The process I recommend is using aggregated Journal Entries to post monthly revenue and individual Journal Entries to post client receipts. Studio Manager produces detailed PDF reports that can serve as backup for the Journal Entries.
Monthly Journal Entry to Post Revenue
Sample Entry – July 2022
Daily Journal Entry to Post Client Receipts
In the accounting system, receipts should be posted individually to make the Bank Reconciliation easier. Studio Manager provides a “Payments Report” which breaks down the credit card payments which are deposited lump sum to make the process easier.
Sample Entry – July 8, 2022 Receipts (Three Individual Checks Totaling $3,375)
Balancing Studio Manager and Accounting
How do I guarantee that Studio Manager and the accounting system are in sync? By performing two standard monthly accounting procedures:
- Reconcile Accounts Receivable in Studio Manager to Accounts Receivable in the Accounting system.
- The monthly Bank Reconciliation will confirm that the client receipts have been reflected correctly in both systems.