How QuickBooks Helps Micro Lenders to Track Expected Cash Flows

A microlending or credit finance company is a business that provides quick personal or business loan to its customers and in return earns interest on the loan. This type of business requires proper documentation of the names of customers, loan disbursed on a daily, weekly and monthly basis, payback period and alongside the expected interest return.

While excel seems to be popular among microcredit finance especially in the area of calculating the interest receivable on this loan, QuickBooks financial software lets you keep a proper record of your reports showing customers and loan receivable balance, interest income, profit or loss, balance and cash flow statement.

As of this update, we are currently deploying QuickBooks accounting in a fasting growing consumer loan and credit finance company, so it’s usual for us to share brief details about the projects and how we have successfully set opening balances for onward transaction entries.

Customers and Loan Balances

Before the project kicks off, we sent a mail requesting the list of all customers and their loan balances. The balances are posted to the loan receivable balances so you can easily track the expected cash flow from your customers and follow up on overdue balances.

For clients with over 100 customer base, the import section of QuickBooks makes it easier to quickly migrate the customers and how much is expected from them as at a selected closing balance date.

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Why You Need an Expert for your QuickBooks Pro, Premier & Enterprise Implementation

Two weeks ago, we received an invite from one of the reputable Transport and Haulage Companies in Nigeria. This company is a group with three (3) subsidiaries: one is a spare part importation and engineering department, the other provides transport services while the third provides logistics services to FMCGs.

The three (3) departments use QuickBooks Enterprise to manage and track cash flow on a daily basis. However, there are some challenges: improper posting of transactions that resulted in several imbalances, and wrong ending figures in the books of account.

In resolving this, we conducted a full review of their QuickBooks entries and discovered that despite the fact they have been using the software for more than 5 years, their transactions were not treated the way they ought to be treated in the accounting software. This, coupled with similar challenges from clients in other industries, led us to conclude that a lot of QuickBooks users in Nigeria are neither exploring nor maximizing the full potentials of the software. We have reviewed QuickBooks Chart of Account, from real estate to hospitality, oil and gas sector, manufacturing, retail, credit company, etc., and we found out that there were irregularities in the Books of Account.

What we found in their books of account:

Upon review of the company’s QuickBooks accounting software, we discovered the following irregularities on the file that manages the transport service section:

  • Wrong Set-up of the branches and the buses under management.
  • The sales of tickets and branch expenses were wrongly treated.
  • Cash deposit by various branches cashier into the bank was wrongly treated.
  • Bank balances were in red, indicating that such accounts were overdrawn.
  • Cash deposit on tickets sold for the day was not sent or attached to the sales receipt for validation.
  • The Class list did not represent branches and as such, profits or losses by branch report were not available.
  • Reconciliation of the bank statement will not be easy if “write check” window is used for the cash deposit.
  • The customer balances’ did not reflect the actual position of the company

Continue reading “Why You Need an Expert for your QuickBooks Pro, Premier & Enterprise Implementation”

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