Ten Tests for Your Books

In London, gold and silver have been tested at Goldsmiths' Hall since 1478. A little is scraped from each piece and tested. If it passes, the piece is stamped. England has required that test since 1300, and it's probably where the word hallmark comes from. The piece was marked at the Hall.

The stamp is tiny. What it tells the buyer is that someone checked, so nobody has to take the seller's word for it.

Across these posts there are nine tests like that for your business. Each one looked at one part of it and gave you an answer you could see.

A silver spoon only needs testing once. Books change every day, so the tests have to come back around. Here are all ten in one place, sorted by how often each one is worth running.

Every week

• The Next Four Weeks (Find Your Tightest Week). Update your forecast with what really happened and add a new week on the end.

Every month, once the bank statement arrives

• The Five-Minute Touchstone (The Touchstone). QuickBooks and the bank agree on the statement's last day.
• Three Places to Look. Undeposited Funds holds only recent payments, Uncategorized is at zero, and checking is reconciled through last month.
• The GET Check (GET Is Not a Sales Tax). 4.5 percent of what came in is set aside, and any invoice that adds GET uses 4.712.
• The Bridge (Two Numbers: Profit and Cash). Every line between last month's profit and the change in your bank balance is something real.
• Who Owes You. It's below.

Every quarter

• The Split (Set Up Before the Doors Open). Your percentages still fit what the business brings in.
• Profit by Service (Not Every Sale Is a Good Sale). You know which service is at the bottom, and why you're keeping it.
• Your Payoff Date (The Day It's Gone). The date is holding or getting closer.

Once a year, before your CPA starts on the return

• Your First Payday (Payday for the Owner). Your pay still fits, and the S corp question gets asked again with this year's numbers.

I put all ten on one page you can print and keep by the desk, with a box to tick each time you run one.

Try It: Who Owes You

1. In QuickBooks, go to Reports and run Accounts receivable aging summary for today. It lists every customer who owes you money, sorted by how long it's been owed: Current, 1 - 30, 31 - 60, 61 - 90, and 91 and Over.
2. Start with 91 and Over. Each amount there is one of two things. It's money someone really owes you, and that customer gets a call this week. Or it's an invoice that was paid and never marked paid, usually because the payment went in as a new sale. It's one of the most common mistakes I find, and it makes your income look higher than it was.
3. Look for minus signs. A negative amount on this report is a payment or a credit that was never matched to an invoice. Find the invoice it paid and apply it.

Healthy is most of the total in Current and 1 - 30, and no minus signs anywhere.

If you'd rather not run them yourself

Four of these tests ask whether your books are right: the touchstone, the three places, the GET check and who owes you. If you'd rather have someone run those for you, that's what my free diagnostic does. I go through your QuickBooks, including a few places that only show up with accountant access, and show you what I found, usually in two or three business days. It costs nothing, nothing in your books changes, and you don't have to hire me for anything after.

P.S. Iao has watched me write all ten. He still hasn't reconciled anything.