 zero accounting software customer revenue or accounts receivable cycle get ready to be an office hero with zero here we are in our custom zero homepage we set up in a prior presentation I'm gonna zoom in a bit by holding control and scrolling up on the mouse wheel to 175% zoom in support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page we also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable so once again click the link below for a free month membership to our website and all the content on it we will be opening the demo file but I'm gonna reset the demo file to its original data and that will open up the demo file once done resetting gonna hide the little item up top we're gonna be opening up the major financial statement reports balance sheet income statement as we do every time by right clicking the tab up top and duplicating it second tab I'm gonna right click on it and duplicate it again going back to the middle tab let's go to the accounting drop down reports and we want to be opening up the balance sheet which is a favorite it must be a favorite if you do not have it as a favorite there's something wrong with you it's sort of favorite report accounting drop down again reports and then we're gonna have the other favorite the income statement and the middle tab the balance sheet tab we're gonna change the date on the drop down customizing it and we want to bring that to 2022 and there it is I'll update it refreshing that we're at 175% on the zoom in so that looks good and then on the first tab back to the first tab we're gonna be looking at now at what we might call the revenue cycle the customer cycle the receivable cycle the cycle which at the end of the day should result in money coming into the business from customers for goods and services being provided now like with the vendor cycle if I hit the drop down many of the forms that facilitate the journal entries that then create the end result financial statements and related reports are here those forms being an invoice for example and of the receive money forms for example however it's useful to think about the flow and the flow could change depending on the type of industry we are in so to consider the flow let's first jump on back over to our flow chart and just think about the flow of the normal forms in a standard a standard kind of revenue process or accounts receivable or sales cycle so at the end of the day we expect to have a deposit going into our system increasing our checking account from customers for goods and services now the easiest kind of system we could have and it will be dependent upon the industry we are in is if we could just set up the bank feeds for example and allow the deposits to come in and then just record the deposits from the bank feeds as revenue increase in the checking account increase in the sales at that point in time that would be great but there's only you can only do that in certain industries so if you gig work or something like that if you get paid from YouTube and you just wait till they pay you and then you record it as revenue that's a nice easy system that you can basically just be dependent on the bank feeds and and use that although you do lose a little bit of flexibility with some of your sub reports because the deposit form is not generally designed to record revenue the the forms generally designed to record revenue is like a received payment or an invoice you you either have an accrual kind of transaction where you have an invoice or you're getting paid and like a cash register type of system you know at the same point in time so in this case you're getting paid directly from a bank feed transaction possibly from like a platform and therefore you use the deposit so you're gonna lose some detail for like items for example sorting the sales by item sorting the sales by customer possibly but might be well worth it if you have the kind of business where that would be easy to do now that's not a full service accounting system however because now you're depending on the bank to record your transactions instead of recording them first and double checking them to the bank even a cash based system will usually enter the items into your system before they clear the bank like a check like a cash register situation you can imagine you're entering the sales into the system as you are receiving them and then you're gonna deposit them into the bank and then you're gonna reconcile in some way possibly with the use of the bank feeds is the typical way that would go so even a cash based system if you have a cash register is going to is going to be a little bit more difficult than just waiting till something clears the bank usually because you want the internal controls of counting your receipts in the that you've made in the system versus the cash that you're counting and then make the deposit yourself right you want those internal controls typically unlike if you just got paid by YouTube or something right which which it is what it is at that you know and then if you are on an accrual system then you're that would be like a bookkeeping firm landscaping firm for example or something like that law firm then you're gonna have to build the client which we call an invoice remember the differences between these terminologies usually with the accounting software we think of an invoice as what we do to bill the clients right so you can again you can use those terms kind of interchangeably I'm invoicing I'm billing the clients whereas the bill is something even though we build the clients from a software perspective usually is the data input form for when people bill us for work they did for us as the business for the vendors billing us so what you got to keep the terminology straight in terms of which side of the table we're on if we have to then enter an invoice that's going to record revenue and it's going to be recording the accounts receivable then we're gonna have to track the accounts receivable and then collect the money on the receivables and then deposit it so that accrual system which would be determined on the type of industry that you're in whether you have to use an accrual system or not will make the bank feeds a little bit more difficult as well we'll talk about bank feeds hopefully we'll have a whole section on bank feeds but but notice if you have an accrual component it's gonna be a little bit more complicated to see where the bank feeds fit into the process and the accrual component the accrual transaction this first one for example doesn't have any cash related to it at all and then of course if we add inventory into the mix that's going to confuse things as well because now we have to track the inventory in some way either a periodic inventory system as we talked about on the vendor side when we purchase the inventory or a perpetual inventory system a periodic system would be one which we record just the purchases but we don't track within the zero system accounting system the actual units that we're purchasing and then we possibly track that somewhere else outside on Excel or something and then we do a physical count possibly at the end of the day week month and we make a periodic adjustment reducing inventory and increasing cost to get sold and expense depending on that adjustment that's a little bit easier in some ways to set up but you don't have that automatic tracking within the zero system or you can have a perpetual inventory system where you have to set up the items and then the items will be tracked on a sub ledger supporting the balance sheet account of inventory telling us what units we purchased how many units we have and then when we sell we're gonna have to sell using an invoice or a sales receipt kind of form as opposed to just waiting till something clears the deposit because inventory is gonna kind of muddy up the process I have to use the forms designed for inventory generally so keeping that flow in mind you got to think about what kind of business that you are in that you're going to be dealing with the and then you can go into these major forms which if you're invoicing clients when you build them you can create the invoice form if you're receiving money then you could just record the receive money form you could think about how the bank feeds are gonna fit into there which once again we'll talk about in a future presentation and then if you're tracking the accounts receivable which is quite common even for small businesses if you're in an industry where you have to deal with accounts receivable then you can go into the businesses drop down and look at your receivables here and we'll talk we'll dig more into this in a future presentation it's similar to looking at the bills kind of section and we'll dive into that more and you might have to be dealing with the contact list for your customers and that this will be tracking you know who owes you money and so on from a customer by customer standpoint and on the balance sheet you're gonna have to deal with the accounts receivable account representing sales that we made but which we have not yet received any money on and then there's subsidiary reports to that telling us who owes the money and we'll talk more about those those reports in a future presentation but if you're on a cash based system then you won't have any receivables and of course that'll be a more simplified type of process whether you're on a cash based system or a cruel based system is not simply up to you it's not like you can just say I'm just I'm just gonna do in a cash based system because it's easier well if you have to build the clients and then collect them in the future because you're in a bookkeeping company or a law firm or something that's just the way it is for that company well then no you don't have really the choice to do that because it's not gonna fit the kind of industry that you're in right so if you're in an industry where you can do that like I'm just collecting money from a platform or something like that well then great you know that that system will work so you got to see the industry you're in there's a reason there's industry standards usually that's because logistically those standards work and so then you gonna want to know what the industry standard is do they use an accrual or cashed based system why do they use that would be nice to know as well instead of just implementing it blindly and then you can have a have a understanding of your path forward and why it's why you're doing what you're doing so we'll talk more about that in future presentations