Why only Quickbooks Online?
When we started developing our integration, we spoke with Intuit’s team to figure out the best way to put our development brains to work. Intuit discontinued the REST API for Desktop in 2016, and is pushing all new integrations toward online-only. In addition, almost all services for Quickbooks Desktop 2014 were deprecated at the end of May 2017, and while users can upgrade to Desktop 2017 Intuit is strongly encouraging a switch to Online instead. Rather than fighting the tide, we decided to follow their direction and integrate with what they say is the most widely-used version of Quickbooks.
But I hate the online version.
You aren’t alone, so we’ve compensated for a lot of the things QBO isn’t great at, like inventory management. Because DISTILL x 5 is designed to be your primary production management system, we’re taking care of the production-focused heavy lifting, then sending the relevant values to Quickbooks to keep your accounting team on the same page as the production team. This applies to packaging, as well; rather than building assemblies in Quickbooks, just run your packaging and watch the value of your supplies magically add up to a bottled cost.
What do you mean? What doesn’t QBO do?
The biggest thing Quickbooks doesn’t do is manage inventory well. QBO does not support variable unit costs, so to properly calculate batch cost, Dx5 should serve as the primary inventory manager with Quickbooks holding only the value of inventory in the appropriate account, rather than the quantity of each item. This applies to both raw materials/supplies inventory and finished products.
Raw materials and supplies receipt and usage will always appear as an account-based journal entry for the amount of the transaction. For example, if 500 units are received at $0.27/unit ($135.00), Quickbooks will display a receipt of 135 units at $1.00/unit. Likewise, if those same 500 units are used in a batch, QBO will display a journal entry for the transfer of $135 of value from one account (ingredients) to another (work-in-progress). Please see the Dx5+QBO Manual for more details on these transactions.
For finished products, DISTILL x 5 will, when able, update the quantity of a given item on hand after additions or depletions in Dx5, for example with a bottling or sales order. These quantities can only be updated if a user has a Quickbooks Plus subscription – Simple Start and Essentials do not include inventory tracking. As with raw materials/supplies transactions, the value of finished product transactions will be reflected by journal entries on the account level, rather than for each individual product.
How does DISTILL x 5 “talk” to my QuickBooks Online account?
The Dx5+QBO integration is push-only; that means that while Dx5 talks to QBO, it doesn’t receive information back (much like a talking to a teenager). The communication is live, so as soon as a Quickbooks-affecting action is completed in Dx5, Quickbooks receives the information and acts accordingly.
Can I restrict who has access to Quickbooks stuff?
Only an administrator in both Quickbooks Online and Dx5 can enable the integration and change its behaviors. At this time, however, all users can see batch and inventory values throughout the system.
Can I change the accounts to which Dx5 is pointing?
No, but you can easily reassign transactions once they get to Quickbooks. Keep in mind that if accounts in Quickbooks have exactly the same name as what we’ve pointed to we’ll just grab that info. If you have similar accounts without the same name, think about renaming before integrating.
I don’t want to reenter my Dx5/Quickbooks contacts in the other system.
We don’t blame you! The integration flow includes a matching process for contacts and finished products.
What does this change about my production process?
The biggest change in process flow is on inventory receipt. To generate average inventory costs, all materials (ingredients and supplies) must be received into Dx5 via the Inventory PO system. Adjusting materials should be reserved for actual adjustments – when inventory is found or lost. Adjusting ad hoc, whether up or down, will have implications for unit costs.
Additionally, distillation collection batches will be unavailable until the distillation batch is complete. This is necessary to determine the total batch cost of the collected spirit, so we aren’t logging losses for stillage. As soon as the distillation batch is marked as complete, you can move on with your batch. This necessarily puts a limitation on continuous distillation.
There is no way to turn off either of these requirements.
Can I decide what I do and don’t want to send to Quickbooks?
Nope. It’s an all-or-nothing deal. Your accountant would love to explain why.
How are you calculating batch costs?
We’re capturing a rolling average for each inventory item, and using that as the basis for batch costing. In cases of bulk spirit use, the batch cost is reflective of the purchase cost entered when spirit is brought into the system.
Why an average? Why not FIFO/LIFO/something else?
After discussions with accounting professionals and distillers, we determined that inventory averages would provide the most accurate and useful data for batch costing, as spirit is so commonly blended that lot-based purchase prices become largely irrelevant.
Can I track by lot anyway?
You certainly may. You’ll just need to create a separate inventory item for each lot received.
What if I already have inventory in the system?
You may add a total inventory value to any existing supply or raw material inventory item via Item Actions – Edit Item. This is then used to determine the average unit cost of existing inventory, which will be adjusted as materials are received moving forward.
How do I account for freight?
We’ll be building out freight options in the future, but for now you have several options:
- Count freight as an operating expense. Enter the freight cost directly into Quickbooks, not DISTILL x 5.
- Divide freight by the number of weight units received. Divide the freight charged by the number of units received, then add that number to the per-unit cost of each material.
- Assign it to one inventory item. Divide the freight charged by the number of units of that material received, then add it to the per-unit cost of that material.
How are you dealing with aging/labor/overhead?
In short, we aren’t. Aging is a calculation that each distillery determines internally, so there is no universally-accepted way for us to account for spirit appreciation. We don’t require time keeping in Dx5, nor do we ask for depreciable asset values, so there’s no way for us to include labor or overhead.
Cool. What about reporting? Can I see my batch costs on operations reports?
Not yet, but it’s on the horizon. For now, inventory costing on inventory reports is much smarter - you can see your batch costs on the inventory report. You can also see your barreled batch costs from the barrel overview list. We’re working on adding individual batch costs to all reporting going forward.
Do my existing batches get a value?
You can assign a cost to a batch that does not have a value, or revalue a batch with an existing value by selecting into the batch, then select Batch Actions / Edit, then enter the cost - you have the option to push the updated cost to Quickbooks or not.
Are barrels included in batch costs?
Because barrels vary in use/reuse by distillery and are a depreciating asset, we’ve elected to leave them out of our batch costs. Potential workarounds include adding barrels as a recipe ingredient – contact Support if you’d like to learn more.
What happens when I take a loss?
It depends on the type of loss. If an entire batch is going down the drain, you’ll see it as a loss in your WIP (Work in Progress) Loss account, as part of a larger Cost of Goods section. If you’re only logging a partial batch loss though, like on a bottling run, you won’t see a financial loss in Quickbooks. Instead, we just keep the value with the remaining active batch, making each drop of spirit just a little bit more valuable.
This is one of the most entertaining FAQ documents I’ve ever read, but it’s a little bit snarky – what’s with the attitude?
Caroline worked on this Quickbooks integration for over nine months and was very tired of it.