MAJOR Accounting improvements! Introducing: The Touchless Journal Entry Integration

Hi. Just a quick editor's note here. The features that you're about to see in this video are being rolled out slowly over the course of summer 2024. So if you are watching this video and it is still Sometime within summer 2024, you may or may not have these features in your account, but if they're not in your account, they're coming to your account very soon. So it's still definitely worth preparing. And if you're watching this video after summer of 2024, assuming everything went to plan, these features should definitely be in your account. Okay, enjoy the video. Bye. What's going on, everybody? It's Richard Kohberger here, the blue collar nerd. And in this video we're going to be talking about Service Titan's touchless journal entry integration. This is something that's newly available as of the time of me recording this video. And should you choose to adopt it, this is going to greatly simplify the process of syncing your financial information over from Servicetitan to your accounting software. So buckle up, grab something caffeinated if you're into that. We're about to get pretty in the weeds with some accounting stuff. Also, if you're not the bookkeeper or any kind of accounting person within your company, you might want to go get them. As always, I'm going to be trying to explain this as thoroughly yet simply as possible. But just due to the nature of the subject, you're probably going to need some contextual accounting knowledge to understand this video. So what exactly is happening here? Well, first of all, Servicetitan is now able to generate journal entries. And that ability essentially means that you can now use Servicetitan with any, any accounting software you want, because journal entries are kind of this universal language. So if you're using an accounting software that doesn't officially integrate with Servicetitan, you can export journal entries from Servicetitan and then import them into pretty much whatever accounting software you want. However, if you are using QuickBooks online intact and not quite yet as I'm recording this video, but coming soon 0, then you will have access to the new touchless journal entry integration. The touchless integration completely eliminates the need to manually batch post and export, and it allows you to edit exported transactions for a period of time that you define, and it also eliminates 99% of export errors. Also with the touchless integration, everything syncs over in near real time. So Servicetitan is syncing over journal entries to the accounting software every two minutes now, for simplicity's sake, when I'm talking in this video. I might just refer to QuickBooks, but just know that anytime I say QuickBooks, what I mean is any accounting software that supports supports the touchless integration, which is QuickBooks Online intact and soon, but not quite yet as I'm making this video. 0 and one more side note, those of you who use QuickBooks Desktop might be wondering if this is something that will work with the desktop version. Unfortunately, the answer there is no. At least not the touchless integration part. You could manually import journal entries that you export out of Service Titan just like you could with most accounting softwares. But you won't get that automatic every two minute syncing. And that's just due to some limitations that come inherently with a server based application like QuickBooks Desktop. And I'll take this opportunity to call out that in the past QuickBooks Desktop has been the more robust software and it's been the one that we've generally recommended to people. But that has now shifted. Intuit, the company that owns QuickBooks, has been putting a lot of resources into its QuickBooks online product. And even on Intuit's own website, they have a page dedicated to discouraging you from buying QuickBooks Desktop and instead pushing you towards QuickBooks Online. And I'm not saying what that might imply, but you know, feel free to draw your own conclusions there. Anyways, moving on, I mentioned before that the touchless integration eliminates 99% of export errors. So how does it do that? Well, it's because we're not duplicating as much information between the two softwares. See, before Service Titan's accounting integration was document based, which means, for example, when we needed to export an invoice, that means that that needed to become an Invoice over in QuickBooks, which means there's a lot of data that needs to exactly match up between the two softwares because an invoice includes a lot of detail. For example, if the customer name in ServiceTitan doesn't exactly match what's over in QuickBooks, then you'll either end up with an export error or you'll end up with a duplicate customer. But with the journal entry based integration, we're not sending all of that information over to QuickBooks because we don't need it there. We already have it in ServiceTitan. All that we really need to use our accounting software for is pulling our P and L and our balance sheet. So the journal entry integration only sends over the information that is necessary to generate those financials. What happened with the money and what GL and class did this transaction happen in? And it enters that information into the accounting software as a journal entry. The rest of the detail related to that transaction just lives in Service Titan. So that example of the customer names not matching that wouldn't be an issue because with the touchless journal entry integration, all AR and payments go to the same place. There will simply be one customer in QuickBooks called Service Titan Customer. Now if for some reason you really need those specific customer names and QuickBooks, there is still a way to do that with journal entries and I'll show you that later in the video. But less duplicate data means less potential for export errors. Not as much stuff needs to match just the GL accounts and the class. Now to be clear, if you want to keep using the document based integration, you can. It's not going anywhere. However, for most people I do recommend switching over to the touchless journal entry integration because while it is a little bit of work and change management upfront, it's going to make your life a lot easier going forward. Okay, so a few things you need to know before making the switch. The first is that if you are currently pulling AR reports out of QuickBooks, you won't be able to do that anymore. Instead you'll pull ar out of ServiceTitan. So you won't be able to pull this AR aging summary report in QuickBooks anymore. Which is fine because you have basically an identical report over in ServiceTitan. See? Same same. But you just need to take a moment and make sure that you know how to use the AR features in Service Titan. Now this goes for the whole company though, so if you have some weird situation where you're not running certain segments of your business on Service Titan, then this isn't going to be for you. But assuming you're good there, then here are a few things we need to do ahead of time to prepare for the switch. First, we need to make sure that our GL account names exactly match between Service Titan and QuickBooks. So in service Titan you're going to go to Settings, Accounting and General Ledger accounts and we're going to make sure that all of the names there exactly match your chart of accounts over in QuickBooks, QuickBooks, or whatever accounting software you're using. And if you're using classes, then we need to make sure that those match up as well. Classes help you to categorize your P and L. So generally we do recommend having those enabled in your accounting software. And classes map to your business units. So in our Service Titan settings, we're going to go into business units. Then we're going to click Edit on a business unit and we're going to go over to that QuickBooks tab and that's where you'll see the QuickBooks classes that the business unit maps to. So make sure that whatever's there matches exactly what's over in QuickBooks. And just as an aside, typically your business unit name is going to match whatever the class that's mapped to it is. Just to make things simpler for yourself. Now, an important little detail to note here is that when you use colons in the name, that indicates a subclass over in QuickBooks. So for example, if you enter in Glendale colon H Vac, then that's going to be mapping to a subclass called H vac underneath a parent class called Glendale. And that's totally fine to do. I just, I want to make sure that you're doing it on purpose. Okay, now if we take a look in Service Titan under Settings, Accounting and Journal Entries and Auto Batching, look at the transaction type column there and notice that there are now two new transaction types that didn't exist before. Those are Applied Payments and Bank deposits. So let's start with Applied payments. Applied payments relate to customer deposits. That's when a payment that was just floating on a customer's account as a credit actually gets applied to an invoice. So if you ever take customer deposits, meaning you take some money up front to secure work that you have not yet done, then it's a strong recommendation to turn on the deposit workflow. You do that in your Service Titan settings under Invoicing and Payment Collections. You're going to want to make sure that that deposits workflow is enabled and it is set up so that deposits hit a customer deposits liability GL account. So when you take a customer deposit, it's going to initially hit that liability GL account, and then once that deposit gets applied to an invoice, the revenue is going to be automatically moved out of the liability account. It'll hit ar. You'll see an applied payment journal entry reflecting that deposit amount as paid, balancing out the AR. Now, previously that deposit workflow was only available with QuickBooks Desktop, but now with journal entries, it's available with QuickBooks Online and intact as well. Again, I highly recommend enabling that, because without that enabled, deposits could result in negative ar, which is bad. Okay. The second new transaction type is bank deposits. And this refers to money that you, the company, are depositing into the bank. So before we had the journal entry integration, here's how it worked in Service Titan. You would batch together all of the payments that matched a particular bank deposit. Then you exported those to QuickBooks or Intact and you you had to batch all of the payments again over there in the accounting software because they would just be sitting loose in undeposited funds. So you had to batch them all up again and put them into a bank deposit over on the accounting software side. But now with journal entries, payments are grouped together into bank deposits over in Servicetitan and they are exported over as a single bank deposit journal entry, which eliminates the need to regroup them and mark them as deposited over in the accounting software. And I'll also call out here that even grouping payments into bank deposits in Servicetitan, that's only necessary for payments that did not go through Servicetitan Payments, Servicetitan's integrated merchant service. If you are using Servicetitan payments, then any payments that go through that, like credit card transactions or checks that you scan in, those will be automatically exported to your accounting software as bank deposits, since you don't need to manually deposit those into the bank so they auto reconcile. The payment grouping process is only needed to reflect when you take like cash or unscanned checks to the bank physically. So here's what that process looks like on the accounting screen. Go to Customer Payments and click into the Ungrouped Payments tab. When you do a bank run, you'll check off all of the payments that you deposited. Go to Actions and click on Add a Deposit. Name the deposit, choose which bank you deposited the funds into, choose choose the deposit date and click Add to Deposit. That will then move those payments out of ungrouped payments and into a bank deposit, which you can see on the bank deposits screen. And then once everything clears with the bank, you will change the status of that bank deposit from open to deposited. All right, next let's talk about vendor bills and credits, so those work better with journal entries as well. See, with the document based integration, we're sending over individual price book line items in QuickBooks Online. They're called products and services. And exporting that way creates all of those same problems that we talked about earlier in the video. There's tons of stuff that needs to match up between the two softwares. Plus if you don't happen to export things in just the right order, there's Scenarios where your QuickBooks inventory is going to end up in the negative and then that creates errors. Inventory stuff is notoriously finicky when it comes to export errors. So with the journal entry Based integration. Instead of exporting line items, we're exporting categories. So basically when a bill or vendor credit is exported, let's say there's 100 line items on the bill. Well, instead of individually exporting all of those individual line items, which will give us errors if anything at all doesn't match up between the softwares, instead we're exporting something that looks like this. We increased inventory by $500 and we increased miscellaneous cost of goods sold by $100, which is all the detail we need there. Because again, we're only using the accounting software to generate our P and L and our balance sheet. All the line item detail already lives over in service item. Okay, now that we understand all that and we've done some prep work, let's actually go and switch to the touchless journal entry integration. So to do that we're going to go back to Settings, accounting and journal entries and auto batching. Under the export type column, we're going to click that edit pencil and switch to Journal Entry summary. And we'll do that for every transaction type that we want to switch over to journal entries. And we'll also enable auto export wherever possible. If you're unsure what to choose for some of the settings, this is what the setup is going to look like for for most people. So for that export type, journal entry summaries are generally what's recommended. But if you do want more detail over in QuickBooks, then you can go with journal entry detail instead. That will give you individual names on your journal entries as opposed to rolling everything up into one service titan customer. And that will also fill in the description field as well. That does however, open you up to more potential export errors though. And the extra detail really isn't necessary in the accounting software because it's all going to be linked to the associated service titan transactions. I'll show you what I mean by that a little bit later. Now, assuming that you've chosen to use the real time auto exporting for at least some of your transaction types, then we need to scroll down here and put in the date that we want the automatic exporting of journal entries to begin. There's also an option to group journal entries by cadence and export type, but generally that's not recommended. Grouping them that way reduces the number of exports, which in turn reduces the number of API calls. And if that's something that's important to you, then that option is there. But if that doesn't matter to you, or you don't even understand what I just said, worry about it, just leave that unchecked. And if you weren't already using auto batching, then set the auto batch start date to the same date as the auto exporting. And I recommend setting everything to auto batch daily. Now, batching invoices and payments from that batch export transaction screen. That isn't actually necessary anymore with touchless journal entries, but we still do need to visit that screen to batch and export our vendor bills and credits. Servicetitan doesn't currently have a way of knowing when we've successfully reconciled and or paid our vendor bills. Unless you happen to be using service item payables, but that's currently on pause as far as new signups. Most people aren't using that. So we do still need to manually export our vendor bills from that batch and export screen. So just for the sake of keeping that batch export screen tidy and not bogging it down, I recommend auto batching everything on a daily cadence. Okay, once that's all set up, the next thing I'm going to do is set up my accounting periods. So remember that with the journal entry based auto exporting, invoices and payments can continue to be edited in even after the journal entry exports. So accounting periods are the new mechanism to control when things are locked when they can't be edited anymore. If the accounting period is closed, then nothing within that period can be edited unless an admin chooses to reopen the period. So to set this up, we're going to go to Settings, Accounting and Accounting Periods. Here we can define our fiscal year as well as tell Servicetitan when it should automatically close the previous accounting month. For example, if it is currently July and we have our accounting period set to auto close on the 15th, then on July 15th, all of June's transactions will be locked. Once that's all set up, you can also control your accounting periods individually from the Accounting periods tab on the accounting screen. So from there you could manually close an accounting period. You could even close an accounting period through a certain date without closing the entire accounting period. And you could reopen an accounting period. And of course all of that is permission based. Okay, now what I'm about to show you is completely optional. But once we switch over to journal entry exports, that means we're not exporting invoices and payments over as individual documents that will match a specific customer over in the accounting software, right? Instead, AR and payments will all be grouped under one single customer in the accounting software called Serviciton Customer. So no more individual customer names. Assuming we've chosen journal Entry summary. What that means is that once you switch over to journal entry summaries, any customers that had an AR balance in QuickBooks will forever show as owing that balance on the QuickBooks AR report. That's because when payments get exported, there won't be a particular name tied to it. It'll just go under Service Item Customer. Now this doesn't actually matter since we're not pulling the AR report from our accounting software anyway. So if that doesn't bother you, you can just skip this section. But if you're just not going to be able to sleep at night knowing that there's balances forever floating on that report that you're never ever going to pull, then here's how you fix it. So once you've switched over in your accounting software, you'll manually create an AR journal entry, set the journal entry dates to the day before you're going live with touchless exporting. Then look over at your AR report in QuickBooks on your journal entry, line by line. Enter in the names of the customers who owe a balance and enter the amount they owe as a credit. So Geeta here owes $629.10 and we're going to enter that amount into the credit field on our journal entry. Then we're going to do the same thing for Jeff. Reduce his balance by 81 bucks, et cetera, et cetera, all the way down the report for everybody that has a balance above zero. For the sake of this example, I'm just going to stop here. But once I have all that in, I'm going to add another line to my journal entry where I debit the total amount of all of those credits I just made. And I'm going to apply that to the Service Titan customer. So add all those balances together and make that a debit to the Service Titan customer. Basically, we just moved all of the AR off of the individuals and rolled it up into the Service Titan customer. Once you save that refresh the AR report and you should see that everybody there now has a $0 balance. Again, I stopped short for time's sake, but you can see here that the customers that I did do, they now have a $0 balance. And instead of the balance being on them, we see that the AR is now associated with the Service Titan customer. Now, if we want those customers that we move the balances off of to completely disappear from the report, then there's another step that we need to do. So we're going to search for one of the customers that were on the report, and then on the transactions list, hit receive payment. Then you would apply their outstanding invoice to the journal entry where we've just given them a credit. When you save and close, you can refresh the report again. And now that customer should be gone. And then I'll have to repeat that for every customer on the AR report, except, of course, for the Service Titan customer. Now that is tedious. And again, it's not necessary to do. It's just something that you can do if you're anal. Okay, so now that we're all set up with the touchless journal entries, let's see in Service Titan what that looks like. So here I'm looking at an invoice for a job that has not started yet. You can see that the invoice date is blank. So this isn't going to generate a journal entry yet, but once the job gets marked complete, that's going to populate the invoice date field. And at that point, that's when the journal entry gets created. That also fills in two new fields, which are the post date and the period status. Now, note that the post date here refers to the post date that will be associated with the journal entry over in our accounting software. It does not refer to posting as in that thing we used to do with batches. That's no longer necessary for invoices or payments. So in most cases, the invoice date and the post date are going to be the same and the period status that refers to those accounting periods we talked about. So this accounting period is currently open, meaning that this invoice will continue to be editable even after the journal entry exports into QuickBooks. Now we see that the export status here is pending. This transaction is going to sync over to our accounting software as a journal entry within two minutes. But after that happens, this export status will still say pending. So this export status is now controlled by the accounting period. And I'll go into more detail about what that means later. But so if we hop over to the accounting screen and click on journal entries, we can see the statuses of the journal entries there. So there's that invoice right there. And we can see that the sync status is in progress. And if we hang out here for a minute and refresh, we'll see that it's now marked as synced. Now, this is a sample test account, all right, where a lot of people are in here messing around. So you see that some of our past journal entries have errors, but that won't be typical. That's just because you know it's a test account, people are in here doing all kinds of tomfoolery. As long as your GL accounts and classes all match up like I showed you before and you're not messing around with stuff in the accounting software itself, everything will export just fine. That is an important call out though. Don't be messing around directly in the accounting software. You can. You can be your own worst enemy here. For example, if you go and directly delete or edit a journal entry in QuickBooks that ServiceTitan is trying to sync to, that would cause you errors. So don't do that. I'm not really sure why you would, but don't. It's a touchless integration, so no touchy. Now here's an example of what an exported journal entry looks like over in QuickBooks. So you can see that all of the AR is under the single service item customer. But we have all of this class information over here which allows us to pull a nice granular P and L. Also note that when you are looking at any journal entry on the QuickBooks side there in the memo field, there's going to be a URL that you can paste into your web browser and that will take you into that journal entry record in Service Titan. And then from there you can click into the Transactions tab and see all the specific transactions associated with that journal entry. You can also click the Details tab and see all the details about every transaction within this journal entry. So this is why we recommend exporting journal entry summaries versus detail. You have all of the detail right here, so there's really no need to also have it in QuickBooks and increase your chances of getting export errors. Now remember earlier I said that a transaction's export status is now controlled by accounting periods. So even though invoices are auto exporting as journal entries every two minutes, if you look at a specific invoice it will show the export status as pending until the accounting period is closed. That's important to know because there are certain things in Service Titan that depend on that export status. For example, payroll. If you run payroll every week, then you need the previous week's invoices to be marked as exported so that you can pay your employees for that work. That export status is tied to the accounting period. Now you don't need to close the entire accounting period just to run payroll. You can partially close periods. So let's say I need to run payroll and last week's invoices are still in the pending status. I would come Here to the accounting screen, go to the Accounting periods tab, find the accounting period that contains the week that we're trying to run payroll for, and then I would click on the period number to open up all of the different transaction types within that accounting period. So in this example, I'm trying to close out invoices for a specific portion of this period. So I would come over to this actions kebab menu and say close through date and then I would close out the invoices through the end of whatever week it is that I'm trying to run payroll for that will close the period up to that date without closing the entire period. Now an important thing to note here is that with this initial release of the Touchless Integration, closing out the accounting period this way, using close through date, that is the only way to get that exported status to say exported. So if you just say close period to close out the entire period, or if the period were to auto close following your auto close rule, your invoices and payments are still going to say pending. So you would still have to go in and use close through date to get them to say exported. Now that's just a quirk of this initial release. And that will be changing so that any way that you close out a period ends up updating that export status. So if you're watching this video after say about the fall 2024 release, then what I just said might not be relevant anymore. But until that does get updated, it's something good to know. And remember, if you do run into a situation where things have been closed out, but it turns out you actually need to make some edits, admins can reopen closed periods from the same screen. And the last thing I want to talk about here is this accounting audit trail. This is found under the accounting screen and it's where you can see a record of everything accounting related that's happened. So you see we have all of these records like right here, somebody modified the task on an invoice. And we can click View Details here to see even more detail about that. So you can see right here the price was edited before it was that and after it was that. And we can search for specific record numbers here. We can filter by record type if we just wanted to see invoices or payments or whatever. And we can even filter by the user who did the thing. And of course there's a date filter here as well. Plus if we don't need all of these columns, we can click this button right here to edit which columns are showing up here and if you want to, you can even download all of this data as a spreadsheet file. But anyways, that's all I got for today. I sincerely hope that that was helpful for you. Be sure to hit like if you like this video, found it valuable, be sure to subscribe to Surface Titan's YouTube channel if you haven't done that already. If you hit that bell icon so that YouTube notifies you anytime we upload a new video. And feel free to leave me a comment down below and let me know what you think. Appreciate it. Peace.