Breeze Through Insurance Audits
Want a better way to handle insurance certificates without having to resort to Excel charts or thumbing through files? Many business owners would be surprised to know this chore can be handled using software they already have!
Because of Quickbooks’ dominance in the small business world (some estimates say as high as 70%), this discussion will focus on Quickbooks 2011 Contractor edition. Most versions of Quickbooks should have similar functionality. To get started, go to the Vendor Center. Find a subcontractor you’d like to update, click Edit, and click on the Additional Info Tab. At the bottom right corner you will see fields to enter the dates. This is where you will enter each current COI on file.
Once all COI’s on file have been entered, Quickbooks will show an alert message if a user attempts to enter a bill from a subcontractor with expired insurance. This eliminates the opportunity to unknowingly pay subcontractors who have not provided proof of insurance as well as giving the user time to request a certificate prior to the bill being due. Finally and most conveniently, this system eliminates having to manually compare payments to a stack of paper COI’s or a spreadsheet.
One issue many people run into when trying to print a report showing all expenditures for the audit period is the report includes many vendors who are not subcontractors. You may have noticed this in the Vendor Contact List report described above. An effective way to limit to help separate vendors from subcontractors is to use the Categorizing section also found in the Edit Vendor menu (see instructions above). You may have to set up some Vendor Types; two basic ones could be Vendor (think of wireless carriers, insurance companies, accountants, etc) and Subcontractor (anyone who does work on a job).
With a few simple steps and some discipline, the dreaded insurance audit can be a thing of the past. Imagine having to do nothing more to prepare for this process than print a couple reports and share them with the auditor- it can be a reality!
Simply go to the Report menu, expand the Vendor & Payables list and select Transaction List by Vendor_____. Since the auditor wants to know only the amounts paid, we need to modify the report a little. Click Modify Report, select Filters, find Transaction Type, and click Multiple Transaction Types. At a minimum we need to select Check, and Bill Payment. Now we need to modify the accounts the report pulls from and which vendors are included. To do this, we’ll click the Modify button in the top left corner of the report. Click on the Filters tab, then select the Account filter. Check all accounts that you code payments to subcontractors; most commonly Work In Process, Cost of Goods Sold, or Expense accounts. Next, select the Name filter, check Multiple Names and place a checkmark next to each subcontractor you use. Don’t worry if you don’t use that subcontractor anymore- you want the report to pull all subs and it will omit subs who didn’t receive any payments. Finally, memorize the report so it can easily be recalled and updated for the next year when needed.