In Lesson 11 of this series, we began our exploration of Accounts Payable by looking at the preferences for Vendors, Billing, Expenses and Purchase Orders in QuickBooks Online. Then last week in Lesson 12, we looked at the Vendor Center and its relationship to Accounts Payable. This week we want to look at various A/P workflows including Vendor Bills and Bill Payments.
As we learned in our lessons regarding Accounts Receivable there typically are different workflows based upon the way a business operates. QuickBooks Online allows you to select one or more workflows that best fit your business. These are the three most common workflows typically used for Vendors and Accounts Payable:
1. Do you pay the Vendor immediately at the time of purchase?
- Write a Check or create a credit card Expense.
2. Do you pay later, make multiple payments, or pay several bills at once?
- Enter a Bill > Process a Bill Payment
3. Do you Order Products?
- Create a Purchase Order > Create a Bill > Process a Bill Payment
Entering Vendors' Bills
Enter Bills when you owe money to a Vendor that you’re not going to pay immediately. Use this workflow for larger expenditures to track what you owe.
PEBCAK! You don’t need to enter a Bill if you’re just paying an expense in full the moment you receive it in the mail. Instead, save a step by entering a Check or Credit Card Expense. We will cover these options in a future article.
Select +New > Bill.
The Bill window opens (as shown below).
The Vendor Bill window in QuickBooks Online
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Fill in the Vendor, Date, Amount, and the Expense Account details.
If the Bill is for Items received, use the Item Details section instead, and list the products. If the Item Details table doesn’t show, click the tiny triangle to its left.
To store a PDF of the original bill from the Vendor within QuickBooks Online, add it as an attachment (not shown, look for the paper clip in the bottom left corner).
Choose Save and close or Save and new.
Purchasing Inventory Items
If you turned on the Expense settings as described in Lesson 11 (Vendor Set-up) two weeks ago, there are two grids on each Bill, Check, or Expense. This is the equivalent of the Items tab in QBDT.
- The top section, Account Details, posts directly to the Chart of Accounts.
- The bottom section, Item Details, tracks your purchases for Products and Services. These may be tangible items you sell, or subcontracted services you hire. If you want to run reports tracking profitability and job costing, be sure to pay your Vendors for the same line items you sell!
If this Item Details table doesn’t show, be sure you turned it on in the settings, and click the tiny triangle to its left to un-collapse it.
Paying Vendors' Bills
When you’re ready to pay an outstanding bill, open the specific bill you wish to pay and click Make payment in the upper right.
If you’re paying several at once, instead choose +New > Pay Bills.
The Pay Bills window opens (as shown below).
The QuickBooks Online Pay Bills window.
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Check off the Bills you are paying. Verify the amounts in the Payment column. If you are making a partial payment, adjust this amount.
If you’re paying by Check, select whether it will be printed or hand-written. Enter the Starting Check Number for the first check.
If you’re Printing your checks, click the Save and print button. Otherwise, change the button to Save and close.
Lesson Wrap-up
Accounts Payable workflows help businesses and their owners track liabilities. Even if you are a cash-based business, it’s important to stay conscious of upcoming debt deadlines. Anything you can do to avoid late fees and plan cash-flows is of great benefit to the success of your business.
To make sure you’re streamlining your A/R and A/P workflows, check out my QuickBooks Online Fundamentals Course with over six hours of video training content covering everything from QBO file setup to tax-time reporting.
Next week's article continues our look at A/P workflows by discussing Writing Checks and printing them out.