QuickBooks Online: Entering/Paying Vendor Bills (Accounts Payable) PDF

**QuickBooks Online: Entering/Paying Vendor Bills (Accounts Payable)** In this video, we\'re going to talk about recording expenses and purchases through the Accounts Payable workflow. Accounts Payable eventually means that you record an expense on one day, and you make the payment for that expense...

**QuickBooks Online: Entering/Paying Vendor Bills (Accounts Payable)** In this video, we\'re going to talk about recording expenses and purchases through the Accounts Payable workflow. Accounts Payable eventually means that you record an expense on one day, and you make the payment for that expense on an entirely different day. The transaction type that we use in QuickBooks is called Bills. We\'re going to go into the New button on the left-hand side, and then under Vendors, we\'re going to find and select Bills. When you click on Bills, you see the New Bills screen open up, and then the first thing you\'re going to fdo is select the vendor that sent you the bill. So we\'re going to click on the drop-down menu, and let\'s say this XYZ Vendor is the one that sent us the bill. Sometimes vendor bills will say the word Invoice in it, because from the vendor\'s perspective, they\'re invoicing you, and then you\'re taking their invoice and you\'re entering it as a bill in QuickBooks. In QuickBooks, when you enter invoices, that\'s actually the Accounts Receivable workflow, and that\'s for you to send to your customers. So in QuickBooks, Accounts Payable is Bills. If the vendor sends you a bill that has the word Invoice on it, you need to know that\'s a bill, not an invoice in QuickBooks. Anyway, the next thing you\'re going to do is you\'re going to find **the bill date** on that document, and you\'re going to **match it in QuickBooks**. And then if there\'s a due date for that bill, you can click on the drop-down menu and select a specific due date. If your vendor has specific terms that they give you, 15 days, 30 days, 60 days, and you have it here in your drop-down menu, which you can also create your own terms if you want to, if the ones that come by default are not enough, you can select that and the due date will change automatically. Now you do want to put the invoice number from the bill you got from your customer, you want to put it in there so you can recognize it, especially if you\'re going to be recording multiple bills for the same vendor, you need to know which bill you\'re paying. Then under category, this is where we\'re going to put the expense category or the account from your chart of accounts that best represents what that bill means. So let\'s say they\'re charging you for some sort of contracting services. So let\'s go and see if we have contractor or contract labor, okay, this is perfect. So let\'s say we\'re subcontracting this company and to use their employees for some labor for our business, then under description, we can put labor for Miami job or something like that. Okay, so whatever description information that best fits to help you remember what you\'re paying for, that would be very useful. Under amount, we\'re going to copy the amount over from the vendor\'s invoice and we\'re going to put that in there. If you want to split the expense into multiple categories, so let\'s say for example, the \$2,500 is really \$2,000 in labor and \$500 in materials, then we will break this up and put 2,000 in one line and then let\'s look for a materials category or something like that. There we go. Supply some materials and we\'ll put \$500 on that and then we can put here materials for Miami job. Okay. Again, it becomes self-explanatory because the name of the account is labor and the name of the account is materials, but again, it\'s up to you what kind of memo you would like to start using. Okay. So now we have a total bill for \$2,500. At this point, we can either just save it, we can click on the dropdown menu and do save and close, save a new, and there\'s also save and schedule payment, which is whenever you have turned on the bill pay feature inside QuickBooks Online, which is a different module altogether that you would have to turn on and add on if you want QuickBooks to make physical payments either via check or electronically via ACH to your vendors. In this specific case, we\'re assuming that you\'re going to be making your own payment arrangements. You\'re not going to be using scheduled payments through the bill pay feature. So we\'re going to click on save and just save the bill, or save and close, and exit out of that. Let\'s do one more example. I\'m going to click on the new button on the left-hand side, go into bill, and let\'s say this time around I got a bill from Verizon Wireless. I\'m going to click on the drop-down menu, click on add new, because Verizon is not in my list, and create the vendor on the fly. So you can always create vendors on the fly, and again, you can add addresses, phone numbers, notes, whatever you want, and relate to that vendor if you want to, or you can just create the vendor by the vendor name, and that\'s it. Now we\'re going to copy the information that we have in the bill in terms of bill date and bill number, all that stuff. So let\'s say we received this bill on 1-20-20-24, and the due date is the 26th, and the bill number, we\'ll just copy the bill number from there. Then under category, we\'re going to put here a phone, or communications, or telephone, depending on what your chart of account looks like, you\'re going to have to figure out which is the chart of account that best fits that, and let\'s say the amount from the bill is 596, with 12 cents, okay? And that\'s really all you need to do. One thing to add here is if you have an actual physical bill in PDF or in an image format, you can actually click on attachments, find the specific image that you have, attach it, and then that becomes part of the documentation. You can attach any documents that you want into the bills for your record. So then I\'m going to go ahead and click on the drop-down menu, click save and close, and we\'re going to be finished with that. So let\'s talk about making a payment to this bill. So there\'s a couple of ways to make payments to the bills. One, we can just simply click on the new button on the left-hand side, and then click right there under bill, where it says pay bill, that would be step number one. We click on pay bill, then we\'re going to get a list of all of our open bills right there on the screen. Then we get to choose which bank account we\'re paying from. Again, this is if you\'re paying these bills separately from QuickBooks, you\'re writing them a check, or you\'re paying them electronically, or paying them with a credit card, then you\'re going to record the bill payment in QuickBooks. We\'re not actually initiating the payment from QuickBooks right now, we\'re just mimicking what happened in the real world. So I\'m going to select the bank account that we\'re paying from, let\'s assume we\'re paying with a check, and then we\'ll put here the date that we wrote them the check, we\'ll put the check number, this is the physical check number that we\'re writing them, then I select the specific vendor that I\'m paying with that check. If I\'m partially paying the vendor, that\'s possible too, I can just select a specific partial payment, so let\'s say I\'m only going to pay this vendor \$2,200, so basically I\'m short paying them \$300, the bill will still have \$300 open from it, because I\'m only paying part of it. Then I\'m going to click on save, or I can click save and close, or save and print. So if you\'re going to print the check straight from here, you can if you have printable checks, you can follow the setup process and the printable check workflow. Let\'s do a slightly different workflow for paying bills. Let\'s say that we\'re going to look at the bill first, so let me go into the new button then click on bill, and then I can click on the history button here where I can see all the historical bills. I\'m looking at the bill specifically, and I want to initiate the bill payment from the screen, which you can do that as well, simply by clicking on this little button on the top right that says mark as paid, and when you click on mark as paid, it takes you to a bill payment screen. It\'s slightly different than the other bill payment screen, but this is a bill payment screen that already starts already by selecting the vendor for you and automatically marking the specific bill that you want to pay, so it kind of does that step for you, and it saves you that step. So the earlier screen that we picked is when we\'re going to choose which bills we\'re going to pay and possibly pay a bunch of bills, and we can do a whole bunch of bill payments in batch if we want to, or print a bunch of checks in batch. This specific workflow is slightly different because we\'re actually opening the bill first, and then from that bill, we\'re making that payment, so let\'s go ahead and click on save and close. 3\. Okay, let\'s go into the Expenses tab on the left-hand side and click on Bills. Okay, this Bills section will actually show me all the bills I have in my system. If I have any bills ready for review, any unpaid bills, any historically paid bills are going to show up in here. If I look at unpaid bills, we\'re actually going to see the XYZ vendor that we partially paid. As you can see here, the original bill amount is \$2,500, but it has an open balance of \$300. So, if I want to pay that bill later on, I can do it from here, or also, let\'s say, for example, the vendor calls us and says, you know what? You don\'t have to pay me the rest. We made a mistake. We\'re going to give you an adjustment to that bill. Now, a lot of people instinctually will go open the bill and make a physical change to the bill. We\'ll actually open the bill and change it and reduce the numbers to make it go down \$300. However, that\'s not the optimal way to do it. The ultimate way to do it, especially if you have multiple bills in multiple situations where they will be giving you credit to pay those bills or to reduce the accounts payable or the balance of those bills, is to do what\'s called a bill credit. So, we\'re going to click on the new button, and then we\'re going to see under bill, pay bills, we\'re going to go down under purchase orders. There\'s a specific option called vendor credit. When we click on vendor credit, we get a screen that looks identical as a bill, but essentially what we do is we select the vendor\'s name, then we pick the categories of sort of which line items are they adjusting. So, we pick the line item that made the most made sense, so let's say they're going to adjust our contract labor and were going ton put a 300 we can put a note like um, "Vendor adjusting for errors or something like that and then notice that I am not putting a negative number, I'm just putting a regular positive number. If they issue us like a formal document for a vendor credit and there's a reference number we want to put in there we would put that reference number in there so we know what's that for and then we click on save and close. So, now if we were to go back to Expenses bills and we look at our open bills, this bill still shows open for 300 because we have **not yet applied that payment to it**. So, to apply the payment to it and it's a bit counterintuitive, is we're going to click on Mark as paid because we're not actually paying the bill, were applying a bill credit but we're going to click a Mark as Paid and immediately you're actually going to see your bill and your vendor credit right under that, so as long as you see a bill and a vendor credit with a check mark right next to it and you see actual no money being exchanged under this amount all the way in the top at zero, that\'s basically indicating that this screen, the bill payment, you\'re actually not making a payment, you\'re taking a previously set up bill of credit and you\'re using it to pay that bill off. And you can, if that credit is applying to multiple bills, you can manually adjust which bill it gets applied to right from this screen. So that\'s how you essentially apply the bill of credit. Save and close. you\'ll be done. 1,) Now let me show you a slightly different workflow. Let\'s make the assumption that we have this old bill sitting in our QuickBooks from many years ago and we\'re no longer going to pay it and we don\'t want it in our system anymore. Well first of all you need to find the bill, take a look at it, and make sure you have a keen understanding to what kind of account was used originally on this bill. So let\'s say we have this old bill from 2019, and it was for advertising and marketing radio ads, and it was for \$6,900. So now what I need to do is I need to write this off. Instinctively, you may think, Hector, I\'ll just delete the bill of QuickBooks and I\'ll be done. **Not a good idea** because you\'re going to be changing your financial statements from back in 2019. So then the proper way to adjust an old bill, one, you can use a bill credit. That\'s possible. We could enter a bill of credit for this year and apply it. And you just saw that workflow. But I\'m going to show you one more thing, which is doing it through a journal entry. Not necessarily the best way to do it. It\'s more of an advanced type of. concept but I want to show you regardless because it is one way you can affect accounts payable. So I\'m going to go to the new button and then under other I\'m going to go down to journal entry. In the journal entry the first thing I\'m going to do is the journal date. I\'m going to put today\'s date so let\'s say we\'re in February 2024 and today\'s when we\'re recognizing that we will no longer ever going to pay that bill. So the first account we\'re going to put is accounts payable. because that\'s the account that runs all your account or your bill balances. And then what we\'re going to do is we\'re going to reduce that accounts payable through a debit by putting 6,900. So accounts payable gets reduced through debits, increased through credits. Again, this is more of an advanced concept. Most of the time, only really accountants deal with this. So we\'re going to put here a "writing off old bill" or whatever we want to put in there. Then under name, we\'re going to put here our vendor\'s name. So this one\'s called all vendor. And then the second entry here, the balancing entry is going to be that advertising and marketing sub account radio ads that we had on the original bill. So as long as we have that debit and that credit balancing each other. And essentially what we\'re doing is we\'re killing that accounts payable. We\'re getting rid of that accounts payable, reducing that balance. And in exchange, we\'re also reducing our expenses for this year. for the same dollar amount. Okay so that once we\'re done we click save and close and we successfully reduce that accounts payable. If we actually go into the expenses tab and go into vendors and specifically find our old vendor, we\'re going to see that our old vendor has an open balance of zero. We actually do not owe that vendor any money. It\'s right there. It\'s very clear that we\'ve written that off. However, it still shows a \$6,900 overdue balance because the bill itself still shows as an open bill because we have not applied that credit to that bill. a credit memo or a vendor credit we would apply a journal entry just as well so what we need to do in this case is to go to new pay bills and again counterintuitive because we\'re actually not gonna pay the bill what we\'re gonna do is we\'re gonna apply that bill payment so under filters I\'m just gonna put here custom and I\'m gonna go back to all the way down to you know before 2019 so that bill shows I notice that bill is showing right here if I select that bill our QuickBooks automatic is gonna say you know what I\'m gonna go ahead and apply the credit. Now unfortunately it doesn\'t show the specific credit that\'s being applied that\'s sort of the tricky part of going through this workflow to do that and this is one of the ways you can do it. Unfortunately if you have multiple credits and you want to pick which of the credits you want to apply QuickBooks actually just behind the scenes uses the oldest one to apply it to here. If you happen to have multiple potential credits that you\'re going to apply and you want to pick and choose specifically which one then you want to use slightly different workflows so we\'re going to X out of that. and show you that one as well, that way you can have all your bases covered. But in order to do that, I\'m actually going to go down into this journal entry and I\'m actually going to split this into two. So I\'m going to make this one 900 instead of 6000. So we\'re just essentially going to do two separate credits, so you can see them clearly when we go to apply them. I\'m going to go ahead and duplicate this transaction. I\'m going to click on copy and I\'m going to do this one for 6000. and then 6,000 and I\'ll just backdate this one to 2022. Let\'s see, we\'re actually gonna see two credits pending for this particular vendor. So I\'m gonna hit save and close. And essentially, when I actually go back and look at that specific bill that\'s still open, so I\'m gonna go back and look at that \$6,900 bill that\'s still open, still showing overdue, still showing open. If I click on Mark as paid, so instead of going through the pay bill workflow, I\'m actually gonna select a specific bill, marked as paid you will notice that in this bill payment screen again it\'s a net of zero no money being exchanged which is perfect is what we want we actually get to see the multiple journal entries and this will work the same way with multiple bill credits multiple journal entries that we could use and we can actually say you know what I only want to apply this \$900 to that bill and then do no money exchange put zero here and just make sure that\'s only \$900 and then 6900 would now only show \$6,000 open and then maybe I intend to pay a part of that later in the future, that\'s possible too. Essentially I\'m just trying to show you that you can pick and choose which of the historical vendor credits, specifically how much of the vendor credits you can use on each. So I\'m actually literally just choosing how much from each one I want to pick. 6900 up here and then I get to pick how much from each of the vendor credits or the journal entries we can use to Apply to the bill so **we\'re basically Managing our old accounts payable making adjustments to them via journal entry or be a bill credit** So then we click save and close and now if I go back into that The vendor screen and I go into my old vendor now I should show that I have nothing overdue everything is paid off and you get to see the entire history of the actual bill for The journal entry for \$6,000, the other journal entry for \$900, and then the bill payment that I can click on and I can see exactly the history of how those two credits were actually applied to the open bill. 2\. There\'s one more part of the bill payment or accounts payable workflow worth looking at, which is **what happens if you have an open bill and that open bill gets matched through the bank feed, through the downloaded transactions through the bank.** So let\'s go into transactions. We\'re going to click on bank transactions. And then we\'re going to see, I\'m actually going to click on spend so we get to see the transactions that were spent kind of in order. And then we\'re going to go down and find one of these transactions for \$596.12. If you remember, we actually had created a bill for that exact same dollar amount earlier. So if I want to make sure that those transactions match, instead of clicking on add and creating a new transaction in the bank feed, I\'m going to click on where it says find match. I\'m going to click on find match. find the bill from all my open bills, in this case I just have one, and match it through there. That way I am not going to duplicate that entry by downloading the transactions from the bank and creating it as a new entry. I\'m actually going to make sure that if I\'m creating bills and accounts payable prior to downloading transactions from the bank, that I match every single one of those transactions that need to be attached to a bill. If I\'m downloading transactions that don\'t have any bills associated with them, then I\'m going to be creating those transactions in the bank feed and they come in as expenses. But if I\'m using an accounts payable workflow such as creating a bill prior, I definitely want to go through the process of matching them in bank feed instead of creating new transactions. For example, you see that there\'s another transaction here from Verizon Wireless for \$444.74. Let\'s say we don\'t have a bill for \$444.74, then I would be your phone expense or whatever it is and I will be creating the transaction [from here] (from transactions in bank feeds) because there\'s no bill outstanding for that same dollar amount. Now if you want to know let\'s say for example at that point you\'re saying Hector how do I know what bills are outstanding and which ones are not? Well you can run a report that shows you all the bills you have open so you can go to bill and then go to open opening it\'s bills unpaid so unpaid bills so you select unpaid bills and then you have a list of all the bills that are unpaid so right now in this particular QuickBooks file I don\'t have any unpaid bills but I\'ll create one really quick on the fly so you can see what it looks like when that gets created in the system so let me create a bill for 1500 click on save and close and now all of a sudden we go back and refresh the report and then it shows up in our list of unpaid bills so So you should always run your list of unpaid bills, decide which bills you\'re going to pay and then if you\'re going to go through your bank feed, just make sure that there isn\'t a bill that you\'re expecting to show up on the bank feed as a payment, as a recent payment so you can match it instead of creating a new transaction. 4\. Now the last thing I\'m going to show you is **using items in your bills instead of using accounts**, using items in your bills and also purchase orders for your bills. my QuickBooks and I\'m actually using QuickBooks Online simple start for this specific example I\'m gonna have to upgrade my plan to plus edition because the plus edition of QuickBooks Online is the one that has the ability for you to put items in bills and also do purchase orders and as an added bonus you can also run and manage inventory which we\'re not gonna cover through here but if you have inventory accounts payable is a very common thing because most sell your inventory on account. They\'ll ship you the inventory and you pay them later sort of thing. So I wanted to enable QuickBooks Plus like I show you on both of those workflows. So let\'s start by going into the new button and then going into bill. And then you\'re gonna notice that bills, the only option you have here is to choose categories. There isn\'t an option enabled to add items into bills, but you can do that simply by adding it in the settings. So I\'m gonna X out of that and I\'m gonna go into the gear menu on the top right of the screen and then I\'m going to go into account and settings and then under expenses, this should be under the option of bills and expenses. I can click on that and one of the options you\'re going to see in here it says show items table on expense and purchase order forms. So if I click on that now all of a sudden when I create a bill I\'m going to see an item instead of an account and the other thing I want to add here is track expenses items by customer. Crucial if the expenses that you\'re entering, the bills, the accounts payable, has to do with that existing customer or project and maybe you even want to make these expenses potentially billable to the customer as well. So if you want to add that, you have to make sure you have to come into the settings and turn all those things on. So we went ahead and turn that on. Then I\'m going to click on Done. Then I\'m going to go into New and create a new bill. And now we\'re going to see a couple of things slightly different. Number one, in the Category section, now it\'s actually labeled Category Details before it wasn\'t. And now we also see a Customer column where you can take an expense and mark it billable to the customer. If I actually scroll down and click on the little triangle on the Item Details and I collapse Category Details, my expenses into categories, I\'m going to enter them into items. For example, I\'m going to select my vendor name here. So let\'s say this is going to be xyzvendor. On the protocol service, I click on the drop-down menu, and I can select the specific item. from my item list. Now, one little caveat is when you create items, products and services, you actually have to tell QuickBooks that this particular product or service is eligible to be used in a purchase transaction. So for example, I\'m gonna click on add new and I\'m gonna create a new non-inventory product and then I\'m gonna call it a USB cable. So let\'s say we sell USB cables, we don\'t track the inventory but we have it in here. Notice that there\'s a checkbox that says I sell this product or service. If that checkbox is on, that means I can use the item in an invoice, in a sales receipt. And then if this checkbox that says I purchased these is not checked on, if I don\'t have that on, then I will not be able to use it in a bill. So QuickBooks understands that you\'re creating the item from the bill screen, so it\'s making the assumption that you do want to use this item for a purchase sort of scenario. So let\'s put here under the materials, expense or something like that. So because you\'re gonna use this item in a purchase scenario, you have to have that checkbox. So if you ever create an item. and you click on this drop down menu and you look at it and you say, hey, my item is not showing up in here. Why is it not showing up in there? It\'s probably because we didn\'t have that little checkbox that says we\'re using this item in a purchase transaction. So let\'s say this is going to be seventy five dollars. So we\'re paying from XYZ vendor. We\'re going to put today\'s date. We\'re buying a USB cable. And again, we did not inventory because we\'re not going to discuss inventory in this particular video. Check out the description for all my entire playlist of QuickBooks. online videos, I have an entire different video that goes really deep into the entire inventory workflow which includes some of the accounts payable but mostly the inventory portion. We\'re focused on accounts payable for the moment and then if this particular set of wires was for a specific customer I can track it through the customer column or I can even mark it billable if I want to be reminded to invoice my customer for it. So that\'s really optional whether you\'re going to mark it billable or not. So essentially what we did is we enable the ability to use both items and categories on bills. So you can always do that. 5\. Now, if we\'re going to do a purchase order, which is basically a transaction that we do prior to the bill, it\'s actually a non-posting transaction. You don\'t have to create a purchase order in order to do a bill, but the purchase order is nice because it reminds you that you order some stuff or maybe you order some services from a particular vendor. And eventually you\'re going to be creating a bill with those items. So we\'re going to go into the new button and go to purchase order. Notice purchase orders is showing there because we turned on QuickBooks Online Plus and the purchase order looks pretty much identical to a bill. The difference is that it says it right there really big that it is a purchase order. And let\'s say for this old vendor I want to do a purchase order for a couple of items. So we\'re going to pick this and this and then we\'ll you know. put dollar amounts associated with my purchase. And when I finish creating the purchase order, nothing\'s gonna affect my system. This is not account payable. I don\'t owe that money. I don\'t have an open balance. It\'s not gonna show up in my banks. It\'s not gonna show up in any of my reports because a purchase order is just a pro forma transaction. But what\'s nice is later on, when I want to receive that purchase order or when the vendor actually sends me a bill for that purchase order, to the new button and then click on build and then when I click on the drop down menu and select all vendor here on the right hand side there will be a drawer reminding me I already have a purchase order for this vendor and it\'s most most probable a future bill that you\'re going to be creating is going to come from a purchase order. So all I have to do is click on add and I will be adding the components to that vendor. Now you do have to be careful because sometimes QuickBooks will automatically add a line based on what the last transaction was. So like this 1500 was added from previous transaction. So I\'m going to delete that. QuickBooks tries to help you by speeding up the process, but you just have to be very, very careful that if QuickBooks is adding things for you. Is that what you want? Is that what you meant to do? So that\'s so this is essentially how we close the circle on an open purchase order all the way through the process of creating the bill then we click on save or save and close and then you pay the bill in whichever way shape or form you need to pay it or match it with a Downloaded bank transaction if that\'s going to be your workflow The nice thing is when you look at a bill that\'s been linked to a purchase order We can click up here with this link to purchase order click on that and then you can click on the purchase order and you can view the purchase order as a separate transaction that the invoice the purchase order could have one date the bill could have a different date the purchase order could have an intent that you want about a hundred units and then maybe in the bill you only really bought 60 units not a hundred because maybe they shipped you short or you change your mind from the moment that you did a purchase order then that the vendor actually executed the order send you the you the services. So that particular piece is more advanced. I know not a lot of people are going to be using items and bills or using the purchase order workflow but if you\'re going to be using inventory it\'s very likely that you\'re going to be using the purchase order workflow. Anyway I hope you enjoyed this video. Again go in the description check out all the other videos I have in this series for QuickBooks Online. **1. Writing Off an Old Bill (Journal Entry) 3^rd^ example** Scenario: Writing off a bill from the past that is no longer going to be paid. Steps: 1\. Open QuickBooks Online and go to the New button. 2\. Under Other, select Journal Entry. 3\. In the Journal Date field, input today's date (for example, February 2024). 4\. In the first line, select Accounts Payable as the account and debit it with the amount of the bill you wish to write off (e.g., \$6,900). 5\. In the Name column, select the vendor you owe the money to (e.g., XYZ Vendor). 6\. In the second line, select the original expense account that the bill was categorized under (e.g., Advertising or Marketing). 7\. Credit this account with the same amount (\$6,900). 8\. In the Memo field, write a note such as "Writing off old bill". 9\. Click Save and Close. Result: The Accounts Payable balance will be reduced by the amount, and the expense will be adjusted for the current year. **2. Matching Open Bills in Bank Feed** Scenario: Matching a bank transaction to an existing open bill. Steps: 1\. Go to the Bank Transactions tab in QuickBooks Online. 2\. Select Spend to view the bank transactions. 3\. Find the transaction (e.g., for \$596.12) that corresponds to an open bill. 4\. Click on Find Match next to the transaction. 5\. QuickBooks will show a list of open bills. Select the bill that corresponds to the bank transaction. 6\. Click Match to match the bank transaction with the open bill. 7\. If everything is correct, click Save and Close. Result: The bill will be marked as paid, and the bank transaction will be reconciled. **3. Handling Multiple Vendor Credits via Journal Entry** Scenario: Applying multiple credits to an open bill using journal entries. Steps: 1\. Create Journal Entries for each credit. Go to New \> Journal Entry. Enter a date for the journal entry. In the first line, select Accounts Payable and debit it with the credit amount (e.g., \$900). In the second line, select the original expense account related to the bill (e.g., Advertising) and credit it with the same amount. Add a description like "Vendor Credit for Bill Adjustment". Save and close the journal entry. 2\. Repeat the process for any additional credits (e.g., for \$6,000). 3\. After creating the journal entries, go to Pay Bills. 4\. Select the open bill you wish to apply the credits to. 5\. QuickBooks will automatically show the available credits, and you can choose how much of each credit to apply to the bill. 6\. Click Save and Close. Result: The bill will be reduced by the applied credits, and no actual payment will be made. **4. Using Items in Bills (Instead of Accounts)** Scenario: Using items instead of accounts in your bills for better tracking. Steps: 1\. Go to the Gear Icon and click on Account and Settings. 2\. Under Expenses, select Bills and Expenses. 3\. Enable the option Show items table on expense and purchase order forms. 4\. If needed, **enable Track expenses by customer (to track expenses by project or customer).** 5\. Save the settings. 6\. Go to New \> Bill. 7\. In the Item Details section, select an item from your Item List. 8\. If the item isn't listed, you can create a new item by clicking Add New. For example, create a Non-Inventory Item for a USB cable. Make sure to check I purchase this item. 9\. Add the price and select the appropriate vendor. 10\. If this expense is related to a customer or project, you can add it in the Customer column. 11\. Click Save and Close. Result: Your bill is now recorded using items, which makes it easier to track and manage inventory-related expenses. **5. Using Purchase Orders for Bill Management** Scenario: Creating and managing purchase orders, then turning them into bills. Steps: 1\. Go to the New button and select Purchase Order. 2\. Select the vendor and items for the purchase order (e.g., 100 USB cables). 3\. After creating the purchase order, save it. 4\. When the vendor sends you the bill for the purchase order: Go to New \> Bill. Select the same vendor. QuickBooks will prompt you to link the purchase order to the bill. Click Add to pull the items from the purchase order into the bill. 5\. Adjust any quantities or pricing if needed. 6\. Save and close the bill. Result: The bill is now linked to the original purchase order, and you can manage your expenses and vendor transactions more efficiently. **1. Recording a Bill in Accounts Payable** - Click on the "New" button on the left-hand side of QuickBooks. - Under the "Vendors" section, select "Bills." - In the "New Bills" screen, select the vendor that sent you the bill from the drop-down menu (e.g., XYZ Vendor). - Match the bill date from the document and input it in QuickBooks. - Set the due date for the bill. If the vendor provides terms (e.g., 30 days), you can select those from the drop-down menu, which will automatically update the due date. - Enter the invoice number from the bill in the "Invoice No." field. - Under "Category," select the appropriate expense category (e.g., Contractor Services). Add a description (e.g., "Labor for Miami job"). - Enter the amount for the bill. If the bill covers multiple categories, split the amount into different lines for each category (e.g., \$2,000 for labor and \$500 for materials). - Click "Save" or "Save and Close" once you're done. You can also select "Save and Schedule Payment" if using QuickBooks Bill Pay. **2. Creating a Bill for a New Vendor** - Click the "New" button and select "Bill." - Click "Add New" under the vendor drop-down if the vendor (e.g., Verizon Wireless) isn't in your list. - Add the vendor details (name, address, contact info) or just create the vendor name and click "Save." - Enter the bill details, including the bill date, due date, and invoice number. - Under "Category," select the appropriate account (e.g., "Phone" or "Communications"). - Enter the bill amount (e.g., \$596.12) and any other relevant details. - If you have a physical copy of the bill, you can attach it by clicking "Attachments" and uploading the file. - - Click "Save and Close" to finish the process. **3. Paying Bills from QuickBooks** - Click on the "New" button and select "Pay Bill." - You'll be shown a list of all open bills. Choose the bank account you're paying from (e.g., checking account). - Input the date of the payment and the check number (if paying by check). - Select the specific vendor you are paying. If it's a partial payment, enter the amount you want to pay (e.g., \$2,200). - Click "Save," or choose "Save and Close" to finalize the transaction. **4. Paying Bills from the Bill History** - Open the bill by clicking the "New" button, then select "Bill." - Click the "History" button to see all past bills. - Find the bill you wish to pay and click the "Mark as Paid" button. - This takes you to the "Bill Payment" screen, where the vendor and bill are pre-selected. - Complete the payment details (e.g., bank account, payment date, and amount). - Click "Save and Close" to finish. **5. Batch Paying Bills** - Click on the "New" button, then select "Pay Bill." - Choose multiple bills to pay by selecting them from the list of open bills - Choose the bank account for payment, and input payment details (e.g., check number, payment date). - Review the bills you are paying and enter partial payments if needed. - Click "Save" or "Save and Close" to complete the process. If you need to print checks, select the "Print Checks" option. **6. Paying Bills Using QuickBooks Bill Pay Feature** If you have the Bill Pay feature enabled in QuickBooks, you can directly schedule payments to vendors from within QuickBooks, either electronically or via check. - When recording a bill, click the "Save and Schedule Payment" button instead of just "Save." - QuickBooks will prompt you to select how you want to pay (e.g., electronically via ACH, via check, etc.). - Choose the bank account from which the payment will be made. - Input the payment date and ensure the details are correct. - After confirming, QuickBooks will process the payment according to the chosen method. You can then track the payment directly from the Bill Pay module in QuickBooks. **7. Recording a Bill Payment (Without QuickBooks Bill Pay)** If you are manually paying the vendor (e.g., through a bank transfer or check), you will record the payment in QuickBooks as follows: - Go to the "New" button and select "Pay Bill." - Select the open bill you are paying. - Choose the payment method, such as "Check" or "Bank Transfer." - Input the payment date and the payment amount. - If you are paying a partial amount, adjust the payment value. - Choose the bank account that you are paying from, and input the check number (if applicable). - Click "Save" or "Save and Close." **8. Printing Checks for Bill Payments** If you're paying bills by check, QuickBooks allows you to print checks directly from the application. - Go to the "New" button, then select "Pay Bill." - Select the vendor and the bills to pay. - Choose the bank account and input the check date and number. - Click "Print Check" instead of saving the payment. - Follow the prompts to print the check, ensuring that you have the proper check layout setup. - Once printed, click "Save" or "Save and Close" to complete the transaction. **9. Verifying Payment and Bill Status** After entering a bill and its payment, you can verify the status of your bills and payments by reviewing the "Bill Payment History." - Go to the "Vendors" tab and select "Bills." - From the "Bill Payment History," you can view all open and paid bills. - For each bill, QuickBooks will show whether it is paid or still open, along with the payment method and date. - You can also use this feature to check if there are any outstanding balances on partially paid bills. **10. Handling Multiple Payments for One Bill** If you need to make multiple payments for a single bill (e.g., paying in installments), follow these steps: - When paying a bill, select the bill from the open bills list. - Enter the first payment amount (less than the total bill) and select the payment method. - QuickBooks will record this partial payment and leave the remaining balance open. - When you make the next payment, follow the same steps, and QuickBooks will apply the payment to the remaining balance of the bill. - Once the full bill is paid, QuickBooks will mark it as "Paid."