November 15th, 2022
QuickBooks is one of the accounting programs used most by small businesses, accountants, and bookkeepers. One of the best features of QuickBooks is how simple it is to manage accounts payable, including keeping track of and paying vendors’ bills. And we already know how important accounts payable is in running your business. Accounts payable, or AP, are debts you owe to vendors or suppliers for goods and services that they invoiced you for. When a vendor or supplier sends you an invoice for the goods and services they provide, you are required to keep a record of those transactions. Since all of their invoices and bills go into QuickBooks’ Accounts Payable, you must know how to properly record them.
By recording your vendor bills in QuickBooks, you will be able to see what payments you have coming up for each of your vendors; ensure that you are paying all your vendors on time to maintain a good relationship; and have a more realistic idea of total expenses and cash flow. By recording your vendor bills, you will then be able to run an A/P report to see your total amount owed. This is a healthy way to ensure that you are making more money than you are spending.
Sometimes in business, unfortunately, customers do not pay their bills on time. In turn, you may have to alter your payments. It is best practice to pay your bills before they are due, but if not, we suggest that you communicate with your vendors and keep them up to date on when they should be receiving their payments from you. Communication is important in any relationship, but your vendors are typically your lifeline. Creating good relationships can even get you things such as bulk discounts on materials, etc.
Now… let us show you how to enter a vendor bill in QuickBooks!
This is short and sweet, but we will do this in a step-by-step format so that it will be easy for you to follow along in your own account.
NOTE: Before you enter any bills into your QuickBooks account, you should first set up all your vendors and your product and service information. This will help a lot of your fields auto-populate on each new bill. To create a vendor, you will click on +NEW, then click on Vendor. You will put in the vendor’s name, mailing address, terms, and set up your categories for your purchases (COGS, etc.).
Step 1: On your QuickBooks dashboard, on the left sidebar, click on +NEW.
Step 2: Under Vendors in the second column, click on Bills.
The enter bill window will open:
Step 3: Record a Bill
1. Vendor name: Select or enter a new vendor
2. Mailing address: The billing address and terms will automatically populate if the vendor is already set up.
3. Terms: If the payment terms are already set up in the vendor’s file in QBO, they will be automatically added. If not, enter the terms of payment. Net 30 means that the payment is expected in 30 days.
4. Bill date: Enter the invoice date directly from the bill you are entering
5. Due date: Enter the due date (if it was automatically calculated, just verify that it is correct).
6. Bill No: Enter the bill or invoice number directly from the bill that you received. QuickBooks will send you a message if the invoice or bill number matches one that was entered previously to ensure that you are not double-entering or paying bills.
7. Account: Select or enter an account (category). The account (category) is provided by the chart of accounts.
8. Description: Provide a description if needed. Note that it will show up on your reports.
9. Amount: Enter the amount of the bill/expense. If you are paying more than one type of expense on one bill, add another line to add the expense.
10. Simply enter the extra accounts (categories) in the lines below. Make sure to include the account, the amount, and a description (if applicable).
11. Balance Due: Check that the total on the vendor’s bill and the total due match.
Click on Save and Close.
After you have entered the bill, you want to verify that all the information is correct. You can do so by:
- On the left-hand sidebar, hover over Expenses, then select Vendor.
This dashboard will hold all your vendors and outstanding bills. Under the Open Balance column, click on the vendor’s name that you just created a bill for. This will pull up all transactions for that vendor and you should also see the bill that you just created.
We hope this helps to make your process just a little bit easier! And again, please feel free to reach out to us with any bookkeeping needs that you may have!
Even though we are based in Albany, NY, we offer our expertise in business accounting, bookkeeping, and tax preparation all across the United States.