Next to payroll, paying bills is probably your least favorite task in QuickBooks. There are two ways you can handle this – the slow way or the fast way!
Many users start with what I call the slow way – stacking bills on your desk or folder, sorting through them when you decide to pay bills, decide which ones to pay and write your check. If you get many bills, this can be really time consuming – especially if cash flow is an issue and you need to decide which bills to pay and you have to keep using a calculator or adding machine to figure your ending bank balance when you pay certain bills. While this system may seem simpler, you are actually creating more work for yourself and losing out on some tools that can simplify the process and help you monitor cash flow better.
Second method is faster and much more helpful. I first started using Enter Bills/Pay Bills because I could get the bills off my desk. I found I could use the Accounts Payable report to monitor what was due when and then the Pay Bills made it easy to decide which bills to pay. One click and the check was created and the bill paid – or I could pay several bills at once.
If you’re use the first method, some additional tools you’re missing are:
- Automating bills
- Reminders for bills due
- Reports to help you review what is due when (no more flipping through all the actual bills)
- Easily tracking Unpaid Job Bills
- Linking bills to purchase orders
- Quick access to a bill’s status
Receiving the Vendor Invoice (Bill)
When an expense bill comes in (from a utility company, for example), click the Enter Bills icon on the home page, or Vendors | Enter Bills. A window like the one displayed below opens. Select the vendor and fill in the blanks. Make sure that the Expenses tab below is selected and the appropriate account number and amount fields are completed.
If this is for a Customer Job/Project, the use the Items Tab (instead of the Expense Tab) and select the item (this is KEY to job costing) and the Customer:Job
If you track inventory, then there are two parts – receiving the products and receiving the bill. QuickBooks has an icon for each. If you receive the Item, but not the Bill, you have an Item Receipt. If it’s a Bill for an Item that already has a related (the shipment preceded the bill), QuickBooks instructs you to use Vendor | Enter Bill for Received Items. Follow the prompts. Unless you are working in Enterprise Solutions using Enhanced Receiving, the difference is:
- A check box stating whether or not bill is received (see above)
- When you receive items without a bill, your Payables increase, but there is no due date and it does not show in the Pay Bills screen.
- If this is inventory, it gets more complicated and beyond the scope of this article. However, I’ll be happy to discuss it with you.
If the bill came simultaneously with items, click Vendors | Receive Items and Enter Bill. When you select the vendor from the list, this box opens (if you have sent a purchase order):
Click Yes. The Open Purchase Orders box opens, containing a list of open POs. Select the one(s) you want and click OK. The bill form opens, containing the details of that purchase order. Change quantities if they don’t match the shipment, and edit other fields as necessary. Save the bill.
Settling your debts
It’s good to set reminders for bills. Go to Edit | Preferences and click Reminders. Make sure that that Show Reminders List… box is checked, then click Company Preferences. Find the Bills to Pay row and enter the advance notice you’d like. Indicate whether you want to see a list or a summary, then click OK.
When bills are due, click the Pay Bills icon or select Vendors | Pay Bills. A window opens displaying all outstanding bills. You can pare this down by selecting a date in the Due on or before field and filtering by vendors. You can also choose how to sort – by Due Date, Discount Date, or Vendor.
Enter a check mark next to the bills you’re paying, and change the amount in the Amt. To Pay field at the end of the row if necessary. At the bottom of the screen, you can set the payment date and type, use any discounts or credits, and make sure the correct payment account is selected. When you’re done, click Pay Selected Bills. You will also see totals of amounts due, amounts being paid and the net effect on your bank balance (or credit card).
If you have a credit, you can click on Set Credits at the bottom to apply the credit. If you print checks from QuickBooks, the check stub will show that you used this credit to partially pay this invoice.
Tip: You can have credits and discounts automatically applied by going to Edit | Preferences | Bills.
After You’ve Paid Up
There are a number of places where your bills appear in QuickBooks, including:
- The Unpaid Bills Detail report
- The Vendor Balance Detail report
- The Vendor Center
- Quick Reports
- In the Recent Transactions pane of some forms
- On the bills themselves
You can just pay bills by using Banking | Write Checks or Enter Credit Card Charges. But the payoff for tracking bills is instant access to your accounts payable status, better relations with vendors, and a more insightful accounting of your company’s cash flow.
If you want help automating any part of this process, contact our office!