Save Time and Monitor Cash Flow Better with Accounts Payable

If you are already using the Accounts Payable feature in QuickBooks, good for you!  However, I find many don’t use this feature thinking it will take too much time. So instead, the bills are either entered in a spreadsheet or in some sort of tickler file. For those of you in that second group, please keep reading.  I’ll show you how using the Accounts Payable feature will help you not only make it much easier to keep up with who you owe how much (definitely important for cash flow – perhaps even more so during the pandemic crisis) but also make bill paying much simpler and faster.

If your bills are in a folder, then when it’s time to pay bills, you have to sort through all your bills to see which ones you want to pay now.  For those of you who get many bills (which is probably most if not all of you), this can be really time consuming if 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. And if cash flow is challenging (which it might be with businesses shut down and customers unemployed), it might take you even longer to decide which bills and how much you’ll pay.   If your list is in Excel, that’s faster than folders or tickler files but still nowhere near as fast as using QuickBooks to manage your Accounts Payable.

If you’re use the first method, some tools you’re missing are:

  • Automating bills (huge timesaver!)
  • 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
  • Quick access to a bill’s status

There are a number of places where your bills appear in QuickBooks, including:

  • A/P Aging (Summary or Detail)
  • Unpaid Bills Detail report
  • Vendor Balance Detail report
  • Vendor Center

Notice how easily you can see not only who you owe and how much, but when you owe

QuickBooks Accounts Payable

Using Accounts Payable is MUCH faster and much more helpful.  I first started using Enter Bills/Pay Bills simply 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 – I could even pay several bills at once.

Note: While the screen shots are from the Desktop QuickBooks, the process is still the same in QuickBooks Online.

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. If this is an overhead expense, use the Expense tab.  If you need job costing, then the Items tab is usually your better option so you get better reporting.

QuickBooks Accounts Payable

If you have track inventory, then there are 2 components

QuickBooks Accounts Payable

  1. receiving the products
  2. receiving the bill.


There are 3 scenarios for Inventory with Accounts Payable

  1. You received the Items, but not the Bill. Vendors > Receive Items (you’ll have an Item Receipt)
  2. You received the bill along with the items, click Vendors > Receive Items and Enter Bill.
  3. You received a bill for Items you already received. Click Vendors> Enter Bill for Received Items


Paying Your Bills

When paying a bill in QuickBooks DO NOT use the Write Check feature.  While a check may be how you’re paying, it does not clear your payable in QuickBooks. Follow the arrows on the Home Page!  The Pay Bills feature is what you need to use (and so much more powerful and helpful).

Click the Pay Bills icon or select Vendors > Pay Bills. A window opens displaying all outstanding bills. You can narrow 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.

QuickBooks Accounts Payable

You can choose who to pay, how much, (noting your account balance in the lower right-hand corner) and whether you pay by check or credit card (method is at the bottom of the above screen).  Simply enter a check mark next to the bills you’re paying, change the amount in the Amt. To Pay field at the end of the row if necessary, and use discounts and credits where applicable. As you check off the bills to pay and amounts, you will also the net effect on your bank balance (or credit card) account. At the bottom of the screen, you can set the payment date.  When you’re done, click Pay Selected Bills.  You’ve just created multiple bill payments faster that you could do by Write Check!

If you print checks from QuickBooks, the check stub will show the bills you are paying as well as any credits or discounts you used.

After you’ve paid the bills, QuickBooks will display the Paid status on the bill

QuickBooks Accounts Payable

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