QuickBooks Accounts Payable Workflow

Jul 8, 2024

QuickBooks Accounts Payable Workflow

Overview

  • Accounts Payable Definition: Recording an expense on one day and making the payment for that expense on a different day.
  • Transaction Type in QuickBooks: Bills.

Steps to Record a Bill in QuickBooks

  1. Select Vendor: Choose the vendor from the drop-down menu.
  2. Invoice vs. Bill: Understand that vendor’s invoice is recorded as a bill in QuickBooks' accounts payable.
  3. Bill Date and Due Date:
    • Match the bill date with the document.
    • Choose or create specific terms for payment due date.
  4. Invoice Number: Enter the invoice number for easy recognition.
  5. Category Selection: Choose the relevant expense category from the chart of accounts.
  6. Description: Add a meaningful description for the bill.
  7. Amount: Enter the bill amount.
    • Split amount into multiple categories if necessary.
  8. Save Options: Save, save and close, or save and schedule payment.

Ways to Make a Payment

Manual Process

  1. Click 'New' -> 'Pay Bill': Choose from the list of open bills.
  2. Select Bank Account: Choose the bank account from which you're paying.
  3. Payment Details: Enter payment date, check number, and partial/full payment amount.
  4. Save: Options to save, save and close, or save and print.

Bill Credit Workflow

  1. Open the Bill: Look at historical bills and initiate payment from the specific bill’s screen.
  2. Vendor Credit: Use vendor credit to adjust the bill amount.
  3. Apply Vendor Credit: Mark as paid to use the bill credit.
  4. Journal Entry Method: Use a journal entry to write off old bills or adjust balances.

Advanced Concepts

Journal Entry to Adjust A/P

  1. New Journal Entry: Debit Accounts Payable, Credit the corresponding expense account.
  2. Apply Journal Entry: Mark the bill as paid using the journal entry.

Purchase Orders and Items

  1. Upgrade to QuickBooks Plus: Required to use items in bills and purchase orders.
  2. Enable Items in Bills: Adjust settings to show items table on bills.
  3. Create Purchase Order (PO): Enter items for a vendor before receiving a bill.
  4. Link PO to Bill: Add items from PO to a bill once received.

Final Steps

  1. Reports and Matching: Use unpaid bills report to manage payments.
  2. Bank Feed Matching: Ensure bills are matched with bank transactions to avoid duplicates.
  3. Attachments: Attach relevant PDFs or images to bills for documentation.

Best Practices

  • Always verify terms and amounts before saving bills.
  • Regularly run unpaid bills reports and match payments promptly.
  • Configure QuickBooks settings to match your business needs (e.g., enabling items on bills).

Additional Features

  • Bill Pay Feature: Option to enable bill pay for automated payments via QuickBooks.
  • Vendor Management: Add vendors on-the-fly with comprehensive details.
  • Memo Field: Use detailed memos for clear identification of expenses.

Conclusion

  • Follow the steps to ensure accurate recording and payment of expenses in QuickBooks.
  • Utilize advanced features as needed to match your business operations.
  • Regularly update and verify transactions to maintain clean records.