QuickBooks Tip: How To Enter Bills (1 of 2)

QuickBooks Tip: How To Enter Bills (1 of 2)

| 3 min read

A function in QuickBooks I often see overlooked or completely misused is the Enter Bills and the subsequent Pay Bills function in QuickBooks. Both are great functions that give an
overview of what the company's total liabilities are to vendors, when they're due, and the ability to print or even pay them online through QuickBooks. In this two part post we'll discuss the process of entering bills and then we'll dicuss how to properly pay the bill via the Pay Bills window.

The flip side to this is that it is time consuming and the same basic function (paying a bill) can be achieved by just entering a check into QuickBooks when a payment is remitted. Most small business that I deal with actually does this very thing. To them, it's not worth the time and effort to enter the same costs they know and understand each month into the Enter Bills window. They setup an ACH with most vendors and will enter the expense into QuickBooks when it hits the bank. This can even be further automated by using a memorized transaction for fixed costs every month.

However, if you're a restaurant the amount of vendors can be overwhelming. Each has their own time frame (Due on receipt, Net-30, etc.) when the payment is overdue, send multiple bills over the course of the month with varying amounts, and remit monthly statements with an overview of all the bills sent for that particular month which can be reviewed via vendor center. Don't freak out though, QuickBooks helps handle this process in a smooth manner

How QuickBooks Handles Bills - The accounting behind entering and paying a bill is as follows:

  • The bill is entered which increase your expense account and increase
    your Accounts Payable (liability)
  • The bill is paid which decreases your Accounts Payable and decreases your checking (cash) or transfers the liability to a credit card

How to Enter Bills - When you receive a bill from a vendor be it a hard copy or digital file from an email or website you're interested in some information to help fill out the bill pay window:

  • The Vendor (Make sure the address information is filled in correctly)
  • Date (Date the bill was created from the vendor)
  • Invoice #
  • Amount Due (The total amount due for services rendered
  • Terms (How many days given before it's due, this could be due on receipt or Net 30)
  • Memo (To note what the bill was used to pay for)

Once you have all of the pertaining information filled out in the purple bill box you need to then allocate it to the proper expense or asset account below. Refer to your CPA for the threshold that they would like to see an expense become an asset.

How to Enter Credits - If you've overpaid an invoice or a refund is due a vendor will issue a credit to your company. Just like in the above example we need the vendor, credit amount, date, and the associated reference number. To enter the credit window click the radio button in the top left corner of the Enter Bills window. Enter the vendor, date of the credit memo, pertaining reference number, and the amount.

When a credit is issued some folks wonder what account they're suppose to hit. Well, if a vendor was to refund you money for an insurance expense because you overpaid the premium you simply back the expense out of the insurance expense, this is not income!

Double Checking with Statements - If a vendor is sending multiple bills or has the potential to send multiple bills over the entire month a statement is generated a monthly basis requesting payment to be remitted for the referenced bills currently due. I never use the statement as a means of remitting payment. If I've been doing my job right I will have all of the bills in QuickBooks referenced to the statement. I use the statement then as a means of reconciling my outstanding bills.

I first head into vendor center, select the vendor, then review the bills referenced in the statement. If you've been entering each bill in with all of the pertinent information you can sort by then date then follow along with the invoice numbers. I double-check all of the invoices as credits can be issued that are overlooked, an amount can be entered wrong ($654.63 vs. $645.63), and you may have just lost a bill. This helps you manager your vendors and keeps your head cool

Entering bills can be time consuming and as discussed before might not need to be in your company's deck of cards. If however you're receiving multiples bills from a plethora of vendors entering bills into QuickBooks helps keep your accounts payable in check, holds your vendors accountable for credits issued, and gives you a big picture of your total liabilities to your vendors at any one given time to help forecast your cash flow.

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