Paying Bills with QuickBooks

There are two ways to manage your bill payments in QuickBooks.

The fastest way to enter invoices and checks, is to use the Write Check window. This might work best for a small business that has very few bills to enter and pay, or if you have just one check you want to write quickly. Also if you write your checks out manually, you can do it this way and then just enter the check number yourself, instead of letting QuickBooks assign it for you. You can use this option for paying by check, credit card or to make a payment online.

 The other option is a two step process. You first enter the bill using the Enter Bills window, and then to pay the bills you use the Pay Bills window. Its actually a three step process if you then go on to print the checks you’ve just selected to pay. This takes a little more time, but it is still very easy and the advantage of this is that you will be able to keep track of how much money you owe. Of course this only makes sense if you’ve entered the bills as you receive them, instead of just when you’re ready to pay them. There are two different reports that you can use to see the total of the bills you owe. Either an Accounts Payable Aging Report or the Unpaid Bills Detail Report.

To enter your invoices into the Enter Bills window:  

• Enter the details (date, payee, amount) just as you would in your manual checkbook.
•  In the Ref. No. field, put the invoice number or something else that clearly identifies this bill. If you enter this reference number again in the future, QuickBooks will let you know that you have done so before, thereby prompting you to check to see if you have already paid this bill.
•  For Bill Due, enter the date the bill must be paid by.
•  If you print your checks, then fill out the account or invoice number on the Memo line so it will show up on your check.
•  Then assign the payment to an account.
•  Finally, if you track items by customer:job and/or class, fill these fields out (we’ll discuss this more in future posts)
•  Click Save & Close if you’re done, Save & New to enter another bill.

 Then when your ready to pay your bills use the Pay Bills window. In the QuickBooks Pay Bills window you can choose whether to see all bills or just those due by a certain date. Select the ones you want to pay, the payment method (check or credit card) and whether or not you will be printing them, and the payment date to print on the checks, and then click Pay Selected Bills. If you’ve elected to print the checks you’ll be given the opportunity to do so now.

Both methods will accomplish the same goal, getting your bills paid. It will end up being a personal preference as to which method works best for you. I use a combination of both writing checks and entering and paying bills. On a weekly basis I’ll enter all of a client’s invoices they’ve sent me using the Enter Bills window and then send them a Unpaid Bills Detail Report so they know exactly how much they owe in outstanding bills. When the bills are due I’ll use the Pay Bills window to process the payments and either print the checks or enter the check numbers if the client has already paid them. I use the Write check window when a invoice has been paid before I receive it or if someone needs one or two checks printed quickly.

Which option do you think would work best for your business?

Also see:

QuickBooks: the most popular accounting software

Getting Started with QuickBooks