You have a choice to record your bank account expenditures in QB using either the Write Checks icon on the Home Page in the lower right BANKING section or by choosing to start with Enter Bills in the top section on the Home Page titled VENDORS.
If you choose Write Checks as shown on the left, when you click on the icon, you will have a check template appear. This is used for any funds leaving your bank account, whether they are actually a check or by other means such as a debit card, wires, transfers, ACHs or any other form of disbursement. For the check No. field, if you plan to print the check from QB, leave the Print Later button checked and QB will complete the check number. If you are hand writing the check or paying by other means, be sure to either input the actual check number or the word debit, wire, transfer, ACH or whatever describes the transaction.
The decision to first enter any upcoming expenditure as a Bill depends on what you want to accomplish. Using Bills is part of the process that allows your financial statements to show the accrual basis of accounting. Using Bills does not prevent your books from also showing in cash basis. On your financial statements, you simply toggle between which basis you want. However, if you don’t input transactions using the accrual basis process, you will never have the choice to have accurate accrual basis reports.
If your cash flow is tight, entering your vendors’ invoices allows you to look at a list of all outstanding bills and choose, based on due dates, which bills to pay first.
To start the process, you choose the Enter Bills icon as shown below. For businesses that use Purchase Orders or have Inventory, you start the process sooner if you have turned on the options on the top line. This example assumes we only need to start with Enter Bills on the second line.
When you choose the Enter Bills icon, a Bill template, resembling a check, appears. It is important that all fields on this template be completed and entered correctly to obtain the correct accounting information.
The date field is the most common field that is not completed correctly. A bill date should be the date when a provided service was completed or when purchased goods were exchanged from the vendor to you. It is common for completed services to be billed after the month end when the services were performed or for goods to be delivered and the vendor extends you credit to allow you to pay later. You want the date on the bill to match the correct time period for accrual accounting purposes. Be aware that vendors sometimes want you to prepay so they may send you their invoice early or they may also invoice you late. The date of their invoice does not necessarily mean it is the correct date for you to use on your bill. For example, rent is usually due on the 1st of the month, so you want to date all of your rent bills the 1st of each month. However, you may prepay the bill in the month before or you may pay later than the 1st of the month. In accrual accounting, dating the bill correctly will show one rent expense per month — no matter when you choose to actually pay your landlord. Cash basis might show two rent checks in April if you paid April in April and prepaid May in April.
The other fields are fairly self-explanatory. Be sure to enter the correct due date either by completing the Terms field which will then calculate the Bill Due date from the Bill date field or by simply filling in the Bill Due date field. This due date will be helpful when you are deciding which bills to pay.
After entering all of your bills, you need to pay them through the Bill process. They can be paid from your bank account or your credit card account. The Pay Bills icon in the Vendors section takes you to the list of all outstanding bills.
You can use the Sort By field to choose different methods to sort the list and then use Filter By to further define your list. You can also show a specific Due on or before date. If you have a small number of bills, you may simply choose Show all bills and sort by Vendor or Date.
Before you choose the button in the right hand bottom corner (not shown) to Pay Selected Bills, you will want to review your bills and apply any Discounts Earned or Credits waiting to be applied. These options are directly under the list section. You may also use Go to Bill to the left of these selections if you need to review or change anything on the previously entered bill.
When you are happy with the final amount in the last column on all selected bills to pay, then you choose your payment options shown in the last row. You can batch together the ones you plan to pay on the same date, by the same method and from the same account. If a vendor is being paid for several bills, one check will be created per vendor and the voucher check stub will list each bill and amount.
Go to the bottom of the screen and choose the date you want to pay the bill. Choose either Check or Credit Card for the method. If paying by check and plan to print all the checks, you choose To Be Printed. Choose Assign Check Number if you have already written the check or plan to pay through another method such as a wire transfer. Always make sure you choose the correct bank account or credit card account!
Now you are ready to pay your selected bills by clicking on Pay Selected Bills. They will populate the register of the account from which you will draw the funds. When you go to your bank register, you will see BILL PMT in the Type column to differentiate from the CHK type.