How to avoid a common bill paying mistake

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When it comes to tracking your expenses in QuickBooks, you can use either the “Enter Bills/Pay Bills” feature, or the “Write Checks” function to record payment. There is an important difference in these, and one will keep you from making mistakes when paying bills.

Let’s see what features each of these has, and then the advantages of each.

“Enter Bills” is where you record all the information from the bill you’ve received:

  • vendor name
  • invoice date (the date from which your vendor ages the invoice)
  • invoice number (the importance of this is explained shortly)
  • total amount of the bill
  • date when that bill is due
  • account(s) to which the expense(s) will be charged

All that information goes into reports called Accounts Payable (A/P) Aging Reports, which can be run in summary or detail. Via these reports, you can manage which bills need to be paid now, and which can wait a while.

“Pay Bills” is where you pick which bills, and what amounts, to pay. The default listing shows the bills in order of when they are due. Handy, huh? You can also filter by a particular vendor, which is also handy if you need to pay several bills to just one vendor. Once you’ve selected which bills and amounts to pay, enter the date of your checks, the correct checking account on which the checks are written, and whether you’ll be printing checks or assigning check numbers. Then click on the “Pay Selected Bills” button. You can then pay more bills, or print checks.

“Write Checks” is the function where you might record a loan payment, or, as the business owner, make a draw from the company. In cases such as these, there usually isn’t a bill to be entered, so just writing a check makes sense.

Contrasting these two methods, you might think that the Enter Bills/Pay Bills is unnecessary work. I disagree; QuickBooks is a robust piece of accounting software, and gives lots of info with which to run your business. Since cash is king, as they say, utilizing the bill paying feature gives you a heads up on the cash you need, and when you need it. Otherwise, I often see clients just paying bills when the frustrated, unpaid vendor gets them on the phone. So plan ahead, don’t be reactionary.

Your other big advantage is knowing exactly which invoices you have paid. You entered the invoice number (see above), so if you receive a duplicate invoice and try to enter it, you’ll receive a warning. Who wants to pay an invoice twice? Simply writing a check does not keep you from this potential overpayment.

Oh, and if you Enter a Bill, for goodness’ sake do not Write a Check for its payment! You’ll have recorded the expense twice, and still show an unpaid bill!

If you use QuickBooks the way it’s designed, you are using best bookkeeping practices, have useful reports for managing your business, and are not making mistakes in not paying bills, or in overpaying them.

If you have further questions about QuickBooks, or would like to work with a professional to resolve confusion with your books, let’s have a conversation.

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