When considering cash management, you might think of increasing collection from the accounts receivable. After all, it represents the money you (business) owe to the customers. However, accounts payable is a huge component of cash management. Account payable represents the borrowing from the suppliers. The combination of these two (Account Receivable and Accounts Payable) is necessary for the performance of your business. If you want to record every single detail about account payable, learn with us how to record accounts payable in QuickBooks. Read more to know in-depth details.
The guide has a focal point on the accounts payable process and how to record accounts payable in QuickBooks Online and Desktop versions.
What Do You Understand by Accounts Payable?
Accounts payable refers to the money that you as a business owe to the vendors for serving goods and services to you on the credit. This can be also considered as a short-term debt owed by you to the suppliers. We can also say, the amount outstanding you owe to the vendors or suppliers comes under the account payable.
Furthermore, account payable is the component of the current liabilities on the balance sheet. In addition, the cash flow statements show the increase or decrease in accounts payable for the prior periods. If the accounts payable increases in the comparison of the last period, it suggests that your business is buying more goods on credit than cash. But, if it decreases, it shows that you meet the short-term obligations at a speedy rate. Hence, recording the accounts payable in QuickBooks is important to analyze the impact of cash flow.
How Do I Record the Accounts Payable in QuickBooks Desktop?
Accounts payable (A/P) is a way of paying the bills to the vendors or suppliers. If you want to enter the bills then you can do that easily. To get started with this, you need to record the bills as they come. By recording the bills does not mean you have to pay right away. The information can be recorded so that you can check what your business owes and how much money you have for a business. Then, QuickBooks sends you a reminder for the due bills. This also prevents you from forgetting the bill payments.
QuickBooks allows you to record the accounts payable in two different ways. Here we will show both the options with detailed steps:
Option 1: Enter and Track Bills By Item and Expense
If you want to track the bills by item and expense, you need to navigate to the Enter Bills window. Then, you can add the bill by selecting the vendor name and payment terms. If required, you can add the reference number of the vendor and a memo describing the bill.
Thereafter, you need to enter the expense account and assign expenses to the Customer: Job and Class. You can also record various items along with the name and price. To save the bill with proper instructions, you can go through the following steps:
- Go to the “Vendors” menu on the homepage.
- Click on the “Enter Bills” option.
- From the “Enter Bills” window, select the “Bill” option from the top.
- If you are planning to send this bill to the vendor who is on the vendor list then click on the “Vendor” dropdown menu. Then, select the name of the considered vendor. Doing so, QuickBooks automatically fills in the details.
- If your vendor is not available in the list, you have to click on the “Add” button and add the details manually.
- At this point, you can choose the payment terms. For that, you can go to the “Terms” line and click on the drop-down menu to select the payment terms.
- This step is optional, but if you wish to add the vendor’s reference number, you can add it. It could be an account number or invoice number.
- If required, you can add a memo in the “Memo” text field to describe the bill. Remember this note will display on your A/P register.
- Now, move to the “Account” column in the “Expenses” tab
- Then, add the name of your expense account.
- Now, move to the “Amount” column and if required, edit the number.
- Add a few words for the “Memo” column.
- After this, assign an expense to the “Customer: Job”.
- You can assign the expense to the “Class” menu.
- Go to the “Items” tab and record the item that you have purchased. You can also add the amount you have paid.
- Now, move to the “Item” column and add the name of the item.
- Thereafter, you can enter the remaining rows on the same tab.
- Once done, click on the “Save & New” button.
This is how you can save the bill in QuickBooks Desktop. If needed, you can enter other bills for some other vendors.
Option 2: Enter Bills in the Accounts Payable Register
- Go to the “Lists” menu.
- Then, click on the “Charts of Accounts”.
- Alternatively, you can select the “Chart of Accounts” icon from the homepage.
- Now, you can open your “Account Payable” account.
- Then, enter the details for your bill. For instance, fill in the “Enter Bills” section
- After this, click on the “Vendor” text box and choose the vendor name using the drop-down menu.
- In case you are paying a new vendor that is not on the list then click on the “Quick Add” button to enter the details.
- Now, select your account name using the “Account” drop-down menu.
- If you wish to track items and expenses or fill out the register for reimbursement for the check then you can click on the “Edit Transaction” option to view the “Enter Bills” window.
- Once done entering the details, you can hit the “Save & New” or “Save & Close” button.
- After that, click on the “Record” button.
Please there is also a Restore button next to the Record button. In case you enter the register but want to reenter the info from the start before recording then you can hit the Restore button, fill out the information, and press the Record button to complete the procedure again.
How to Record Accounts Payable in QuickBooks Online?
QuickBooks Online users can also enter bills to track upcoming payments. All you have to do is go to the Enter Bills, add the required information correctly, and review the details after saving it.
- Log in to your “QuickBooks Online”.
- Then, click on the “New” button located at the top left.
- Select the “Bill” option from the “Vendors” column.
- Here, you will see a screen to enter bill details. Depending on your choice, you can set up the advanced settings as well.
- For specifying the bill details, you will have to select the vendor from the list. In case the vendor is new to the record then click on the “Add” button to set up the new vendor.
- Then, enter the “Bill date”. The due date is set up by adding the payment terms to your invoice date. Thus, you should add the bill date that is the invoice date, not the date when you received the bill or entered it.
- In the “Due date” column, the date will be calculated automatically based on the bill date and terms. However, it is recommended to verify the calculated date matches the due date displayed on the bill.
- Now, add the invoice or bill number in the “Bill no.” column.
- Go to the “Category” section and assign the expenses that are not billed to the customers. All you have to do is choose the category from the drop-down or hit the “Add new” button to create the new account.
- In the “Description” section, you can enter the details of the expense.
- Now, click on the “Amount” button and add the expense amount.
- After this, move to the “Billable” section and check the box to assign expense billable to the customer. Or, you can simply assign the billable expenses to product and services items rather than categories.
- In case you are billing the customer more than the real expense then add the “Markup%” here.
- Those who want to collect sales tax after billing the expense for the customer then check the box for “Tax”.
- In the “Customer/Project” section, you can add the project or customer to whom you want to bill the expense. If the considered customer is not available then click on the “Add new” button to create the one.
- In the “Product/Service Item”, purchases of the item that you have sold to the customers should be assigned to the inventory item. You can assign the services and expenses to the service item. In case there is no product and service, you can click the “Add new” button, and the details like rate, billable, class, and other information will be populated automatically.
- Move to the “Qty” section and add the number of goods. As you do so, the amount will be calculated as quantity times rate and the sales amount will be calculated as the amount times markup%.
- Now, select a customer or project for billing the item. You can click on the “Add new” button to start the new customer or project.
- After adding all the required details, you can click the “Save and Close” button.
Now that you have entered the bill, you can review it to verify the information. For this, you can go to the Vendor Center and hover the mouse on the Expenses tab to choose the Vendors option. Now scroll down and locate the vendor for whom you have entered the details. Here, you will see the outstanding bills in the Open Balance column.
In Brief
Recording the accounts payable helps you to track the money you owe to the vendors or suppliers. Be it QuickBooks Desktop Enterprise or QuickBooks Online, you can use the above-mentioned guide to enter your bills and pay to the vendors. Here, we have already explained in detail how to record accounts payable in QuickBooks Online and Desktop versions.
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