QuickBooks gives you 2 options for how to pay bills you get from vendors. The faster way is to use the Write Checks function, put in all the information, and print the checks. While this can save you some time, there are some advantages to using Enter Bills and Pay Bills. If you generate financial reports using the accrual basis of accounting, the second method allows you to account for bills that come in after your fiscal year closes and need to be accrued. It also allows you to monitor unpaid bills from within QuickBooks, as well as entering and applying credit memos. If you pay bills on a fixed schedule, such as weekly or on net 30 terms, entering bills as they come in will let you monitor your expenses and plan your cash flow. I’ll walk through how to use both methods here.

Entering Bills: When you get bills from vendors, you’ll need to know a few details to enter it in QuickBooks:

  • Vendor – make sure you have the correct address information.
  • Date – this should be the invoice date, when it was sent by the vendor.
  • Invoice #
  • Amount Due
  • Terms – this is how long the vendor gives you to pay the bill, e.g. due on receipt or net 30.
  • Memo – this is the product or service you’re paying for.
  • Account – this is the expense you’re charging or asset you’re recording. You can choose from anything in your Chart of Accounts.

Click Enter Bills and put in the information. If you get a credit memo from a vendor, e.g. if you overpaid an invoice, or returned a product, you can enter that in the same screen – just click on the radio button for Credit.

Pay Bills: When you’re ready to cut checks, click on the Pay Bills button on the home screen. You’ll see all the unpaid bills you’ve entered and can choose which you’d like to pay. Also select any credit memos you’d like to apply to your payment. If you have multiple bills from a single vendor, QuickBooks will combine them into 1 check. Use Assign Check Number if you’ll write the checks by hand, or To Be Printed if you’ll be printing them from QuickBooks.

Write Checks: Using the Write Checks window will let you write checks without having to enter a bill. Write Checks will ask for the same information as entering bills, except for the payment terms.

A couple pointers: (1) If you use Enter Bills when a bill first comes in, always use Pay Bills to close it out. If you use Write Checks, the bill will still show up as unpaid. (2) If you enter a bill that you later paid by credit card, use the Pay Bills window, and change the payment method at the bottom of the screen to Credit Card instead of check. If you didn’t enter the bill, you can use the Enter Credit Card Charges button from the QuickBooks home screen. Like the Enter Bills screen, this also has a radio button for refunds/credits.

QuickBooks Online Bill Pay: If you’re tired of printing checks, stuffing envelopes, and mailing them out, QuickBooks offers an online bill pay feature. You can select this as a payment method within the Pay Bills window or the Write Checks window. When you submit the payments, it will upload payment instructions to QuickBooks, who will print the checks and mail them to vendors. Before you process payments through this method, make sure each of your vendors has an account number on their vendor card. In the Vendor Center, right click a vendor and click Edit Vendor. Account No. is on the Additional Info tab. If the vendor hasn’t assigned you an account number, use your organization’s name.