Manage Invoices Overdue for Inventory Effortlessly

Invoices overdue for Inventory

in this video we're going to talk about recording expenses and purchases through the accounts payable workflow accounts payable eventually means that you record an expense on one day and you make the payment for that expense on an entirely different day the transaction type that we use this in QuickBooks is called bills we're going to go into the new button on the left hand side and then under vendors we're going to find and select bills when you click on bills you see the new bill screen open up and then first thing you're going to do is select the vendor that send you the bill so we're going to click on the drop- down menu and let's say this XYZ vendor is the ones that send us their bill sometimes vendor bills will say the word invoice in it because from the vendor's perspective they're invoicing you and then you're taking their invoice and you're entering it it as a bill in QuickBooks in QuickBooks when you enter invoices that's actually the account's receivable workflow and that's for you to send to your customers so in QuickBooks accounts payable it's bills if the vendor sends you a bill that has the word invoice on it you need to know that's a bill not an invoice in QuickBooks anyway the next thing you're going to do is you're going to find the build date on that document and you're going to match it in QuickBooks and then if there's a due date for that bill you can click on the drop- down menu and select the specific due date if your vendor has specific terms that they give you 15 days 30 days 60 days and you have it here on your drop down menu which you you can also create your own terms if you want to if uh the ones that come by default are not enough you can select that and the due date will change automatically now you do want to put the invoice number from the bill you got from your customer you want to put it in there so you can recognize it especially if you're going to be recording multiple bills for the same vendor you need to know which Bill you're paying then under category this is where we're going to put the expense category or the account from your chart of accounts the best represents what that bill means so let's say they're charging you for some sort of Contracting Services so let's go and see if we have contractor and or contract labor okay this is perfect so let's say we're subcontracting this company and to use their employees for some labor for our business then on the description we can put uh labor for um Miami job or something like that okay so whatever whatever uh description information that best fits that help you re remember what you're paying for that would be very useful under amount we're going to copy the amount over from uh the vendor's invoice and we're going to put that in there if you want to split the expense into multiple categories so let's say for example the $2,500 is really $2,000 in labor and $500 in materials then we will break this up and put 2,000 in one line and then let's look for a materials category or something like that there we go Supply some materials and we'll we going to put $500 on that and then we can put here materials for Miami job okay again it becomes self-explanatory because you know the name of the account is labor and the name of the account is materials but again it's up to you what kind of memo you would like to start using okay so now we have a total bill for $2,500 at this point we can either just save it we can click on the drop- down menu and do save and close save a new and there's also save and schedule payment which is whenever you have turned on the bill pay feature inside QuickBooks Online which is a different module alog together that you would have to turn on and add on if you want QuickBooks to make physical payments either via check or electronically via a to your vendors in this spe specific case we're assuming that you're going to be making your own payment arrangements you're not going to be using scheduled payments through the bill pay feature so we're going to click on Save and just save the bill or save and close and EXC out of that let's do one more example I'm GNA click on a new button on the left hand side go into build and let's say this time around I got a bill from Verizon Wireless so I'm going to click on the drop- down menu click on add new because Verizon is not in my in my list and create the vendor uh on the fly so you could always create vendors on the Fly and again you could add addresses phone numbers notes whatever you want are related to that vendor if you want to or you can just create the vendor by the vendor name and that's it then we're going to copy the information uh that we have in the bill in terms of Bill date and and um bill number all that stuff so let's say we received this bill on20 2024 and the due date is the 26th and the bill number will just copy the bill number from there then under category we're going to put here a phone or Communications or telephone depending on what your chart of account looks like you can have to figure out which is the chart of account that best fits that and let's say the amount from the bill is 596 with 12 cents okay and that's really all you need to do one thing to add here is if you have an actual physical bill in PDF or in an image format you can actually click on attachments find the specific image that you have attach it and then that becomes part of the documentation you can attach any documents that you want into the bills for your record so then I'm going to go ahead and click on the drop down menu click save and close and we're going to be finished with that so let's talk about making a payment to this bill so there's a couple ways to make payments to the bills one we can just simply click on the new button on the left hand side and then click right there under Bill where it says pay bill that would be kind sort of Step number one we click on pay bill then we're going to get a list of all of our open bills right there on the screen then we get to choose which bank account we're paying from again this is if you're paying these bills uh separately from QuickBooks you're writing them a check or you're paying them electronically or paying them with a credit card then you're going to record the bill payment in QuickBooks we're not actually initiating the payment in from QuickBooks right now we're just mimicking what happened in the real world so I'm going to select uh the bank account that we're paying from let's assume we're paying with a check and then it will put here the date that we wrote them the check we'll put the check number this is the physical check number that we're writing them then I select the specific vendor that I'm paying with that check if I'm partially paying the vendor that's possible too I can just check select a specific partial payment so let's say I'm only going to pay this vendor $2,200 so basically I'm short paying them $300 the bill will still have $300 open uh from it because I'm only paying part of it then I'm going to click on save or I can click save and close or save and print so if you're going to print the check straight from here you can if you have printable checks you can follow uh the setup process and the printable check workflow let's do a slightly different workflow for paying bills let's say that we're going to look at the bill first so let me go into the new button then click on Bill and then I can click on the history button here where you I can see all the historical bills I'm looking at the bill specifically and I want to initiate the bill payment from the screen which you can do that as well simply by clicking on this little button on the top right that says Markus paid and when you click on Markus paid it takes you to a bill payment screen that's slightly different than the other bill payment screen but this is a a bill payment screen that already starts already by selecting the vendor for you and automatically marking the specific bill that you want to pay so it kind of does that step for you and it saves you that step so the the the earlier screen that we picked is when we're make uh going to going to choose which bills we're going to pay and possibly pay a bunch of bills and we can do a whole bunch of bill payments in batch if you want to imprint a bunch of checks and batch this specific workflow is slightly different because we're actually uh opening the bill first and then from that bill we're making that payment so let's go ahead and click on Save and close and that finishes that workflow okay let's go into the expenses tab on the left hand side and click on bills okay this bill section will actually show me all the bills I have in my system if I have any uh bills ready for review any unpaid bills any historically paid bills they're going to show up in here if I look at unpaid bills we're actually going to see the xyc vendor that we partially paid as you can see here the original bill bill amount is 2500 but it has an open balance of 300 so if I want to pay that bill later on I can do it from here or Also let's say for example the vendor calls us and says you know what you don't have to pay me the rest we made a mistake we're going to give you an adjustment to that bill now a lot of people instinctually will go open the bill and make a a physical change to the bill we actually open the bill and change it and reduce the numbers to make it go down $300 however that's not the optimal way to do it the ultimate Way the ultimate way to do it especially if you have multiple bills and multiple situations where they will be giving you credit for for to pay those bills or to or to reduce the accounts payable or the balance of those bills is to do what's called a bill credit so we're going to click on the new button and then we're going to see under bill pay bills we're going to go down under purchase orders there a specific option called vendor credit when we click on vendor credit you get a screen that looks identical as a bill but essentially what we do is we select the vendor's name then we pick the category so sort of which line items are they adjusting so we pick the the line item that made that made the most sense so let's say they're going to adjust our contract labor and we're going to put a 300 we can put a note like um vendor adjusting for errors or something like that U and then notice that I'm not putting a negative number I'm just putting a regular positive number if they issue us like a formal document for a vendor credit and there's a reference number we want to put in there we would put that reference number in there so we know what that's for and then we click on Save and close so now if we were to go back into expenses bills and we look at our open bills this bill still shows open for 300 because we have not yet applied that payment to it so to apply the payment to it and it's a bit counterintuitive is we're going to click on Mark as paid because we're not actually pay P the bill we're applying a bill credit but we're going to click a Marcus paid and immediately you're actually going to see your bill and your vendor credit right under that so as long as you see a bill and a vendor credit with a check mark right next to it and you see actual no money being exchanged under this amount all the way in the top that's zero that's basically indicating that this screen the bill payment you're actually not making a payment you're taking a previous previously set up Bill credit credit and you're using it to pay that bill off and you can if that credit is applying to multiple bills you can manually adjust which bill it gets applied to right from the screen so that's how you essentially apply the bill credit save and close and you'll be done now let me show you a slightly different workflow let's make the assumption that we have this old Bill sitting in our QuickBooks from many years ago and we're no longer going to pay it and we don't want it in our system anymore well first of all you need to find the build take take a look at it and make sure you have a keen understanding to uh what kind of account was used originally on this bill so they say we had this old bill from 2019 and it was for advertising and marketing radio ads and it was for $6,900 so now what I need to do is I need to write this off instinctively you may think Hector I'll just delete the bill of QuickBooks and I'll be done not a good idea because you're going to be uh changing your financial statements from back in 2019 so then the proper way to adjust uh a an old bill one you can use a bill credit that's possible we we could enter a bill credit for this year and apply it and you just saw that workflow but I'm going to show you one more thing which is doing it through a journal entry not necessarily the best way to do it it's more of an advanced type of concept but I want to show you regardless because it is one way you can affect accounts payable so I'm going to go to the new button and then under other I'm going to go down to journal entry in the journal entry the first thing I'm going to do is the journal date I'm going to put today's date so let's say we're in February 2024 and today is when we're recognizing that we will no longer ever going to pay that bill so the first account we're going to put is Accounts Payable right because that's that's the account that runs all your account all your bill balances and then what we're going to do is we're going to reduce that accounts payable through a debit by putting 6,900 so accounts payable gets reduced through debits increased credits again this is more of an advanced concept most of the time only really accountants deal with this so we're going to put here writing off old bill or whatever we want to put in there then under name we're going to put here our vendor's name so this one's called Old vendor and then the second entry here the balancing entry is going to be that advertising and marketing sub account radio ads that we had on the original bill so as long as we have that debit and that credit balancing each other and essentially what we're doing is we're killing that account's payable we're getting rid of that account's payable reducing that balance and in exchange we're also reducing our expenses for this year for the same dollar amount okay so that once we're done we click save and close and we successfully reduce that accounts payable if we actually go into the expenses Tab and go into vendors and specifically find our old vendor we're going to see that our old vendor has an open balance of zero like we actually do not owe that vendor any money it's right there it's very clear that we written that off however the it still shows a $6,900 overdue balance because the bill itself still shows us an open bill because we have not applied that credit to that bill so the same way that we would apply a credit memo or a vendor credit we would apply a journal entry just as well so what we need to do in this case is to go to new uh pay bills and again counter intuitive because we're actually not going to pay the bill what we're going to do is we're going to apply that bill payment so under filters I'm just going to put here a custom and I'm going to go back to all the way down to you know before 2019 so that bill shows I notice that that bill is showing right here if I select that bill a QuickBooks automatically is going to say you know what I'm going to go ahead and apply the credit now unfortunately it doesn't show the specific credit that's being applied that's sort of the the tricky part of going through this workflow to do that and this is one of the ways you can do it unfortunately if you have multiple credits and you want to pick which of the credits you want to apply QuickBooks actually just behind the scenes uses oldest one to apply it to here if you happen to have multiple potential credits that you're going to apply and you want to pick and choose specifically which one then you want to use slightly different workflow so we're going to EXC out of that and show you that one as well that way you know you kind of have all your bases covered but in order to do that I'm actually going to go down into this journal entry and I'm actually going to split this into two so I'm going to make this one uh 900 instead of uh 6,000 so we're just essentially going to do two separate credits so you can see them clearly when we go to apply them I'm going to go ahead and duplicate uh this transaction I'm going to click on copy and then I do this one for 6,000 and then 6,000 and I'll just back date this one to uh 2022 Let's see we we're actually going to see two credit spending for this particular rendor so I'm going to hit save and close and essentially when I actually go back and look at that specific bill that's still open so I'm going to go back and look at that $6 900 bill that's still open still showing overdue still showing open if I click on Mark as paid so instead of going through the pay bill workflow I'm actually going to select the specific Bill click on Mark as paid you will notice that in this bill payment screen again it's a net of Zero no money being exchanged which is perfect is what we want we actually get to see the multiple journal entries and this will work the same way with multiple uh Bill credits uh multiple journal entries that we could use and we could actually say you know what I only want to apply this $900 to that bill and then do no money exchange put zero here and just make sure that's only $900 and then at that point that bill for 6,900 would now only show $6,000 open and then maybe I intend to pay a part of that later in the future that's possible too essentially I'm just trying to show you that you can pick and choose which which of the uh historical vendor credits specifically how much of the vendor credits you can use um on each so I'm actually literally just choosing how much from each one I want to pick Let's just put 6,900 up here and then I get to pick how much from each of the vendor credits or the journal entries we can use to apply to the bill so we're basically managing our old accounts payable making adjustments to them via journal entry or via a bill credit so then we click save and close and now if I go back into that uh the vendor screen and I go into my old vendor now I should show that I have uh nothing overdue everything is paid off and you get to see the entire history of the actual bill for 6900 the journal entry for 6,000 the other journal entry for 900 and then the bill uh payment that I can click on and I can see exactly the history of how those two credits were actually applied to that open bill there's one more part of the bill payment or accounts payable workflow worth looking at which is what happens if you have an open Bill and that open Bill uh gets matched through the bank feed through the downloaded transactions through the bank so let's go into transactions we're going to click on Bank transactions and then we're going to see I'm actually going to click on spend so we get to see the transactions that were spend kind of an order and then we're going to go down and find one of these uh transactions for 500 and $96.2 if you remember we actually had created a bill for that exact same dollar amount earlier so if I want to make sure that those transactions match instead of clicking on ADD and creating a new transaction in in the in the bank feed I'm going to click on where it says find match I'm going to click on find match and then I'm going to go find the bill from all my open bills in this case I happen to just have one and match it through there that way I am not going to duplicate that entry by downloading the transaction from the bank and creating it as a new entry I'm actually going to make sure that if I'm creating bills and accounts payable prior to downloading transactions from the bank that I match every single one of those transactions that already attach that that need to be attached to a bill if I'm downloading transactions that don't have any bills associated with them then I'm going to be creating those transactions in the bank feed and they come in as expenses but if I'm using an accounts payable workflow such as creating a build prior I definitely want to go through the process of matching them in Bank feed instead of creating new transactions for example you see that there's another transaction here from Verizon Wireless for 444.hu you want to know let's say for example at that point you're saying Hector but how do I know what bills are outstanding and which ones are not well you can run a report that shows you all the bills you have open so you can go to Bill and then go to open open uh it's it bills unpaid unpaid so unpaid bills so you select unpaid bills and then you have a list of all the bills that are unpaid so right now in this particular QuickBook file I don't have any unpaid bills but I'll create one really quick on the fly so you can see what it looks like when that gets created in the system so I'll let me create a bill for 1,500 click on Save and close and now all of a sudden we go back and refresh the report and then it shows up in our list of unpaid bills so you should always run your list of unpaid bills decide which bills you're going to pay and then if you're going to go through your bank feed just make sure that there isn't a bill that you're expecting to show up on the bank feed as a payment as a recent payment so you can match it instead of creating a new transaction now the last thing I'm going to show you is using items in your bills instead of using accounts using items in your bills and also purchase orders for your bills now in order to do that I actually have to upgrade my Quickbooks I I'm actually using QuickBooks Online Simple Start for this specific example I'm going to have to upgrade my plan to plus Edition because the plus edition of QuickBooks Online is the one that has um the ability for you to put items in bills also do purchase orders and as an added bonus you can also run and manage inventory which we're not going to cover through here but if you have inventory accounts payable is a very common thing because most vendors sell your inventory on account they'll ship you the inventory and you pay them later sort of thing so I wanted to enable QuickBooks plus so I can show you both those workflows so let's start by going into the new button and then going into Bill and then you're going to notice that bills the only option you have here is to choose categories there isn't an option enabled to add items into bills but you can do that simply by adding it in the settings so I'm going to x out of that and I'm going to go into the gear menu on the top right of the screen and then I'm going to go into account and settings and then under expenses this should be under the option of bills and expenses I can click on that and one of the options you're going to see in here it says show items table on expense and purchase order forms so if I click on that now all of a sudden when I create a bill I'm going to see an item instead of an account and the other thing I want to ask add here is track expenses items by customer that's going to be crucial if the expenses that you're entering the the bills the accounts payable H has to do with an existing customer or project and maybe you even want to make these expenses potentially avilable to the customer as well so if you want to add that you make you have to make sure you have to come into the settings and turn all those things on so we went ahead and turn that on then I'm going to click on done then I'm going to go into new and create a new bill and now we're going to see a couple things slightly different but number one in the category section now it's actually labeled category details before it wasn't and now we also see a customer column where you can take an expense and Mark it avilable to the customer if I actually scroll down and click on the Little Triangle under item details and I Collapse category details then instead of entering my expenses into uh categories I'm going to enter them into items so for example I'm going to select my vendor name here so let's say this is going to be XYZ vendor and then under product and service I click on the drop- down menu and I can select the specific item from my item list now one little caveat is when you create items products and services you actually have to tell QuickBooks that this particular product and service is eligible to be used in a purchase transaction so for example I'm going to click on add new and I'm going to create a new non-inventory product and then I'm going to call it a USB cable so let's say we sell USB cables we don't track the inventory but we' have it in here notice that there's a checkbox that says I sell this product or service if that checkbox is on that means I can use that item in an invoice in a sales receipt and then if this checkbox that says I purchase these is not check on if I if I don't have that on then I will not be able to use in a bill so QuickBooks understands that you're creating the item from the bill screen so it's making the assumption that you do want to use this item for a purchase sort of scenario so let's put here under the materials expense or something like that so because um uh you're going to use this item in a sell in a purchase scenario you have to have that checkbox so if you ever create an item and you uh click on this drop down menu and you and you look at it and you say hey my item is not showing up in here why is it not showing up in there it's probably because we didn't have that little check box that says we're using this item uh in a purchase transaction so let's say this is going to be $75 so we're paying from xyc vendor we're going to put today statee we're buying a USB cable and again we did non inventory because we're not going to discuss inventory in this particular video check out the description with for all my entire playlist of QuickBooks online videos I have an entire different video that goes really deep into into the entire inventory workflow which includes some of the accounts payable but mostly the inventory portion we're focused on accounts payable for the moment and then if this particular set of wires was for a spe specific customer I can track it through that customer uh column or I can even mark it billable if I want to be reminded to invoice my customer for it so that's really optional whether you're going to mark it billable or not so essentially what we did is we enabled the ability to use both items and categories on bills so you can always do that now if we're going to do a purchase order which is basically a transaction that we do prior to the bill it's actually a non-posting transaction you don't have to create a purchase order in order to do a bill but the purchase order is nice because it reminds you that you order some stuff or maybe you order some services from a particular vendor and eventually you're going to be creating a bill with those items so we're going to go into the new button and go to purchase order notice purchase orders is showing there because we turned on QuickBooks Online plus and the purchase order looks pretty much identical to a bill the difference is it says it right there really big that it is a purchase order and let's say for this old vendor I want to do a purchase order for a couple of items so we're going to pick this um and this and then we'll you know put a dollar amounts associated with my purchase and when I finish creating the purchase order nothing's going to affect my system this is not account payable I don't owe that money I don't have an open balance uh it's not going to show up in my Banks it's not going to show up in my any of my reports because a purchase order is just a pro forat transaction but what's nice is later on when I want to receive that purchase order or when the vendor actually sends me a bill for that purchase order I can go to the new button and then click on Bill and then when I click on the drop down menu and select all vendor here on the right hand side there will be a drawer reminding me I already have a purchase order for this vendor and it's most most probable a future bill that you're going to be creating is going to come from a purchase order so all I have to do is click on ADD and I will be adding the components to that vendor now you do have to be careful because sometimes uh QuickBooks will automatically add a line based on what the last transaction was so like this 1500 was added from previous transaction so I'm going to delete that QuickBooks tries to help you by speeding up the process but um you you just have to be very very careful that if QuickBooks is adding things for you that is that what you want is that what you meant to do so that's uh so this is essentially how we how we close the circle on an open purchase order all the way through the process of creating the bill then we click on save or save and close and then you pay the bill in whichever way shape or form you need to pay it or match it with a a download a bank transaction if that's going to be your workflow the nice thing is when you look at a bill that's been linked to a purchase order we can click up here where it says link to purchase order click on that and then you can click on the purchase order and you can view the purchase order as a separate transaction that the invoice the purchase order could have one date the bill could have a different date the purchase order could have an intent that you want to buy 100 units and then maybe in the bill you only really bought 60 units not 100 because maybe they shipped shipped you short or you change your mind from the moment that you did a purchase order that that the the vendor actually executed the order send you the items or sold you the services so that particular piece is more advanced I know not a lot of people are going to be using items in bills or using the purchase order workflow but if you're going to be using um inventory it's very very likely that you're going to be using the purchase order workflow anyway I hope you enjoy this video again go in the description check out all the other videos I have in this series for QuickBooks online if you like this video make sure you hit a thumbs up make sure you add comments to ask what kind of content you like to see in the future and subscribe to the channel so you can be notified next time I create another video like this thank you and I'll see you in the next one