Accounts Payable workflows in QB

Accounts Payable or A/P is the record of the outstanding bills of a business. It is the money you
owe your vendors for goods or services that you purchased on credit. It is important to record A/P
transactions correctly to avoid wrong financial reports that can lead to incorrect tax payments and
penalties.

This article outlines two usual A/P workflows available in QuickBooks Desktop. To record your A/P
transactions, choose one workflow that suits your business process and go through each step from
your selected workflow.

Workflow 1: Purchase order - Receive inventory - Bill - Payment

If you need to track the goods and services you ordered, your A/P workflow includes creating
purchase orders, receiving inventory, entering bills against inventory and paying the bills.

Step 1: Create Purchase Order

Step 2: Receive inventory with a bill
Receive inventory without a bill
Step 3: Enter bills against inventory
Step 4: Pay bills

Workflow 2: Bill - Payment

If your business does not require creating purchase orders, your A/P workflow includes entering bills
and paying bills.
Step 1: Enter bills
Step 2: Pay bills

Create purchase order

Use Purchase Orders when ordering items. Using POs keeps you on top of your inventory as it
helps you track the items ordered and received.

NOTE: The option is only available if your preference for using POs is turned on. Go to your
QuickBooks Items & Inventory preference (Edit > Preferences) to check your PO settings.

1. From the Vendors menu, click Create Purchase Orders.

2. (Optional) Click the Template drop-down and choose the template you want to use.
3. Click the Vendor drop-down and choose an existing vendor or enter a new vendor.
4. (Optional) If you use class tracking, click the Class drop-down and choose a class for this
purchase order.
5. (Optional) Update the information in the Vendor (address), Date, P.O. No. or Ship To fields.
6. Fill in the line item area by entering the items you're ordering.
7. (Optional) Use the Memo and/or Vendor Message fields to document the purchase order.
8. Click Save & Close.

Once you receive the items, you can proceed to Step 2 and receive inventory with a
bill OR without a bill. You can also go back to your workflow.

Receive inventory with a bill

Use this option if you received the items and the corresponding bill/s for them.

1. From the Home screen, click Receive Inventory drop-down and choose Receive Inventory
with Bill.
2. On the Enter Bills window that appears:
a. From the drop-down, choose the vendor name.
b. On the Open POs Exist dialogue box that appears, click Yes.
c. On the Open Purchase Orders screen, select the correct PO and click OK.
d. Review information on the Bill. Note that except for the Memo field, any fields that
were filled in on the PO are carried over to the Bill.
 e. Click Save & Close.

When you are ready to pay the Bill, proceed to Step 4: Pay Bills. You can also go back to
your workflow.

Receive inventory without a bill

Use this option if you received the items from the PO and the vendor did not provide the bill yet. This
will create an Item Receipt which increases your inventory asset account and accounts payable.

1. From the Home screen, click Receive Inventory drop-down and choose Receive Inventory
without a bill.
2. On the Item receipt window:
a. From the dropdown, choose the vendor name.
b. On the Open POs Exist dialogue box that appears, click Yes.
c. On the Open Purchase Orders screen, select the correct PO and click OK.
d. Review information on the Item Receipt. Note that except for the Memo field, any
fields that were filled in on the PO are carried over to the Item Receipt.
e. Click Save & Close.

When you are ready to create a bill for the items received, proceed to Step 3: Enter Bills
Against Inventory. You can also go back to your workflow.

Enter bills against inventory

1. From the Home screen, click Enter Bills Against Inventory.

2. On the Select Item Receipt window:

1.
a. In the Select Item Receipt window, click the Vendor dropdown and choose the
correct vendor name.
b. To keep the original inventory availability date, put a check mark on the box Use
item receipt date for the bill date.
c. Select the Item Receipt that corresponds to your bill.
 NOTE: If there are multiple item receipts, each must be converted into a bill
separately.

d. Click OK. QuickBooks converts the item receipt into a bill.

When you are ready to pay the bill, proceed to Step 4: Pay Bills. You can also go back to
your workflow.

Enter bills

Use this form to record transactions that you will pay at a future date including expenses incurred,
materials purchased or services provided by a vendor.

1. On the Home screen, click Enter Bills.

2. Select the vendor.
3. Choose the date.
4. Select the appropriate tab.
o Expense: if you are recording a bill for expenses incurred by the business (ex.
Utilities, Rent, and phone/cable service).
o Items: if you are entering a bill for anything that your company buys, sells, or resells
in the course of business such as products, shipping and handling charges,
discounts and sales tax (if applicable).
5. Choose the expense account OR item.
6. Enter the amount.
7. If you are tracking billable expenses, select the customer job and put a check mark in
the Billable column.
8. Click Save & Close.

When you are ready to pay the bill, proceed to Step 2: Pay Bills. You can also go back to
your workflow.
Pay bills

IMPORTANT: Do NOT write a check/cheque to pay for a bill. If you do, the bill will remain
open/unpaid in QuickBooks which may lead to inaccurate data on financial reports.

1. From the Vendors menu, click Pay Bills.

2. If you have more than one A/P account, select the appropriate A/P account.
3. Select the bills you want to pay.
4. Set any discount or credit that you want to apply to the bills.
5. Select the payment date and method.
6. Click Pay Selected Bills.
7. A Payment Summary window appears. Click Done if you are finished paying the bills.
Click Pay More Bills to return to the Pay Bills window.

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