Welcome to the Fit Small Business QuickBooks Online training course! In this lesson, we’re going to cover how to pay bills previously entered in QuickBooks.
To complete this lesson, you can either watch the video below, read through the step-by-step instructions, or do both. Let’s begin!
Why Should I Pay Bills in QuickBooks Online?
If you previously entered bills into QuickBooks then the next step is to pay them before they become due. Paying bills in QuickBooks will automatically mark the bill as paid and it will no longer be outstanding. This will also update the accounts payable balance to reflect the bill payment. Accounts payable is the amount that you owe to vendors.
How Do I Pay Bills in QuickBooks Online?
Step 1 – Navigate to Pay Bills
From the Home page, click on the plus sign at the very top.
Below the Vendors column, select Pay bills as indicated below.
Step 2 – Select Bills for Payment
The Pay Bills window should display. There are a total of 15 fields that need to be completed as indicated below.
- Payment account: select from the drop down the bank account that you will make these payments from.
- Payment date: this will typically be your check date.
- Bill Notifications: Notice QuickBooks has provided a summary of the # of open(outstanding bills). The overdue bill is referenced with an exclamation point.
- Bill selection: select which bills you would like to pay and QuickBooks will put a checkmark in this column.
- Payee: this is the payee for the check. Typically this will be your vendor’s name but if for some reason the payee differs from your vendor’s business name then you can update the vendor profile with this information. In the Setting up Vendors lesson, we walk through step by step how to set up your vendors in QuickBooks.
- Ref No: this is the vendor’s invoice #.
- Due Date: This is the due date of the bill. Notice that QuickBooks will indicate with an exclamation point if the bill is past due.
- Open Balance: This is the unpaid (open) amount due for the invoice.
- Credit Applied: If you have entered any credits that you received from your supplier, they will show up here to reduce the amount that you owe.
- Payment: Enter the amount that you would like to pay. QuickBooks will automatically populate this field with the total amount due. However, you can pay less than the total amount due by simply typing directly in this field.
- Total Amount: this field will automatically populate with the payment column.
- Total payment: This will be the total amount of the payments that will be made.
- Starting check no: If you are prepared to print checks now, enter the starting check # that you will load into the printer. If this is your first time printing checks, click here for step by step instructions on where to buy & how to print checks in QuickBooks Online.
- Print later: Put a checkmark in this box if you will print checks at a later date.
- Save and print or Save and close the bill payment window.
Step 3 – Check Register
To locate your payment, navigate to the check register. From the left-hand menu bar, click on Transactions and Banking as indicated below.
Click on the Go to Register button about ½ way down the page on the right:
The payments that we created for both vendors are located at the very top, as indicated below.
- Check date: This is currently the date of the check but it will be updated once you print the check.
- Ref No./Type: In this field, you will notice the “To Print” field. This field will be updated to reflect the check # once the check has been printed. QuickBooks assigns Bill Payment as the type of transaction for these payments.
- Account: Below the payee you will see the Accounts Payable account.
TIP: Besides the checking account, this is the other account that is impacted when you pay bills. See the next section for additional information on how paying bills affects the financial statements.
- Balance: This column reflects the balance in the bank account after these payments were created.
TIP: QuickBooks will reduce the balance in the bank account whether you have printed a check or not.
Step 4 – Confirm Payment was Correctly Applied
From the left navigation bar, select Vendors as indicated below.
Both vendors should be listed as indicated below.
Click on the Nuts & Bolts Bill as indicated below.
The bill will display. If payment was applied correctly, then the status should be PAID as indicated below.
What Impact Does Paying Bills have on My Financial Statements?
When a bill payment is created in QuickBooks the accounts and financial statements are affected as follows:
Impact on Account
Accounts Payable account
That wraps up the section on how to pay bills previously entered into QuickBooks. The next lesson in our QuickBooks Online Training Course will be how to manually enter banking transactions. In this lesson, we will walk you through how to enter banking transactions that you were not able to import into QuickBooks. To access this lesson or any of the others in the series, click here.
For a free 30-day trial of QuickBooks Online, click the link below.