Keep Up With Payables: Paying Bills in QuickBooks

It’s not your favorite accounting task, but QuickBooks makes bill-paying easier.

Last month, we described the process of entering bills in QuickBooks. We discussed how you can’t pay bills without first entering them (Vendors | Enter Bills). We went over the steps required to memorize them to save time and repetitive data entry. And we discussed the importance of using Reminders if you’re going to memorize bills.

QuickBooks provides templates that you can use when you’re entering bills. You have to complete these forms before you can apply payment.

This month, we’ll discuss the next step: paying your bills. Click Pay Bills on the home page or open the Vendors menu and select Pay Bills. The screen that opens displays bills that you’ve entered that need to be paid. You can choose to list those due on or before a date you specify or all bills. 

By default, all vendors are represented in the table. If you want to only see bills from one specific vendor, click the down arrow in the Filter By field and select he correct one. You can also sort the list by any of a number of criteria, including Due Date, Vendor, and Amount To Pay by clicking the down arrow in the Sort By field.

Once the table is displaying your bills the way you want, it’s time to select the ones you want to pay. You can either click in the box in front of each to make a checkmark or click on Select All Bills below the table. When you select one, the Amount To Pay field will change to reflect the Amount Due. If you can’t afford the whole payment, replace the 0.00 in the Amount To Pay field with your actual planned payment.

You can select individual bills to pay in QuickBooks or click on Select All Bills below the table.

QuickBooks provides additional information in the table of bills to be paid beyond Date Due, Vendor, and Amount To Pay. You’ll see a column for a reference number, but there are other columns that can display vendor-issued discounts and credits that could be applied to individual bills. Vendors sometimes offer discounts for early payment, for example, and credits can be issued to settle things like returns or overpayment.

Warning: If you’ve never worked with discounts and credits, we can help you learn about them, create them, and apply them. It’s complicated.

When you’re satisfied with the information in the table, look below it. Highlight a bill by clicking on it to see what your options are there. You can click Go to Bill to see the original form. If there are discounts or credits available, they will appear there as Sugg[ested] Discount and Total Credits Available. You’ll also notice that any discounts or credits will have been applied in the table above. To change these, click Set Discount or Set Credit.

Make sure the payment Date is correct and select the payment Method. If you select Check, you’ll have to choose between To be printed or Assign check number (for handwritten checks, you’ll be able to specify the number or let QuickBooks assign it in the next window). Select the correct payment Account and click Pay Selected Bills. A Payment Summary appears in the window that opens. You can either click Pay More Bills or Done. If you’re paying bills using more than one payment method, you’d go back to the previous screen and repeat the process.

The lower half of the Pay Bills window

Helpful Automation

As you saw in this example, QuickBooks applied discounts and credits automatically when you selected a bill. To set this up, open the Edit menu and select Preferences, then Bills. Click on the Company Preferences tab, which opens the screen for company-wide preferences that are established by the Administrator. 

Click in the boxes in front of Automatically use credits and Automatically use discounts. Then click on the down arrow in the field next to Default Discount Account to open the list. There should be an Income account labeled Discounts. Select this one, then click OK. 

QuickBooks provides three reports that help prevent bills from slipping through the cracks. Open the Reports menu and go to Vendors & Payables, then A/P Aging Summary and Detail, and Unpaid Bills Detail. If you’re running into problems with your accounts payable workflow and want some guidance on that or any other element of QuickBooks, we’d be happy to work with you.

How Do You Add Users in QuickBooks Online?

 If you have one or more people besides yourself using QuickBooks Online, you’ll need to know how to set up their accounts.

Your QuickBooks Online file contains a great deal of very sensitive information, like customers’ credit card numbers and employees’ Social Security numbers – data you don’t want to have fall into the wrong hands. You obviously trust your employees or you wouldn’t have hired them, but when it comes to security, you should implement all the safeguards you can.

QuickBooks Online can help you stay safe by limiting the access that other users have to your company file. Here’s how it works.

To get started, click the gear icon in the upper right and select Manage users. You should be listed there, of course, as the Master Administrator. Click Add user. The screen that opens will ask you what type of user you’re adding. There are four of them:

• Standard user. You can assign full or limited access to standard users, but they won’t have administrator privileges.

• Company admin. At this level, the user can see and do everything.

• Reports only. These individuals have access to all reports except those that contain payroll or contact information.

• Time tracking only. You’d assign this type to employees who only need to enter their own timesheets. 

The first step in adding a user in QuickBooks Online is to specify their type.

The first two count toward your user limit, but the second two do not. Make your selection and click Next. We’ll select standard user for this example. 

On the screen that opens, you’ll be assigning actual access rights, telling QuickBooks Online what the user’s restrictions are. You can choose All (with or without payroll access), None (allows some activities), or Limited. Select Limited, then click in the box in front of Customer to create a check mark. You’ll see the list of specific actions that that individual can take (like creating invoices, sales receipts, and statements) and the screens that they can see (customer registers and reports, tax rates and agency settings, etc.). 

There’s also a list of what they can’t do, including printing checks, viewing bank registers, and preparing a sales tax return.

Click in the box in front of Customer again to uncheck it and select Vendor. You’ll see a similar list here of what your new user can and can’t do, only its activities relate to your accounts payable.

QuickBooks Online provides lists of what standard users can and can’t do and see for both customers and vendors.

Click Next  If the user will be entering his own her own timesheets in QuickBooks Online, click the button in front of Yes, then select the correct name from the drop-down list. Click Next. Answer the user settings questions on the next screen and click Next. Enter the user’s name and email address (user ID), then click Save. QuickBooks Online will return you to the Manage Users screen, where you’ll see that your new user has been added to the list. The individual you just invited will receive an email invitation to set up an account, with instructions on how to do so.

Other Security Tips

There are other ways you can keep all of your company’s data safe. Here are some suggestions to consider if your business has returned to its offices.

• Always update your operating system and applications when prompted. These often contain security patches in addition to bug fixes and new features.

• Keep backups out of reach of others. Cloud backups are best, but if you use a local device, don’t leave it out in the open.

• Log out of QuickBooks Online when you’re not at your desk.

• Shred anything you print from QuickBooks Online or store it in a locked drawer.

• Protect your networks. Discourage excessive web browsing by employees. Don’t allow extraneous app downloading on company equipment and ask employees not to use company mobile devices on public networks. Consider network monitoring software if you can’t afford managed IT.

We follow security best practices in our own offices, and we hope you’ll do the same. Applying safeguards proactively will help prevent data theft that can be nearly impossible to recover from. 

Intuit employs industry-standard security practices to keep your data safe, too, and it handles all backup and upgrades. Often, those updates include new features, like the recent addition of transaction “tags.” Let us know if you need our help with these or with any other element of QuickBooks Online.

Should You Charge Late Fees? QuickBooks Can Help

 Do you have a lot of aging receivables? Assessing finance charges can speed up customer payments.

Have your customers been submitting payments later than usual these last several months? It wouldn’t be surprising. Many businesses are struggling to pay bills these days. Still, you need to get paid – and on time. Tardy receivables have a negative impact on your own cash flow.

We’ve discussed ways to encourage prompt payment in past columns. For example, you can start accepting credit/debit cards and direct bank transfers, make sure invoices go out immediately after a sale, or offer a premium like a small one-time discount for paying on time 12 months in a row to name a few.

You can also assess finance charges on remittances that come in after the due date. QuickBooks provides the tools to allow this.

Setting It Up

Before you start charging extra for late payments, you’ll need to do some setup work in QuickBooks. Open the Edit menu and select Preferences, then Finance Charge. Click the Company Preferences tab. You’ll see a window like this:

You can set your own preferences for assessing finance charges in QuickBooks.

You’ll have to answer these questions and enter your responses in the window:

What will your Annual Interest Rate (%) be?

What will you set as a Minimum Finance Charge?

Will you allow a Grace Period? This is the number of days given to your customers to make their payments after the due date before finance charges kick in. This is typically from 15-21 days.

Where should captured finance charges go? In this example, the Finance Charge Account has been assigned to Other Income. 

Do you want to Assess finance charges on overdue finance charges? Some jurisdictions don’t allow you to charge interest on overdue interest charges. If you want to do this, check on your local lending laws - specifically state usury laws which may limit the amounts that can be charged.

When will you start to Calculate charges? In this example, the due date is selected. So, QuickBooks will start to add finance charges 21 days after the stated due date. If you choose invoice/billed date, you’ll want to make your grace period longer. This can be rather a confusing concept. Contact us if you want a deeper explanation.

Assessing Finance Charges

There’s one more issue on the Preferences screen that you’ll need to resolve. QuickBooks offers two ways to notify customers about finance charges. You can’t include them on invoices, like you may be used to seeing on credit card bills. Rather, you have to print separate invoices that only contain the finance charges. 

If you put a check in the box in front of Mark finance charge invoices “To be printed,” you can print them out separately. If you leave the box blank, the finance charges will appear on the customer’s next statement. Click OK when you’re done with this window.

QuickBooks can find the overdue invoices that need to have finance charges applied and display them in a window like this one.

Open the Customers menu and select Assess Finance Charges. A window like the one in the image above will open. Make sure that the Assessment Date is the actual date you want to assess charges, which may not be the current date. Click in the Assess column to create a checkmark for every customer you want to charge. When you’re done, click Assess Charges.

When you’re ready to print finance charge invoices, open the File menu and select Print Forms | Invoices to open a window like this:

Invoices with an FC preceding the number are finance charge invoices ready for printing.

Lots to Learn

Besides knowing whether you can charge finance charges on existing finance charges, there are other considerations. For example, do your state’s lending laws allow you to use the phrase “finance charge” or must you use something like “late fee?” When should you assess finance charges? Have you notified your customers of your intent to begin assessing finance charges? This is definitely something they should know in advance. You might need to add this to your customer message on invoices.

We can’t tell you whether finances charges are the path you should take to improve your cash flow as there are many issues to consider. But we can help you with the mechanics of doing so and are here to answer any questions. Let us know if you want to get started using this tool, we can help.

How to Create Recurring Transactions in QuickBooks Online

 QuickBooks Online saves time and improves accounting accuracy in numerous ways. One example is its support for recurring transactions.

It’s easy to get distracted when you’re doing dull, repetitive accounting work. That distraction leads to errors sometimes. So, besides the time you’re spending on work that could be automated, you have to tack on additional time to chase down your mistakes.

QuickBooks Online already reduces repetitive data entry by saving your lists of customers, vendors, products, etc., and making them accessible when you’re creating transactions. But it does more to save time and minimize errors by allowing you to create recurring transactions. Enter a transaction like an invoice or bill once, and QuickBooks Online memorizes it for future use!

Here’s how it works. Let’s say you have a customer who wants to rent a printer from you for one year. You create an invoice for one month’s rental. At the bottom of the screen, click Make recurring. A partial view of the screen that opens is pictured below.

QuickBooks Online allows you to set up a transaction to repeat at scheduled intervals.

Much of this screen will have already been filled in. You’ll need to enter a name for the template you’re creating at the top of the screen, one that will remind you of its content. In the second field, the drop-down list displays three options for how the recurring transaction will be handled by QuickBooks Online They are:

• Scheduled. Your invoice will go out automatically at the scheduled interval, with only a change to the date. As with any automated process, you should be very careful when selecting this option.

• Reminder. You will get a reminder ahead of each occurrence so you can make any necessary changes before sending.

• Unscheduled. No automation is involved here. The invoice is memorized, but you’ll have to remember when it needs to go out.

If you chose Reminder, the next field will read Create (x) days in advance. Enter the number of days here. On the next line, you’ll only have to check or uncheck the Options. 

Under Interval, you’ll tell QuickBooks Online when the invoice is scheduled to go out. You can choose from Daily, Weekly, Monthly, and Yearly. The invoice in this example should be processed and sent on the first day of every month. The start date is January 1, 2021, and it will end on December 31, 2021. If your recurring transaction should continue to go on indefinitely, you’ll have the option to select None from the drop-down list under End. You can also choose After.

Check the fields below this line to make sure they’re correct. You can change the message if you’d like and add an attachment. If everything looks correct, click Save Template in the lower right corner.

Using Recurring Transactions

If you’ve set this transaction up to recur automatically, you don’t have to do anything more with it unless you need to edit it at some point. If you need to do so, or if you’re responding to a reminder (or chose not to be reminded), you can access the list of transactions you’ve memorized by clicking the gear icon in the upper right and selecting Recurring Transactions under Lists. A screen containing this section will open:

Once you’ve created recurring transactions, you have several options for managing them.

The table that appears will contain other columns describing the recurring transactions, like Type and Interval. The image above shows the end of each row that reads Edit until you open the drop-down menu. You can see what your options are. They include Use, which you would select when you want to edit and/or send a transaction. You can also create a Duplicate, Pause the recurrences temporarily, Skip next date, or Delete the template. Click the arrow next to Reminder List in the upper right and select Run Report to see the Recurring Template List Report.

As you can see, recurring transactions can not only save time, but they can also help reduce errors and minimize unnecessary work. They’re not overly difficult to create, but you should use caution if you choose to automate them. We’re available to answer your questions about this useful tool and about any other element of QuickBooks Online. Stay healthy, and here’s to 2021!

New to QuickBooks? Try These 5 Activities

 QuickBooks can be overwhelming when you first start using it. Here are five ways to familiarize yourself with some of its features to get you up and running in no time.

Tackling any new piece of software can be daunting. Add a complex process like accounting to the mix, like QuickBooks does, and you may feel apprehensive about your ability to learn how to use it. 

But QuickBooks was designed for small businesspeople, not for accountants nor technical wizards. It uses familiar language and forms, and it works like other Windows programs. That doesn’t mean, though, that you’ll be able to just jump in and start completing your accounting tasks. 

Here are five steps you can take to start familiarizing yourself with QuickBooks that will get you up and running in no time. We’ll assume that you’ve already created your company file. If you need help with this critical first step, let us know.

Open a sample file.

While you’re exploring QuickBooks, it’s a good idea to work with a sample file. That way, you can look around and practice without risking compromising your company file. You’ll be able to see how completed records and transactions should look and try your hand at entering sample data of your own.

QuickBooks comes with sample files that allow you to practice entering data without harming your own company file.

Before you open a sample file, you’ll need to close your current company. Click on File in the upper left to open that menu, then select Close Company. A window will open that should have your company file in its list. Below that, you’ll see three boxes containing different options. Click on the down arrow next to Open a sample file, as pictured above (this may look slightly different in your version). Choose the one you want to open and click on it. QuickBooks will load again with that file open. When you’re done looking at the sample file, go to File | Close Company again. The No Company Open window should appear again. Click on your company file name and then on Open to return to your own file.

Learn where your lists are.

You’ll be storing a great deal of information in lists. QuickBooks maintains these automatically sometimes when you enter information in a record or transaction. For example, when you create a record for a product or service you sell, it goes into a master list that you can access by opening the Lists menu at the top of the screen and clicking on Item List. You’ll also open the Lists menu when you want to add options to an existing type of list, like Class List (QuickBooks allows you to assign Classes to transactions so you can group related information, like New Construction or Remodel if you’re a contractor).

You’ll sometimes select from lists of commands in QuickBooks. This is the menu for the Item List.

Try a Transaction.

There are two transactions you’ll probably be using the most: invoices and sales receipts. QuickBooks comes with templates that resemble these sales forms’ paper counterparts. You simply fill in the blanks by entering data and selecting options from drop-down lists. Open the Customers menu and select Create Invoices. Click the back arrow above Find in the upper left corner to see sample invoices. Then click the right arrow to get back to a blank form and create an invoice by clicking the down arrows in blank fields to see your sample lists.

Explore Snapshots.

Once you start entering records and transactions, you’ll want to be able to access that information in ways that provide insight on how your company is doing. You’ll eventually start running reports in QuickBooks, but the software also accomplishes this through its Snapshots. There are three of them, and they all provide these overviews by using data tables and charts. Open the Company menu and click on Company Snapshot, then click the tabs to move between Company, Payments, and Customer. You’ll learn how QuickBooks provides real-time information about your finances.

Look at the Income Tracker.

It’s easy to see the status of your invoices (and estimates) in QuickBooks. Open the Customers menu and select Income Tracker. Colored bars at the top of the screen show you what’s outstanding and what’s been paid. A list of the related transactions appears below these bars.

This partial view of the Income Tracker tells you how much money is tied up in unbilled Time & Expenses and unpaid Invoices.

As we said earlier, QuickBooks can be overwhelming when you first start to use it. We can ease that transition by providing training and helping you move your existing accounting information over to the software. If you’ve started using QuickBooks on your own and you have questions, we can always step in to offer answers.

Stay healthy, and best wishes for a more prosperous 2021.