Home > QuickBooks > Paying Bills vs. Writing Checks in QuickBooks

Paying Bills vs. Writing Checks in QuickBooks

One common mistake I see business owners making is not knowing when to use the Enter/Pay Bills (Accounts Payable) feature and when to use the “Write a Check” feature and what the difference is. When properly recorded, the end result of each method is the same on the General Ledger and your Financial Statements (Increased Expense/Reduced Cash). I have created this model to show the flow of each method for training purposes.

 

 

 

 

 

 

 

 

Use the “Write check” feature for expenses that are to be paid immediately. This will simply record the amount spent to an expense account (i.e., office supplies) and reduce your bank account by that same amount.

“Enter a bill” and use the Accounts Payable system for vendor bills that will be paid at a future date. This will increase your A/P balance to show the liability for the amount owed.
Think of Accounts Payable as a holding bucket for money you owe and will need to pay at a future date. Once you “Enter a Bill”, you must use the “Pay Vendor Bills” function┬áto properly record the payment of that bill.
THE PROBLEM: If you have “entered a bill” and then mistakenly “Write a check” to pay it, you will have recorded the expense twice and your A/P balance will stay falsely inflated.
This is also true on the Income/Revenue side: “Create Invoice/Receive payment” vs “Enter Sales Receipt”
The key is to be consistent and to properly use one function or the other but never both at the same time!
Happy Accounting!
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