How to Enter and Pay Vendor Bills in QuickBooks Online (Accounts Payable)

Managing vendor bills properly in QuickBooks Online is one of the most important steps in keeping your cash flow predictable and your financial reports accurate. If you receive bills from suppliers and pay them later, using the Accounts Payable workflow is the right approach.

In this guide, I’ll walk through how vendor bills work in QuickBooks Online, how to enter them, how to review what you owe, and how to record bill payments so your books stay clean and up to date.

What Is Accounts Payable in QuickBooks Online?

Accounts Payable (often shortened to AP) represents money your business owes to suppliers for goods or services you’ve already received but haven’t paid for yet.

When you enter a bill in QuickBooks Online:

• The expense is recorded immediately
• Your balance sheet shows how much you owe
• Your cash balance stays unchanged until you pay the bill
  

This gives you a much clearer picture of both profitability and upcoming cash requirements.

When You Should Use Bills Instead of Expenses

Use Bills in QuickBooks Online when:

• A supplier sends you an invoice to be paid later
• You want to track outstanding balances
• You need better visibility into upcoming payments
• You want accurate cash flow reporting
  

Use Expenses when you pay at the same time as the purchase (for example, a debit or credit card transaction).

Entering a Vendor Bill in QuickBooks Online

When you receive a bill from a supplier, enter it right away.

This allows you to see the cost of what you’ve purchased and keeps your payable balance accurate.

When entering a bill, you’ll typically fill in:

• Vendor name
• Bill date and due date
• Category or product/service
• Amount owed
  

You can also set up default categories for vendors you use regularly. This saves time and reduces categorization errors when entering future bills.

Once saved, the bill appears in your unpaid bills list.

Viewing and Managing Unpaid Bills

QuickBooks Online gives you a clear view of everything you owe.

By opening the Bills section, you can see:

• All unpaid bills
• Recently paid bills
• Bills awaiting review (if enabled in your file)
  

This list becomes your central dashboard for managing accounts payable. It’s especially useful when planning cash flow or deciding which bills to pay first.

Paying Vendor Bills in QuickBooks Online

When it’s time to pay your suppliers, QuickBooks makes it easy to record bill payments.

You can:

• Select one or multiple bills to pay
• Choose the payment date
• Record the payment method (bank transfer, cheque, etc.)
  

Once paid, QuickBooks automatically clears the bill from Accounts Payable and records the cash leaving your bank account.

This two-step process (enter bill → pay bill) ensures your financial reports stay accurate and your payable balances don’t linger after payment.

Why Accounts Payable Helps with Cash Flow

Using bills instead of recording expenses immediately gives you better control over your cash flow.

You can:

• See upcoming obligations before cash leaves the bank
• Avoid surprise expenses
• Make informed decisions about timing payments
• Keep profit and cash clearly separated
  

QuickBooks Online becomes more than just a bookkeeping tool, it becomes a planning tool.

Common Mistakes to Avoid

A few things to watch for:

• Entering bills and also recording bank feed expenses (this creates duplicates)
• Paying vendors directly from the bank feed without linking to existing bills
• Forgetting to review unpaid bills regularly
  

Sticking to one consistent workflow prevents confusion and keeps your books reliable.

Any time you receive a bill from a supplier, entering it into QuickBooks Online allows you to immediately see the cost, track what you owe, and manage payments with confidence.

Used correctly, Accounts Payable is one of the simplest ways to improve cash flow visibility and reduce bookkeeping stress.

If you’re just getting started with bills or want to double-check that your workflow is set up correctly, reviewing your unpaid bills list regularly is a great habit to build.

Helpful Resources

Compare QuickBooks Online plans: https://www.mycloudbookkeeping.org/quickbooks-plan-comparison

Download the free Month-End Checklist for Small Business: https://learn.mycloudbookkeeping.org/small-business-month-end-checklist

Book a free consultation: https://www.mycloudbookkeeping.org/consultation

If you have questions about bills, bill payments, or accounts payable in QuickBooks Online, you’re not alone and you don’t have to figure it out the hard way.

Hi, Kerry here from My Cloud Bookkeeping. I work with small businesses and entrepreneurs helping them to manage their business finances using QuickBooks Online. Now, you may have heard the acronym AP or even heard of accounts payable, but not sure exactly what that means. You use accounts payable when you purchase something now and you pay for it later. The main reason you would want to do this is to ensure you’ve captured the cost in the period it belongs and ensure you’ve recorded that liability, the amount you owe, and it’s showing up in your records. This makes sure your profit is accurate and you can manage your cash flow. So, let’s take a look.

So, here we are in our sample company and I’m going to pop up here to create and I’m going to go under the suppliers section here to create a bill. Now, when you send something to somebody, it’s an invoice. Then they send you an invoice. QuickBooks uses the languaging bill. So, when you receive something from somebody that you need to pay in QuickBooks, you have a bill.

So, we’ve received a bill from Cass Hayden. You can see that the information in QuickBooks has prepopulated her address. And now we have the option to enter our bill date, which is the date on the bill that we’ve received from her, and the bill number. Now, a bill number is a great idea because that’s the number of her invoice. And when Cass receives the money from us, she will know exactly which bill we’re paying for. So, the number on her bill is 612.

Now, we can also enter in here the terms. You can see here the bill date was the 19th of November and therefore the due date was the 19th of November. Let’s take a look what happens when we enter some terms.

Let’s say that this is a net 15 bill. All of a sudden our due date has shifted to the 4th of December. So now we know who we have received the bill from, what the date of the bill was, we’ve entered the bill number, we know the terms, and we know when it’s due. We get to categorize what these expenses were for. Now, QuickBooks has prefilled this row here with the information we had last time. That’s a setting that you can turn on or off.

I’m going to say that this is for computer and internet expenses. However, this bill is for $850. We’re still going to use the same sales tax code. And we have now entered a bill for Cass Hayden. So, why don’t we click save and new and we’ll enter another bill.

So, let’s see whose bill we’ve received next. Let’s receive a bill from Town Electric and Gas. We’ll say this bill was dated on the 1st of November with terms of net 30. Now, typically they don’t have separate bills. They often have our account number, which I happen to know is 2A23456.

What’s that for? Well, this would be for utilities. So, we’ll enter in here our utilities, which is electric and gas. We’ll put in the amount on the bill, 2,278, and some sales tax. Let’s just say it’s exempt.

Now, we might have a situation where we’re paying this for two separate classes and we want to split the row. So, I’m going to pop here utilities and gas again. I’m going to find out what half of this is, 1,139, exempt. And we can use our classes. We can see that half of this was for us paying for the bill for north and half of it was for admin. Perhaps admin and north are in the same building.

So, you’re able to split the bill amongst different rows. In our previous example, Cass may have provided some subcontractor services in addition to the internet. What we always want to make sure though is that the balance due total here is the same as the total on the bill.

Now, before we save it, we also have the option to add an attachment. This gives you the opportunity to add in a copy of the bill that you’ve received. There are many ways this can be automated, but for the sake of this example, I’m just saying you can add an attachment. And there it is attached to the bill. This is also very useful if you’re sending things out for approval. This particular version of QuickBooks I’m in now doesn’t have that option, but a lot of them do now where you can send it for approval before it gets paid. So, I’m going to save and close this.

Now, as with all things QuickBooks, there are multiple ways to get to enter a bill. There’s expenses and pay bills. Here will take you to the vendor center where you can have a new transaction and select bill. This is exactly what we just did.

We can also go across here to all apps or actually expenses and bills. We’ll have a list of our bills including those that we just entered and we can add a bill here. So, you will have your favorite way to get there and that’s fine. There’s no one way that’s better than the other.

What I have done is put myself beautifully in this pay bills section, which you can also get to from up here, pay bills, and any of the other ways we just explored to add a bill. So, I’m going to click pay bills.

And what we can see now is a whole pile of bills sitting here in QuickBooks. And they all appear to be overdue. We might be deciding which ones we’re going to pay. Some of these here are very old because I was just doing another exercise. And we most likely will not be paying these without investigating why they’ve been sitting here for this long.

So, I’m going to take a look now at Cass’s bill, Town Electric, and Gas. And let’s just say Jennifer and Christina should be paid as well. So, I’ve selected four bills to be paid, and the total of those is 1,947.90.

Now I need to select an account to pay that from. We can see here the balance of that account is displayed. So we can always make sure that the funds are there before we make these payments.

We have the starting check number. This is assuming of course that we’re printing checks. I don’t know if anybody does this anymore, but if you’re printing checks, this is where you’ll put the starting check number.

So once we’ve selected these bills, you can see that the payment amount also has populated here. If for some reason we weren’t going to pay the full amount, we would just type that in here. So for example, we might only want to pay $500. Then we’re paying a partial amount. It makes a note here that it’s a partial payment.

This is where we go to make payments on our bills. I have the option to save and print, just save it, or save and close. I’m going to go with save and close.

We can see here the unpaid bills. There’s the $8 left from Christina’s where we only paid $500, and these old bills that we’re going to look at and see why they’re still hanging out there.

Now, let’s say we’ve done our investigation and we found out that this bill from Kyle was entered in error. Let’s have a quick look here and see what happened. We had a bill for subcontracted services for $150 plus sales tax. We don’t want to go and delete this because this was back in January and we’ve already filed sales tax for that period.

So, what we’re going to do now is create a supplier credit. It could be that Kyle sent us the bill in error or sent it twice. We’re going to create a credit for subcontracted services for the amount of $150 plus sales tax, bringing it to $169.50. We’re going to save and close.

We can see now in Kyle’s vendor center that we don’t owe him anything, but we still have an overdue payment sitting here. So we want to tidy that up.

We’re going to go back up to pay bills and select Kyle. As soon as we put the checkmark here, the credit is applied. We could choose not to use that credit, but we’re not going to. We now have a zero payment. We still need to select a bank account even though the amount is zero. We’ll choose print later and save and close.

Now you can see we don’t have an overdue amount for Kyle and we don’t owe him anything. We have a zero bill payment that cleared the amounts against each other. We will have a reduced amount of subcontracted services showing up because we reversed the expense in a later period. This is something you may want to discuss with your accountant if the amounts are significant.

Now, another thing that we can do with bills is buy inventory. If we go back to a bill, you can see the category section which pulls from the chart of accounts. But if we’re buying inventory to sell, we can collapse this and add products or services instead.

Let’s choose a supplier. We already have a purchase order, so let’s add that. We’ve ordered water bottles and engraved items. By using this item details section, you’re able to purchase inventory from your suppliers. This adds the items to inventory quantities.

So, we save and close.

We also saw a purchase order. A purchase order is something you send out when you want to place an order with a supplier. It does not post anything into QuickBooks. It just sits there waiting. When the goods arrive and the bill comes in, you can copy it directly to a bill. This links everything together.

From the suppliers page, you can see all suppliers listed. Selecting one shows their information, address, contact details, notes, and default categories if applicable. All vendor information lives here.

The bills we looked at, expense transactions we didn’t cover this time. Those are for paying people directly. The list includes bill payments. When we click on bills, we see unpaid bills, paid bills, and any for review.

Hopefully that answers all your questions regarding bills, bill payments, and accounts payable. Anytime you receive a bill from a supplier, enter it into QuickBooks Online. You can immediately see the cost of the items you’ve purchased, know how much you owe, and manage your cash flow more effectively.

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