Linking receipt of inventory to bill already paid

Hello KHewitt,

It's great that you're taking advantage of QuickBooks Desktop's inventory features to help you keep track of when your inventory arrives and which vendors you have paid. I can help walk you through how to receive inventory against a bill to a vendor.

QuickBooks Desktop Premier makes creating an order, receiving the inventory and paying the vendor easy by following the path progression included in the program. In order to receive inventory for a bill you already paid I'd recommend recording the information on the payment and then deleting it. Once the payment is removed you can follow these steps.

1. Go to Receive Inventory dropdown, then select Receive Inventory with Bill.
2. On the Enter Bills window that appears:
   1. From the Supplier dropdown, select the supplier.
   2. Select Yes to receive a purchase order for the bill.
   3. Choose the correct PO, then select OK.
   4. Review the information on the Bill.
   5. Select Save & Close.
3. When you're ready to pay the bill, proceed to Pay Bills.

Once the inventory is received then pay the bill using the information that you recorded from the deleted payment.

Going forward I suggest following the steps in this article to process inventory orders and payments.

Have a great one!

Thanks Nick..      I think your solution will work .... but it does involve creating a bill and related payment, and then subsequently deleting both of them and re-entering the same info via the "Receive Inventory with Bill" utility - which is a tad cumbersome but doable.      This sort of problem is fairly rare.

Hi KHewitt,

QuickBooks Desktop does it this way to ensure that your accounts are correct and you only enter the items you receive. The other way to add inventory is through: Inventory Activities>Adjust Quantity/Value on Hand. This however is not recommended as it can cause issue with your item cost/profit. 

I also welcome you to submit Feedback if you want to have other ways to add inventory to an already paid invoice. All feedback goes straight to our product development team so they can work on looking into ways to have this function added for all users. In order to submit feedback in QuickBooks Desktop you'll need to go to: Help>Send Feedback Online>Product Suggestions. 

Hope you have a great day!

Hello @KHewitt ,

The message from the QB employee is simply telling you how to enter a bill and receive inventory at the same time, but that wasn't your question.

When you enter a bill on it's own, the inventory is assumed to be received at the same time.  Most of the time, goods are received before the vendor's bill so in that case, you have the option of receiving the inventory separately, and then entering a bill against the goods that have already been received.  You would do this by going to Vendors-->Receive Items.  Then when the bill arrives, you would go to Vendors-->Enter Bill for Received Items.

But it cannot be done the other way around; you can't go to Vendors-->Enter Bill for Received Items and then receive the items later.  Because you recorded the bill first, it automatically uses Vendors-->Receive Items and Enter Bill, which is the process @Nick K explained above.  This will have recorded the inventory as received, provided you used the ITEMS tab on your bill and not the EXPENSES tab.  If the goods are not showing up in the inventory, then I suspect the EXPENSES tab was used on your bill rather than the ITEMS tab.

Because you entered the bill (which also records the inventory received at the same time as mentioned above) and paid it, you should not have to do anything else to "receive" your inventory, as the bill has done it for you.  If you did use the EXPENSES tab, just go in and edit your bill and change your entry to the ITEMS tab and record the inventory item, quantity and cost that way.  Then the items on this bill will show up in inventory.

I hope I've understood your questions and given some insight.

Hello Rochelly .... and thank you for the follow-up and clarification.

For context -- the real-world situation here is a supplier who insists on advance payment before shipping the goods, and requests this payment by issuing his invoice prior to shipping goods.

Now, in fact, I think that QB employee Nick did understand my question - because his response began with the suggestion that I record the initial billl & payment, and the subsequently delete those two transactions when the goods arrive, and re-enter them via the correct Receive Inventory with Bill using of course the Items tab.

Now.... with that said, I am wondering what would be the problem if I 1) Entered the bill and payment initially when requested by supplier, and then 2) completing the Receive Inventory without Bill in order to complete the inventory increment, but take no further action to reconcile the goods receipt to the bill.   This has the effect of leaving the Receipt somehow "incomplete" -- but I can't see any further repercussion from an accounting perspective.

Your thoughts on this?

Hi @KHewitt ,

When a supplier insists upon a payment in advance, it really shouldn't be done using an invoice.  You are basically making a "deposit" on an amount that should not be invoiced until the goods are shipped.  What I would do in this situation:

1. Write a cheque to the vendor for the amount they are requesting in advance.  Post the amount to the G/L Accounts Payable account then tab over and enter your vendor's name in the "Customer:Job" column.  I know they're not a customer but don't worry, it does allow a vendor name in there.  If you go to that vendor in the A/P sub-ledger, you will see that you now have a credit balance waiting to be applied against a future bill.

2.  When the goods arrive, you can receive them first against your initial PO and then enter the bill against those received items OR just enter the Bill which will receive the items at the same time.

3.  Go to Pay Bills.  Choose that vendor and that invoice.  Look at available credits and apply the payment credit to the outstanding bill.

A bill shouldn't be recorded in advance of receiving inventory, and a vendor's insistence on making a bill so they can collect money from you just reveals that they don't know much about accounting.  The amount you pay in advance should sit in an asset account (or in this case, a negative payable which amounts to the same thing) and the money he receives should sit in a liability account such as "Customer Deposits" which means he owes you something . . . the goods that have yet to be shipped to you.  The purchase/sale shouldn't be recorded on his end until the goods leave his possession and he issues a bill/invoice to you, and you should record it at the time of receiving the goods.  This also means that you are not recording the taxes ahead of time (and neither should vendor) and everything will occur in the proper period.  Then you both will be following the matching principle, which is intrinsic to proper accounting.

But when all is said and done, you have no control over what your vendor does, unless you can convince him to receive your payment as a proper "deposit" and not as a bill payment.  Whatever he does on his end doesn't really matter to you, but you can do it correctly on your end, which might mean you have to change the date of his invoice in your system to better reflect what actually happened.

Hope that helps :)

Hello again Rochelly

AND.... thanks once again.    Your response has provided a clear set of guidelines that make complete sense, and which I will follow going forward

Really appreciate your time and effort with this this, and the thoroughness of your response.

Hi @KHewitt ,

Glad to help.  Have a great day!

I am reading this thread because I have a situation where I have returned to a position where another individual consistently did not create bills by selecting the item receipt.  These bills have been paid and have been reconciled with the bank statements.  I would like to be able to link these item receipts with the paid bills, so that these item receipts are no longer "open" or show up as a choice when creating new bills.  Can this be done?  Or am I facing unreconciling and recreating bills for an entire year? Or can I "close" item receipts?  

It's good to have you here, @TuckerRae.

You will get item receipts after choosing the option to receive inventory without a bill. You can simply delete them if you already created the bill for your inventory.

To do that, open the item receipt and click the Delete button at the top. See this:

Otherwise, you'll need to delete the bill and the payment so you can link the item receipt to a new bill.

I'm sharing this article that talks about the workflows of receiving inventory through bills: Accounts Payable workflows in QuickBooks Desktop.

It's nice to see you here today. Please come back here if you need further assistance with your item receipts and bills. I'll be more than happy to help.

Hello, makes sense in case we are talking pure accounting. However, it doesnt really help using all the features QB Enterprise has like budgeting and planning tools. Cash flows planning is part of it.

For example: we are an importer and importing our goods from abroad. Obviously the Vendor is billing us when his responsibility over delivering goods is fulfilled. Ex. : Ex works conditions. 

On our side we have to register the Bill, so that it shows in the system when we have to pay it (90 days from BL date for ex.). In the situation when reception of the goods is equivalent to entering bill it really truncates the reality we are facing and doesnt allow for proper planning and recording. Any suggestions?