Learn how to track the items that you’ve paid but haven't received yet in QuickBooks Online.
You can record a payment to your supplier, without affecting the inventory quantity on hand until you've received the items.
The following steps work well if you don't want to see a credit in Accounts Payable or when you want to separate prepaid inventory from the inventory asset account.
In this article, you'll learn how to:
- Create a Purchase Order when the order is placed
- Write a cheque to the supplier and categorize the payment
- Roll the Purchase Order to a bill for that supplier
- Re-categorize the payment to Accounts Payable
- Show the bill you created for your supplier as paid
Step 1: Create a Purchase Order when the order is placed
- Select + New.
- Select Purchase Order.
- Fill in the appropriate fields.
- Go to the Item details section, then enter the details of the product/service you are purchasing.
- Select Save.
Step 2: Write a cheque to the supplier and categorize the payment
- Select + New.
- Select Check.
- Select the supplier.
- In the Category details section, choose another current account such as Prepaid Inventory then enter the amount of your payment.
- Select Save.
Step 3: Roll the Purchase Order to a bill for that supplier
- Select + New.
- Select Bill.
- Select the name of the supplier.
Note: When you select the supplier, any open purchase orders for that supplier will appear at the right side of your screen. - Locate the purchase order you created then select Add Purchase Order.
- Select Save and close.
Step 4: Re-categorize the payment for Accounts Payable
- In the Cheque screen, change the Account to Accounts Payable (A/P) in the dropdown.
- Select Save and close.
Step 5: Show the bill you created for your supplier as paid
- Select + New.
- Select Check.
- Select the supplier from the dropdown list.
- Add the bill and the cheque you entered for the supplier.
- Select Save and close.
Note: After adding, the bill appears under "Outstanding Transactions," and the cheque under "Credits."
| Tip Another way of tracking prepaid inventory is to create a PO when the order is placed, enter a bill payment cheque, then establish a credit for the supplier. When the items are received, convert the PO to a bill then apply the previous bill payment to the bill. |