Differences between bills, checks, and expenses

Understand when to use bills, checks, and expenses to accurately record payments and track what’s owed in QuickBooks Online

Overview

The primary difference between these transaction types is the timing of the payment.

• Use Bills: When you receive items or services now but will pay for them later (Accounts Payable).
• Use Checks or Expenses: When you pay for items or services immediately (at the time of purchase).

Bills (Pay later)

Enter a bill to report a transaction that you will pay in the future. This is essential for accurate Accounts Payable (A/P) reporting and tracking vendor balances, especially if you use accrual-basis accounting.

Use a bill when:

• You receive an invoice from a vendor that is not due until a later date (for example, an electric bill due at the end of the month).
• You need to track how much you owe specific vendors.

Bill payments (Close a bill)

If you originally recorded a transaction as a bill, you must use the Pay bills feature to close it.

Important: Do not use a Check or Expense to pay an existing bill. Doing so may cause the bill to appear unpaid on your reports and will not decrease the vendor balance appropriately.

Use Pay bills to:

• Print a bill payment check.
• Record a credit card payment for a bill.
• Close the open bill in your records.

Note: If you pay a bill via electronic payment, enter EFT in the Check no. field.

Checks and Expenses (Pay now)

Use a Check or Expense to record a transaction that you pay for on the spot. These forms record the expense and the payment simultaneously

Use a Check or Expense when:

• You buy supplies and pay immediately (for example, a purchase at an office supply store).
• There is no money owed to the vendor after the transaction.

Choose between Check and Expense

• Check: Use this if you need to print a check to send to the vendor.
• Expense: Use this if you paid via credit card or electronic funds transfer (EFT). Note: If you pay via EFT, you can enter EFT in the Check no. field within the Expense or Check form. send to the vendor.

If your preferred delivery method for a customer is set to "Print later," an Expense transaction will save as a Check. To verify this, go to your customer's profile, select Edit, and check the Payments section.