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Super Explorer ***

Credit Card: payment after reconciliation -- bill method, or check method?

I'm aware there are at least two methods for handling payment to a company credit card on completion of a reconciliation -- for brevity I'll call them the Check method, and the Bill method.[1] And I've actually used both. I began with the Check method, but at one point an accountant I'd hired started using the Bill method. When he left, I was filling the gap until I got someone else, so when I finally figured out what on earth the Bill method was, I continued with it. A subsequent accountant decided to change back to the Check method, and so it went on from there.

 

But although I'm familiar with both, I still don't know why anyone would choose to use the Bill method. It's a little bit more work than with the Check method, being two entries rather than one. And it means you can no longer just look in your Credit Card register to see what the balance is. The balance is a combination of that Credit Card register, plus the A/P balance associated with the pseudo-Vendor, so you need to keep an eye on both.

 

So what is the upside? Can anyone tell me what if any, benefits the Bill method has over the Check method?

 

Thomas

 

[1] Anyone who can help me will probably already know what each of those is, but to make sure I'm using the right terms. By the Check method I mean that the payment is entered as a posting between the Bank account and the Credit Card account (typically using a check, hence the name). The other requires there be a pseudo-Vendor -- I'll call it "Credit Card Bill Vendor" -- and then payment is done in two stages. First, a bill is created, thereby posting between the Credit Card account, and A/P in the name of "Credit Card Bill Vendor. And then when the payment is made, there's a posting between Bank and A/P (again, named for the pseudo-Vendor), to pay the bill.

 

 

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Best answer 10-02-2019

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Super Explorer ***

Re: Credit Card: payment after reconciliation -- bill method, or check method?

Oh dear. That's the third attempt, by a third person, but like the previous two it not only doesn't answer my question, it's not clear that it is even addressed at my question.

 

I thought my question was clear. The opening sentence states that it is about, "...payment to a company credit card on completion of a reconciliation". And bizarrely, in this case the answer even contains a link to the article which describes the very choice I am asking opinions on. (It's in the section headed "Make a payment after reconciling your credit card", in the bulleted list, just after the numbered list.) And yet the answers I've received have been about the general idea of cash vs accrual payments or, in this case, something about whether the credit card transactions had been entered as bills. I'm not sure why that would ever be done, but I'm absolutely sure it has nothing to do with what I asked.

 

Maybe it's me, but there's clearly something stopping my explanation from reaching some people. However, after several attempts here, similar experiences in other threads, as well as the experiences of other forum users (such as the poor sods on this thread) I'm at a loss as to how to fix that. So for my part, I'm going to consider this a lost cause. I'll look for input elsewhere; I don't see any point in continuing here. 

 

Thanks for your time spent anyway,

Thomas

 

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6 Comments
QuickBooks Team

Re: Credit Card: payment after reconciliation -- bill method, or check method?

It's nice to see you, @ThomasK!

 

The difference between Bills and Checks differs from how you handle your payments for your vendors. Let me discuss this further.

 

To start with, recording your expenses using the Bill method accurately track your accounts payable. Especially, when you pay your vendors the same time you received the item or service.

 

Meanwhile, recording your expenses using the Check method is simply paying your vendor the same time you made the purchase. It's either an expense you made for an item or a service.

 

Additionally, here's an article you can read to learn more about the difference between the two methods: What is the Difference Between Bills, Checks, and Expenses?

 

Know that you can always visit our Help Articles page for QuickBooks Online in case you need some tips and related articles for your future tasks.

 

If there's anything else that I can help you with, please let me know in the comment section down below. I'll be always around ready to help.

Super Explorer ***

Re: Credit Card: payment after reconciliation -- bill method, or check method?

Hi @JonpriL , thanks for replying.

 

Unfortunately neither what you wrote, nor the article you linked to, answered (or for that matter even addressed) my question.

Thomas

Moderator

Re: Credit Card: payment after reconciliation -- bill method, or check method?

Hi again, ThomasK. I appreciate your prompt response.

 

The information provided by my colleague JonpriL talks about the difference between Bills and Checks, and how it differs when handling payments to vendors.

 

In terms of decision making on what method you will record for the customer, I'd recommend consulting an accountant for better guidance. They are the best one to ask on what to use for the customer's transaction.

 

If ever you have any other questions in handling your transactions, please let me know by commenting below. I'd be more than happy to answer it for you. Have a great day!

Super Explorer ***

Re: Credit Card: payment after reconciliation -- bill method, or check method?

Hi Mirriam,

 

> The information provided by my colleague JonpriL talks about the difference

> between Bills and Checks, and how it differs when handling payments to vendors.

 

Correct. But that wasn't what I asked. 

 

Here is an Intuit article discussing the context of my question (it's for QB Desktop but that's not important): https://quickbooks.intuit.com/learn-support/en-us/chart-of-accounts/set-up-use-and-pay-credit-card-a...

 

Look at the section near the bottom, with the header, "Pay credit card charges (after reconciliation)" The first part of that section says: 

 

...there are 2 options to pay a portion of the outstanding balance;

  • Write a Check for payment now (for expenses that are to be paid immediately)
  • Enter a bill for payment later (for vendor bills to be paid at a future date)

Now in fact even that advice is at best poorly written, and at worst simply wrong. The issue at stake has nothing to do with whether expenses are being paid immediately or a vendor bill is going to be paid at a future date. Those are both completely irrelevant to that article -- I'm not sure why the words are even there.

 

Nevertheless, there still legitimately are two options for posting in QuickBooks a payment to your credit card (i.e. a payment to the card; not a bill; not an expense; but essentially a transfer of one asset/liability to another). And I'm asking -- and I'm really asking people who are actually using the bill method in practice -- why choose the bill method? Why not just use the direct "Check" method? What benefits does the bill method bring?

 

Thomas 

 

Anonymous
Not applicable

Re: Credit Card: payment after reconciliation -- bill method, or check method?

Recording credit card payments will depend on how you enter credit card transactions in QuickBooks, ThomasK.


If you’ve entered the transactions as a bill, you’ll have to record the payment through pay bills. You can also pay these transactions through checks if they were recorded as credit card charges into your register. Checks can also be used when transactions are automatically downloaded through online banking.


Some users prefers to enter bill to a credit card vendor. This is to summarize the total charges on one bill and entering a separate line for each expense account amount.


If you’d like to enter individual transactions, you can do it manually through the register. Connecting the credit card account into your QuickBooks would be fine as well.


Check this out for additional information about recording credit card payments. 

 

Whatever method you’re practicing would be fine as long as everything was recorded properly. 

 

Let us know in the comments about which procedure you’d like to follow. Also visit us here again if you have other questions. 

Super Explorer ***

Re: Credit Card: payment after reconciliation -- bill method, or check method?

Oh dear. That's the third attempt, by a third person, but like the previous two it not only doesn't answer my question, it's not clear that it is even addressed at my question.

 

I thought my question was clear. The opening sentence states that it is about, "...payment to a company credit card on completion of a reconciliation". And bizarrely, in this case the answer even contains a link to the article which describes the very choice I am asking opinions on. (It's in the section headed "Make a payment after reconciling your credit card", in the bulleted list, just after the numbered list.) And yet the answers I've received have been about the general idea of cash vs accrual payments or, in this case, something about whether the credit card transactions had been entered as bills. I'm not sure why that would ever be done, but I'm absolutely sure it has nothing to do with what I asked.

 

Maybe it's me, but there's clearly something stopping my explanation from reaching some people. However, after several attempts here, similar experiences in other threads, as well as the experiences of other forum users (such as the poor sods on this thread) I'm at a loss as to how to fix that. So for my part, I'm going to consider this a lost cause. I'll look for input elsewhere; I don't see any point in continuing here. 

 

Thanks for your time spent anyway,

Thomas

 

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