Using Purchase Orders to manage cash flow

StephanieCrocker1 · ‎December 20, 2022

I have a client who I am trying to help manage their cash flow.

They have a vendor they place orders with that only gives them an estimate of what is due. When the item is complete, the vendor gives them a final amount and then they need to pay that immediately.

At first, I thought they should just create a bill with the estimated amount and then they could adjust that later. That way, it will show up in accounts payable. But we tried this system and it seemed to create confusion because it wasn't actually a bill yet so it couldn't be paid.

But I am also thinking a better solution might be for them to create a purchase order. I know how to do this, but am unsure how this would show up in their cash flow projections? There is a separate report, but I'd like to see their income and expenses (including their upcoming potential expenses) in one report.

ZackE · ‎December 20, 2022

Thanks for reaching out to the Community, StephanieCrocker1.

There's a couple ways I'd recommend doing this, however, you'll want to confirm with an accounting professional which method is best for your business.

One option's to hold off on recording bills until their amounts are finalized. Afterwards, you can enter the bills and their payments.

Your other option is to record the bills with their estimated amounts, then edit them and make any necessary changes once their amounts are finalized. Afterwards, you can record your payments.

If you're in need of an accountant, there's an awesome tool on our website called Find a ProAdvisor. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.

Additionally, I can certainly understand how an ability to enter vendor estimates could be useful and have submitted a suggestion about it as of today. You can also submit your own feature requests while signed in.

I've also included a few detailed resources about working with cash flow projections, bills, and purchase orders which may come in handy moving forward:

Please feel welcome to send a reply if there's any questions. Have an awesome Tuesday!

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ZackE · ‎December 20, 2022