Help With QuickBooks | Blog

Our blog section at Help With Quickbooks (UK)

QuickBooks Online (UK) - How to Enter A Supplier Refund or Credit

One of the tricky things to master when using bookkeeping accounting software is the less common postings that don't seem obvious.

One of those we have found is "How to enter a refund from a supplier?"

There is a good answer we found posted about posting supplier credits here which summaries it nicely for QuickBooks Online users in the UK.

John

QuickBooks UK - Hints and Tips - Expenses Suppliers Bills and Payments

Okay in this blog post I want to take a look at suppliers and how suppliers are treated in QuickBooks and in particular one aspect which I think is a common mistake for inexperienced QuickBooks users.

Got questions or issues about using QuickBooks why not join in our new QuickBooks user forum?

What are suppliers?


Suppliers are people, companies or organisations that supply your business with services or products.

The way that you interact with your suppliers can vary from business to business and particularly noticeable is the difference between larger businesses and smaller businesses. Larger businesses with multiple staff and perhaps accounting departments or bookeepers often have credit with supplier and receive bills for purchases or use purchase orders. Smaller business more often simply pay for purchases at the time of acquisition.

Recording A Simple Supplier Purchase

A simple way that you interact with your suppliers is that you walk into a shop and buy something such as stationery, pay for it with a debit card or cheque book, and leave the shop with the stationery you paid for.

In this simple scenario you have not received a bill or taken delivery of the goods before paying for them and the two sides to the entry in QuickBooks are a debit from your bank account of the cost of the stationery purchased and the stationery expense item to be shown your profit and loss account as a stationery expense.

If you are a VAT registered business and claim credit for the VAT on the item purchased and will be accounting to HMRC separately for your VAT items when you submit your VAT return.

The simplest way to record this entry in QuickBooks is to record the expense via the “write cheque” (keyboard shortcut Ctrl W) within QuickBooks choosing the correct bank account and selecting stationery or whichever is the most appropriate expense account.

If the purchase was with a cheque, which is much less common these days, you will need to record the cheque number in the top right corner but if it was with your debit card you can simply leave the cheque number box blank.

If you are not VAT registered we could actually make the entry in your appropriate bank account ledger directly.

So that’s the easy bit, but where can entering bills from suppliers and recording expenses go wrong.

Entering suppliers bills

Being organised and methodical in the way that you approach QuickBooks will lead to more accurate accounting records and less errors to correct later that is why you invested in QuickBooks software after all, right?

Errors, especially if you are VAT registered and have filed your VAT return before spotting an error are more tricky to correct so avoiding errors in the first place by having a system of accurately recording expenses and paying for them is crucial.

The same would apply to any accounting record whether QuickBooks or not.

If you receive bills from suppliers for goods or services supplied to you and pay those bills later you need to avoid entering the expense twice, as this will lead to you recording the expense twice in QuickBooks and doubling up.

This can happen where you enter a bill that you have received but when you subsequently make payment to the supplier you don’t first check that you have an unpaid bill for that item and supplier which is the bill that you are paying but instead  enter the payment directly as a cheque or bank expense, leaving the previously entered bill as no paid!

In this instance the bill still exists in QuickBooks as an outstanding expense to settle plus you also have the expense repeated as a direct entry through the write cheque or posted to the bank directly entry.

Tips to avoid the error of doubling up expense items?


  • Have a folder or tray (manual paper) for unpaid bills, know what’s in it and always check before writing a cheque to suppliers who normally provide bills and get paid later.
  • Or if you are trying to operate a paperless office as far as possible scanned the bill and save the bill to and unpaid bills folder on your computer and move the bill out of the unpaid bills folder when you pay it to where you save your paid bills.
  • Always keep an eye on what's in your unpaid bills folder whether it is a paper folder or a folder on your computer so that you are aware of what's in it.
  • Perhaps set a reminder on your smartphone or computer for suitable regular times to review your unpaid bills folder.
  • Before entering cheque or credit card payments to suppliers within QuickBooks always review your unpaid bills entered in QuickBooks to ensure you haven't already entered a bill for that expense as then you should use the "pay bills" route instead.
  • Always check your un-paid bills report BEFORE filing your VAT returns to make sure you are satisfied that bills have not been settled by a direct "write cheque" entry in QuickBooks that way you can avoid doubling up the expense entry. Once your VAT returns filed in QuickBooks it finalises the entries and deleting or removing them is problematic and probably best done in the form of a credit note contra entry.
  • Don’t unnecessarily enter bills that we the quotes or bills that you know may get settled extremely quickly as it may be easier to record these at the time of payment rather than receipt of the bill then "pay bills".

Why Enter Suppiers Bills At All?


The main reason for entering bills received from suppliers for their paid is precisely so that you can monitor and control the money that you owe to suppliers for goods or services provided to you.

So unless you are using QuickBooks specifically to monitor and maintain money owed to suppliers by entering bills keep things simple, especially where payment is likely to be made to the supply quickly, and enter the expense just at the time payment then you can match your paperwork of the payment and the bill received at the same time as making the payment.