The vendor workflow
Learning outcomes
In this lesson, you’ll learn how to:
1. Identify best practice vendor workflows
Topics
Introducing the Vendor workflow
Different clients
More vendor transactions
The story so far
To effectively run his business, Craig needs to buy consumables like hardware, which
means he has items to purchase and people to pay.
How can QuickBooks Online help?
QuickBooks Online offers all the features your clients need to manage their vendor
transactions and support their purchasing workflows.
Introducing the vendor workflow
Set your clients up for success by coaching them in best practice workflows from day
one. This also saves you time and effort when it comes to reconciling the books,
producing financial statements, and preparing for taxes.
You’ve already seen what a good customer workflow looks like, but what about the
other side of the coin? What’s the best way to work with vendors in QuickBooks Online?
Craig needs to pay a number of different people and companies to keep his landscaping
business going: his contractors, utility bills, vendors who supply materials, and (of
course) his trusted bookkeeper. These tend to be things he is billed for that he can pay
for later.
Craig also has to manage day-to-day cash expenses, like making sure he has gas in
the truck, which he pays for on his credit card.
Let’s take a look at what this looks like in a typical vendor workflow.
Different clients
The vendor workflow may differ based on your clients' needs.
Most items that Craig needs to run his business are cash-basis expenses. These are
items that aren’t directly rechargeable to his customers, like the fuel in his truck or the
electricity to run his office.
Craig has three options for recording these expenses. Each uses a simple vendor
expense workflow.
Accrual-basis expenses
Craig charges items he purchases on behalf of a client, such as a fountain or new pump
for a pond he maintains, back to the client as part of their bill. He should use an
Accounts Payable vendor workflow for these items.
More vendor transactions
You can find a list of vendor transactions under Vendors in the + New menu.
Coaching your clients in how to choose the correct transaction type for each stage of
their business workflow will lead to a well-managed set of books.
The difference between posting and non-posting transactions is whether or not there is
an exchange of money to one of the categories in the Chart of Accounts. Non-
posting transactions do not exchange any money between accounts, while posting does
create an exchange of money.
Transaction type Description Posting/Non-posting
account
Expense Transaction form to pay vendors using Posting
cash, check, or credit card at time of
purchase
Check Transaction form to pay vendors using Posting
check only at time of purchase
Bill Accrual-basis transaction form to record Non-posting for cash-basis
expenses on payment terms reporting; posting for accrual-basis
reporting
Pay bills Payment transaction to record payment of Posting for cash-basis reporting;
previously recorded bills non-posting for accrual-
basis reporting since the reporting of
this expense was posted at the bill
level
Purchase order Transaction form used to request and track Non-posting but can be added to an
vendor purchases expense, check, or bill transaction
Vendor credit Transaction form used to record returns to Posting transaction that reduces the
vendors or refunds from vendors amount owed to vendors. Can be
applied to an open bill
Credit-card credit Transaction form to record returns of Posting transaction that reduces the
expenses paid via credit card open credit-card balance
Lesson check
Craig’s has a new order from a customer. He needs to buy some paving from his
vendor for the customer’s job. He has 60 days to pay for it. Take a look at the vendor
workflow:
1. Craig buys paving on credit
2. Vendor bills him
What two steps should come next?
3) Craig makes payment; 4) Vendor credit
3) Craig creates bill in QuickBooks Online; 4) Makes bill payment
3) Craig creates bill in QuickBooks Online; 4) Vendor credit
3) Craig creates expense in QuickBooks Online; 4) Makes payment
That’s right. When you create the bill in QuickBooks Online, it shows up in Accounts
Payable, so Craig knows money is due to come out of the business. But he can help his
cashflow by keeping money in the bank for the next 60 days until it’s time to pay his
vendor.
