QuickBooks – What’s the Difference between Bills and Invoices?
There is no doubt that QuickBooks has done a great job in making double-entry accounting which is accessible to a number of people. However, sometimes people still get confused about the terminology.
ne of the areas of confusion is the difference between the Invoices and Bills in QuickBooks. In our normal interactions, we may use these terms inversely, but they mean entirely different things in QuickBooks.
Invoices in QuickBooks
‘Invoices’ are accessed by this path – Customers > Create Invoices
Invoices are sent to the customers. They will record the revenue (sales) on the books, and they record that customers who owe the amount of money that appears in the invoice.
There is a payment screen which is associated with the invoices, where your customer payments are recorded. And, recording payments on this screen shows that the customer owes less money, as well as the record that more cash has been acquired. The payment screen which is for the customer invoices is called Receive Payments, and it can be accessed by this path – Customers > Receive Payments.
Firstly, the invoices are generated by using the ‘Create Invoices’ screen and, as the payments are received from customers, then the payments are applied against the invoices using the ‘Receive Payments’ screen.
Bills in QuickBooks
‘Bills’ are accessed by this path – Vendors > Enter Bills
Bills are received from the vendors. They record the expenses, costs or inventory, and they also record that the business owes the vendor the amount of money that shows on the bill.
There is a payment screen which is associated with the bills, where the payments are made to the vendors are recorded.
In this screen, the recording payments show that the business owes the vendor less money, and also records that if there is less cash by paying the vendor.
If the vendor bill was paid via credit card, then this screen will show that there is more credit card debt on the books. The payment screen for vendor bills is called Pay Bills. It can be accessed by this path – Vendors > Pay Bills
When vendor bills are received, they are entered using the Enter Bills screen. Then, as they become due, they are paid using the Pay Bills screen.
When to Create a Customer Invoice After Entering a Vendor Bill
The users need to create a customer invoice only after entering a vendor bill in a specific instance i.e. when there were the expenses on the vendor bill need to be invoiced for a specific customer.
For example, if there are reimbursable expenses, or any other expenses that requiring a markup, then these can be marked Billable in the ‘Enter Bills‘ screen and put into a specific invoice of the customer.
Once the users of QuickBooks understand the difference between the Bills and Invoices, and how they can be used, then they can proactively avoid many problems.