When do I use Bills vs Expenses to record project related expenses?

Summary:

This article explains how using the wrong “expense” transaction type and payment module associated to these transactions, can impact the job cost reporting and workflow issues in Both QUICKBOOKS Online and Contractor Foreman.

Two expense types associated to a “Project.”

• Bills (Vendor/Supplier (PO’s)/Subcontract “invoices” received with terms); When entered will create Accounts Payable (liabilities) and outstanding balances owed.

• Expenses (written “Check”/credit-card charges/cash payments) are payments made for expenses at the point of sale. Expenses are immediately reported on the profit and loss statement.

If a QuickBooks user is unfamiliar with the “Pay Bills” process in QuickBooks, they will use the “Check” module in QuickBooks to manually record a “check” and assume that it will mark the bill created from Contractor Foreman paid.

Why the QuickBooks “Check” module should not be used to pay a “Bill” entered in Contractor Foreman?

Check(s) created through the “Check” module in QuickBooks will create a new Expense in Contractor Foreman, not a payment applied to an existing Bill. To properly pay a Bill in QuickBooks, you must use the “Pay Bills” module, so the Bill Payment can be linked/synced to the Bill in both QuickBooks and Contractor Foreman.

Why does the transaction type matter?

No Accounts Payable (A/P) linkage: A “Check” does not mark the “Bill” as paid, leaving the “Bill” outstanding and A/P aging overstated.

Duplicate Bill expense: The “Check” creates a separate Expense transaction for the same Bill amount in Contractor Foreman.

Reconciliation & Bank Feeds: “Pay Bills” creates a Bill Payment that links the Bill and Bank transaction; “Checks” do not match, leaving room for duplication by “added” duplicate expenses.

Credits/discounts/partial payments: “Pay Bills” supports applying “Vendor credits,” early-pay discounts, and partial payments against the “Bill.” Using a “Check” bypass’s those features.

Integration and sync issues: Integrations (like Contractor Foreman) expect “Bills” to be cleared via “Pay Bills.” Using “Checks” breaks mappings and causes duplicates or failed syncs.

What “Pay Bills” does, that a “Check” does not

1. Applies a payment directly to one or more open Bills (reduces AP and clears specific invoices).
2. Records Bill Payment with references to the applied Bill(s).
3. Allows applying vendor credits, discounts, and partial payments against the Bill.
4. Preserves correct job-cost and vendor balances and a clean audit trail.

Recommended practice

Enter invoices from Suppliers/Vendors, Purchase Orders, and Subcontracts as a “Bill” in Contractor Foreman to sync to QuickBooks as an unpaid open Bill.

When it is time to pay the Bill, go to “Pay Bills” (Bill Payment) in QuickBooks Online and select the bills to pay for that vendor, which will sync to Contractor Foreman and mark that “Bill” paid.