Thorough vendor setup is a critical step in QuickBooks.
When you first start using QuickBooks, you’re eager to get started processing transactions and running reports. So sometimes vendor setup gets short shrift. You tell yourself you’ll go back someday and complete those vendor records, but other tasks take priority.
Those “other tasks” will be easier if you take the time to fill in absolutely every field possible. You don’t have to do it all at once; you could make it a point to complete each record as you deal with individual vendors’ activities. If you’ve ever had QuickBooks training, the instructor probably emphasized this.
Vendor Type Designation Important
Start by doing the background work necessary in QuickBooks. For example, have you created a complete list of Vendor Types? Categorizing vendors in this way can make your payables reporting more flexible and insightful.
Open the Lists menu and select Customer & Vendor Profile Lists | Vendor Type List. You’ll see any that have already been defined. Right-click in this window to create a new type. Click New.
The right-click menu in the Vendor Types window lets you manage the entries in this list.
In the window that opens, enter a vendor type name in the box provided and put a check in the box next to Subtype of if it should be subordinate to another type. Click OK.
There’s other prep you should do. Open the Edit menu, then click Preferences | Bills | Company Preferences. You’ll see this screen:
As you’d learn in a QuickBooks class, it’s important to establish preferences early on in your work with QuickBooks.
Your decisions here aren’t difficult, but they are important. If you want to be sure to stay on top of your accounts payable obligations, you might set the due date for bills earlier than is necessary. This might also make you eligible for discounts with some vendors. If you want to automatically take any discounts or redeem any credits you have with your suppliers, check those two boxes and select an account to deposit them in from the drop-down list.
To be sure that you don’t pay a bill twice, check the box next to Warn about duplicate bill numbers from same vendor.
Once that prep work is done, you need to make sure that vendor records are completely filled out before you enter transactions for them. When you get a bill from a customer, open his or her record in the Vendor Center by clicking Vendors | Vendor Center and double-clicking on the correct name. Select the Edit command (this action will vary depending on the version that you’re using).
Of course, the contact information should be completely filled out. But there are other fields that should not be blank. They include:
- Credit limit
- Payment terms
This window from the 2013 version of QuickBooks displays some of the options you can choose from for individual vendors.
- Vendor Tax ID (eligible for 1099?)
- Vendor type
- Default expense account
If you complete all of this information for vendors as you go along, you’ll save time and ensure that your relationships with vendors remain cordial and your financial reputation remains sound.