This article addresses how to manually apply an old vendor payment to open bills in QuickBooks Online.

This procedure does NOT utilize the “Pay Bills” function in QuickBooks Online, but rather is just a back-door method of applying a vendor payment to an unpaid bill that directly utilizes the manual posting to the Accounts Payables account.

So, let’s get started:

  1. If you have not already done so, post your vendor payment into your bookkeeping software. The caveat here is to be sure you post this vendor payment directly to the “Accounts Payables” account. This is because this payment will then show within the vendor’s transaction history, which is where you will later need to find this to complete the next steps.
  2. Now, go to the vendor’s transactions list history directly within their profile. The vendor’s transaction list history should contain all purchase orders, bills and bill payments that have ever posted to this vendor’s name. You should notice that payment you just posted in step 1 above.
  3. Now, within this list, find an open bill that you want to apply this vendor payment to.
  4. On the right side of that bill (within the list still) click on the down-arrow and select “Mark as Paid.”
  5. Now, the Bill Payment screen opens up.
  6. Select a payment date that is the same as the vendor payment date from Step 1 above.
  7. For the reference number (Ref no.), I like to type in “APPLY’ as this is the specific purpose of this bill payment entry, to apply a bill payment (credit) to an open bill.
  8. The total in the “Amount” block, also near the top, should be zero. You are not creating a new vendor bill payment here, but again just applying a credit to an open bill.
  9. Now, very important, scroll down and select the bill(s) you want to pay off, then scroll further down and select that open credit (the payment from Step 1).
  10. To check and verify your work: If you have done everything correctly, the total “Amount to Apply” on the bottom right of this screen should also match the total credit amount you just check marked, AND, the “Amount to Credit” should now equal zero.
  11. If everything checks out, then click Save and Close and process a Vendor Unpaid Bills report to ensure both the bills and credit amounts from all steps above are no longer in this report.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.

Share This Post: