Note: This article assumes you do NOT have the “Automatically apply bill payments” setting turned on in your QuickBooks company settings.

Let’s say you process an Unpaid Bills report and get the following results for one of your vendors:

• Vendor has an unpaid bill in the amount of $300.
• Vendor ALSO has an unapplied credit in the amount of $300.

Clearly, this vendor is fully paid, however the bookkeeping software still needs for you (assuming you do not have any automatic settings engaged) to apply this credit to this open bill for this vendor, that way you will not see this information any longer on your Unpaid Bills or any other Vendor Payables financial report.

So let’s do this:

1. Open up the transactions list within this vendor’s profile and click on this open bill.
2. Click on “Mark as Paid” at the top right.
3. Within the Bill Payment screen, be sure the Payment date is set to either the same day or after the new bill date (perhaps on the same date as the date from which the vendor credit originated), then in the Reference No. field, type in the word “apply”.
4. Now go directly to the “Payment” field which is directly to the far right side of the new bill you are wanting to apply the credit to and:
   1. Type in a payment amount that is EXACTLY the same as the credit amount you want to apply (Note: QBO might have already done this for you).
5. You will now notice some very important payment details on your Bill Payment screen:
   1. The “Amount” field towards the top on the left side has changed to 0.00.
   2. The “Amount to Credit” towards the bottom on the left side has also changed to 0.00.
   3. Both the bill and corresponding credit(s) are now check-marked: amount of the bill equals exactly the amount of the credit(s) being applied.
6. Click on Save and Close.
7. If you process either an Accounts Payables Detail report or an Unpaid Bills report, you will see this open bill and credit balance no longer exist.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your Certified Public Accountantfor verification and clarification about the contents of this article.