How to Develop a Reliable Accounts Payable Workflow for QuickBooks

Accounts payable QuickBooks workflow can be explained either for Intuit QuickBooks Online or QuickBooks Desktop accounting software. To leverage AP automation, we explain how to use accounts payable in QuickBooks Online and make vendor payments. 

The article includes the workflow for accounts payable with and without purchase orders in QuickBooks Online. And we describe the Workflow automation feature and menu in Intuit QuickBooks’ highest pricing plan level for  QBO, QuickBooks Online Advanced. 

Before explaining QuickBooks Online AP workflow process steps, we explain why add-on payables and payments automation is essential. It helps you save time and reduce costs, and offers financial controls benefits. With AP automation, the finance team can devote time to higher-level work, enhancing revenue and profitability.  

AP Automation Software Reliably Streamlines Workflows for QuickBooks Online 

A TechValidate study provides supplier invoice and payables processing statistics that confirm the need to reduce financial and AP operations costs with accounts payable automation software. 

Businesses can streamline accounts payable workflow with a scalable SaaS add-on app to automate payables and payments in QuickBooks Online. Efficient accounts payable automation (APA) software eliminates manual data entry, saves up to 80% of accounts payable processing time, and helps you close the books much earlier each month. 

Add-on cloud-based AP automation software for QuickBooks Online (not Desktop) saves substantial time in supplier onboarding, invoice processing, document matching, invoice approvals, and making and reconciling payments. 

The integrated AP automation app also automates the time-consuming invoice approval process, adds self-service vendor onboarding and tax compliance, and reduces erroneous payments and fraud risk. Global mass payments automation is an essential feature of AP automation software. 

To compare traditional accounts payable software workflows vs streamlined AP automation workflows, view the linked infographic in the middle of the Tipalti AP automation webpage. The infographic image explains the superior AP processes workflow provided by a Tipalti add-on app for QuickBooks Online (including QuickBooks Online Advanced) to achieve accounts payable automation. 

Accounts Payable and Vendor Workflow in 15 Steps

Accounts payable and payments workflows are:

1. Create and approve a purchase order
   • Create a purchase order (PO)
     • PO doesn’t apply to all expenditures
     • It depends on the company policy and expenditure type
     • Optionally create a purchase requisition first and get approval

2. Place an order with the vendor 
   • Enter vendor contact information in the system
   • Obtain W-9 for supplier tax compliance
   • Submit an order to the vendor
3. Receive an invoice for purchases on account, 
   • for later payment in about 30 days
   • depending on vendor terms
4. Receive item ordered and packing slip or services
5. Confirm receipt of items and create receiving document or confirm packing slip
6. Match supplier or vendor invoice with supporting documents: 
   • with purchase order and receiving document (3-way matching), or
   • with receiving document (2-way matching)
7. Enter invoice in accounts payable system (invoice data entry)
8. Include vendor’s early payment invoicing discount terms in the accounting software
9. Obtain invoice approval(s) required per company policy
10. Allow the system to screen for duplicate payments, errors, or fraudulent or questionable vendors
11. Pay supplier invoices when due or early for discounts
    • Single payment if needed immediately (like COD orders)
    • Batch mass payments of multiple invoices are efficient
    • Online payments via ACH electronic bank transfer
    • Credit cards or debit cards
    • Paper checks (suboptimal – inefficient and fraud risks)
12. Print aged accounts payable report in QuickBooks Online
13. Reconcile payments to accounts payable and the general ledger
14. QuickBooks Online journal entry
15. Prepare supplier/vendor tax compliance reports based on their W-9 (or international supplier) documents

Accounts Payable and Payments Workflow in QuickBooks Online

We group these AP processes into categories to explain QuickBooks Online steps and features for accounts payable workflows. You’ll need integrated add-on AP automation software for QuickBooks Online to increase the efficiency of accounts payable workflows.  

AP automation software handles all steps when combined with QuickBooks Online (or ERP systems). These end-to-end steps include self-service vendor onboarding, tax compliance reporting, capturing automated online invoices instead of manual data entry, automating approvals, and automating payments reconciliation. 

Purchase Orders in QuickBooks Online Workflow

In adequately-staffed companies, the purchasing department creates purchase orders. (In very small businesses, the owner may perform both purchasing and payables functions. Separating procurement from payables, payments, and accounting leads to good internal control. The accounts payable team takes over when it’s time to match invoices with any related purchase orders. 

Company policy may require preparing purchase requisitions (outside QBO) and getting them approved before purchase orders are created. 

QuickBooks Online support describes these workflow steps in QuickBooks Online for creating and sending (emailing) purchase orders to vendors:

1. Turn on the purchase order feature the first time you use it.
   1. Settings >Account settings
   2. Expenses tab
   3. Use purchase orders
   4. Option to add up to three custom fields and default message to vendors
   5. Save and Done
2. Create and send a purchase order to vendor (via email)
   1. + New > Purchase Order
   2. Select vendor from the dropdown menu
   3. Review vendor Mailing Address and customer Shipping Address (from Ship To dropdown)  if the order is being shipped to a customer
   4. Enter Purchase order date
   5. Enter Shipping via, Sales rep, and other custom relevant fields
   6. In Items detail, enter products to enter from the vendor
      1. Your products and services for these items must indicate: “I purchase this product/service from a vendor.” 
      2. If any exceptions, when ordering and entering in (PO) Items detail, add this tag to the product or service
   7. Select either Save and close, if sending PO to vendor later, or Save and send to send the PO immediately to the vendor.
   8. If you send a purchase order to the vendor later:
      1. Go to the Expenses menu
      2. Select the purchase order
      3. Send
3. Run and view open purchase order reports
   1. Reports menu
   2. Run one (or more) of these purchase order reports
      1. Open Purchase Order List
      2. Open Purchase Order Detail
      3. Purchases by Product/Service Detail
      4. Purchases by Vendor Detail

Workflow for Processing Supplier Invoices in QuickBooks Online and Add-on AP Automation Software

Vendor invoice processing workflow (excluding approvals and payments) includes:

• Manually entering (inefficient) or digitally capturing an online invoice in the QBO accounting system
• Matching the invoice to the receiving report and purchase order (when used)
• Coding the invoice for accounting purposes
• Viewing invoice status
• Taking prompt payment discounts when paying invoices early
• Running accounts payable aging reports
• Accounting staff making sure that the AP aging report total is the same as the general ledger.

To enter and review vendor invoice bills manually in QuickBooks Online, the steps are:

1. + Bills
2. Choose vendor from the dropdown menu or Add new vendor
3. If you’ve set up the vendor Mailing Address in the vendor profile, it will appear; otherwise, set it up (preferably) or enter it in the Mailing Address window 
4. Terms for this vendor automatically appear if set up earlier in the vendor profile
5. Enter Bill date (invoice date) from the invoice 
6. QuickBooks Online automatically calculates the due date using the Bill date and Terms
7. Enter the Bill no. (the vendor’s invoice number on the invoice)
8. Use the Account details section for services like monthly expenses
9. Use the Item details (line items) for purchases like inventory or equipment
   1. Select Product/Service using the drop-down menu or add a new product or service, using the + symbol 
   2. QBO automatically enters the Description
   3. Enter Qty and Rate
   4. QBO automatically calculates Amount and Total
10. Save the bill.
11. Review the bill from the Vendors menu, make any changes by clicking on the bill, then save changes.

AP automation software captures online invoices and uses OCR scanning technology to get the rest of the invoices online. Vendor invoices are automatically entered into the system, saving your business significant invoice processing time and reducing errors by eliminating manual data entry. 

Automating Vendor Invoice Approval Workflows for QuickBooks Online 

Businesses may use inefficient off-line vendor invoice approval processes that take a lot of time, including follow-up by the accounts payable department. Company policy includes designated approvers, their dollar approval levels, and when multiple approvers in your business are required for capital expenditures, inventory purchases, and expense invoices. 

QuickBooks Online Advanced includes some standard automated workflows, including Pay Vendor reminders. In QBO Advanced, you may be able to create some basic custom Workflows for approving supplier invoices. 

Instead, consider using third-party add-on AP automation software integrated with QuickBooks Online. AP automation software already includes robust role-based supplier invoice approval processes. It gives approvers access to online invoices and matching receiving reports and purchase orders (if a PO is used for the purchase). An AP automation app communicates with approvers in real-time, including issuing reminders.  

Making Vendor Payments in QuickBooks Online and Add-on Accounts Payable Automation Software

QuickBooks Online support details steps for bill payments to a vendor using Online Bill Pay.

The linked steps to pay bills from QuickBooks Online include:

1. Set up bank transfers with a vendor using private bank add. 
2. Choose Bill pay online widget
3. Choose Make a payment
4. In Send a payment screen:
   1. Enter vendor name
   2. Check box if tracking payment for 1099 applies
   3. Enter Amount
   4. Enter Memo description (optional)
   5. Enter Bill Number
   6. Select your bank Payment account
   7. Code the accounting transaction from your chart of accounts
      1. Account
      2. Description
      3. Customer
      4. Class
5. Click Choose delivery method button
6. Choose Bank transfer or Check (form fields with an asterisk are required)
   1. For Bank transfer:
      1. Enter vendor bank information only if not already set up
      2. Expect a first-time vendor payment to be verified with their bank in 2 business days, taking longer than normal
      3. Estimated arrival date shows, along with process date you enter
      4. Enter Vendor information
      5. Click Review and submit button
      6. Click Submit payment
   2. For Check:
      1. Enter Vendor information in required fields
      2. Choose process date
      3. Review and edit any information, if needed
      4. Click Review and submit button
      5. Click Submit payment
7. QuickBooks Online automatically creates a bill in the background. 
   1. The automatic bill can’t be edited.
   2. The Description field is generated from Pay a Vendor Auto Created Bill

AP automation software efficiently handles either single bill payments or global mass payments (batch payments) with a broader choice of preferred payment methods and local currency payments to numerous countries. 

Tipalti FAQs provide answers about approval workflows, payment method choices and countries, reconciliation reporting, tax compliance, security, and fraud prevention measures. 

A Tipalti FAQ describes payment method choices:

 “Depending on country, Tipalti supports a variety of payment methods and is always adding more options. These include ACH (automated clearinghouse), wire transfer, Global ACH (eCheck), PayPal, prepaid debit cards, and live paper check. While payers can determine which methods are made available, the advantage for the payee is that they can choose a payment method that works best for them.”

For more QuickBooks vendor payments information, see this link to a Tipalti guide on How to Make Vendor Payments in QuickBooks. 

Automatically Reconciling Payments with an Accounts Payable Automation Add-on App for QuickBooks Online

Automatic payments reconciliation requires using add-on AP automation software for QuickBooks Online. Tipalti automatically reconciles global mass payment data for you. That’s one way Tipalti can help you speed up your company’s financial close by up to 25%.

From Tipalti FAQs:

“Tipalti provides reports required by various disciplines of the organization: Payment Operations, Accounts Payable, Tax Management, Compliance, etc. The Reconciliation Report directly looks at payee transactions made in Tipalti with all connected banking providers including full view into banking providers, currency exchanges, transaction and conversion fees, payee ID and name, etc. It is primarily used for end-of-cycle general ledger reporting.”

Automatic Accounting Journal Entries for Accounts Payable in QuickBooks Online

QuickBooks Online automatically makes a QuickBooks accounts payable journal entry based on the detailed transactions that you enter in the accounting software. 

Accounts Payable, Cash Flow Management, and Financial Reports and Dashboards with QuickBooks Online and Add-on AP Automation Software

Accounts payable reports in QuickBooks Online (including purchasing reports) are:

• Accounts Payable Aging Detail 
• Accounts Payable Aging Summary 
• Bill Payment List
• Bills and Applied Payments
• Expenses and Suppliers
  • Check Detail
  • Expenses by Supplier Summary
  • Open Purchase Order List
  • Open Purchase Order Detail
  • Purchases by Class Detail
  • Purchases by Product/Service Detail
  • Purchases by Supplier Detail
  • Supplier Contact List
  • Transaction List by Supplier

The QBO Accounts Payable Aging reports (Detail and Summary) show outstanding bills by date range outstanding categories of Current, 1 – 30 days; 31-60 days; 61-90 days; > 90 days, and Total columns.

QuickBooks Online includes a Statement of Cash Flow in the Report menu. 

Steps to run the QuickBooks Online cash flow report are:

1. Select the Reports menu 
2. Search for Statement of Cash Flows and select it
3. Choose Customize to change the report settings, like report period dates
4. Run Report

A cloud-based AP automation app for QuickBooks Online provides real-time reports and dashboards to supplement those available from QuickBooks Online. For example, Tipalti delivers a real-time dashboard to manage trends in accounts payable turnover to help you manage KPIs and cash flow.

Handling Compliance, Error Detection, and Fraud Prevention with QuickBooks Online and AP Automation Software 

QuickBooks Online can detect duplicate bill payments if you enter the vendor’s Bill Number from their invoice in the Bill screen in QuickBooks Online. Tipalti AP automation software uses over 26,000 automated rules to detect vendor fraud and errors. Tipalti scans supplier payees against blacklists and its internal risk network for payees to reduce illegal and fraudulent payments. 

Workflow Menu in QuickBooks Online Advanced 

The Workflow menus in QuickBooks Online Advanced let users create automated workflows and reminders for either customers or your company’s team members. But you can create custom tasks as workflows for anything. The Pay Vendor reminder relates to accounts payable workflow. Other standard QBO Advanced workflows apply to customer invoices and their approval process. 

Simple QuickBooks Online Advanced – Workflow steps to get started are:

1. To create a new workflow, begin the process here:

             Settings > Manage workflow > Create workflow

2. To add, review, or approve workflow tasks after receiving an automatic notification, use the Task menu. Then follow the steps in the linked QBO support page. 
3. Manage Workflow steps:

            Workflows menu > Track workflow instances > Review your workflows

            To edit, delete, or turn off a workflow:

            Workflows menu > Actions drop-down menu > Choose an option. 

Summary – Accounts Payable Workflow for QuickBooks 

When you understand accounts payable workflow in general, you can apply QuickBooks Online or QuickBooks Desktop accounting software steps. We describe QuickBooks Online workflow steps and the automated Workflow menu in QuickBooks Online Advanced. 

QBO lets you gain significant accounts payable workflow reliability and efficiency by seamlessly integrating a cloud-based AP automation software app for QuickBooks Online. Tipalti functionality is accessible through the QuickBooks Online login and user interface. 

Add-on Tipalti AP automation software provides time-saving paperless payables and payments workflow automation, self-service supplier onboarding, better financial and payments controls, more global payment method choices, and automated payments reconciliation. Tipalti also automates tax and regulatory compliance.

When using QuickBooks Online or QuickBooks Online Advanced for accounts payable workflow, AP automation is the key to unlock its potential.