Expenses and Vendors
What this domain tests
The payables and spending cycle: vendors, expenses, bills, bill payments, purchase orders, vendor credits, billable expenses, 1099 tracking, mileage, and recurring entries.
Core concepts
The deciding question is timing. If cash leaves now, record an Expense (cheque, cash, or credit card). If you owe money later, record a Bill, which posts to Accounts Payable, and clear it with Pay Bills or a bill payment linked to a bank account. A vendor credit reduces what you owe and can be applied to an open bill or refunded.
Mark a line billable to a customer so the cost can later be pulled onto that customer invoice. Purchase orders are commitments, not expenses, until items are received and billed. Enable 1099 tracking on the vendor and map the correct box; payments are what get reported, not bills.
Traps
- Recording both a bill and an immediate expense for a single purchase, doubling the cost.
- Using Pay Bills to clear a charge that was actually paid by credit card, leaving an unpaid bill behind.
- Forgetting the billable flag, so the cost sits in overhead and the client is never invoiced.
- Editing or deleting a bill after it has been paid, which breaks the payment link; void instead.
- Overlooking use tax on purchases where the vendor did not charge sales tax.
Worked example
A subcontractor bill for 600 arrives and is fully billable to Customer A. Record the bill with the billable box checked and the customer selected. When you create the invoice, add the billable expense as a line; the cost lands in COGS and revenue is billed. Skip the flag and the 600 stays an overhead expense while the client pays nothing.
Rule of thumb: cash now means Expense; obligation later means Bill; card spend is never a bank Bill Payment.