How to automate accounts payable workflows in QuickBooks
How do you process vendor invoices in QuickBooks?
Creating an efficient and accurate accounts payable workflow is crucial if your business relies on QuickBooks. However, navigating complex AP processes can be challenging, especially when you’re juggling the multiple demands of a growing company.
In this article, we’ll help you understand how to use the four core QuickBooks Online accounts payable workflows to optimize your accounts payable process. We’ll explore each workflow and look at the obstacles and pain points other businesses encounter when using it. We’ll also discuss how an integrated AP automation solution may be a better fit for your business. After reading, you’ll be able to plan the best path for your business to save time and money, prevent errors and fraud, and optimize cash flow management by streamlining AP processes.
What is accounts payable automation in QuickBooks?
The accounts payable automation function in QuickBooks helps businesses streamline complex manual AP functions, like invoice capture, supplier payments, and AP reporting. AP automation is available in QuickBooks Online, QuickBooks Desktop, and QuickBooks Enterprise. However, the specific AP features vary across these solutions. Additionally, many advanced features, such as custom workflows, are only available in higher-tier versions. Note that Intuit stopped selling new subscriptions to QuickBooks Desktop on September 30, 2024, so it’s unlikely new AP features will be added to that platform in the future.
For our example, we’ll break the AP workflows available in QuickBooks Online and QuickBooks Online Advanced into 4 core processes. They are:
- Creating purchase orders.
- Processing vendor bills.
- Automating vendor bill approval.
- Making and recording vendor payments.
Let’s break out the workflows.
1. Creating purchase orders
The QuickBooks Online (QBO) AP process begins when the procurement department creates a purchase order and issues it to the vendor. Here are the steps.
Activate the purchase order feature
You need to turn the purchase order feature on before you can create POs in QBO. To do this, navigate to Settings > Account and settings and select Expenses. Then select the edit icon in the Purchase orders section, and click Use purchase orders. QBO gives you the option to add three custom fields and a default message to your purchase orders. Complete these fields if needed, then select Save and click Done to activate the feature.
Create purchase order
To create the purchase order, begin by navigating to + New > Purchase order. If the purchase order is with an existing supplier, select the supplier from the Supplier dropdown menu and review the supplier’s contact information under Mailing address. If it’s with a new supplier, add them by clicking + Add new at the top of the dropdown menu and enter their information.
If the PO is for goods you are shipping to a customer, select the Ship to dropdown menu and then click Ship via to add the shipping address.
Next, add the Purchase Order date. If you want to add custom fields to the purchase order, go to Settings on the form, select Choose what you use, and then select the link.
Enter the details for the products you want to purchase in the Item details section of the purchase order form. Note: you must manually add products and services to Products & Services under Sales in QuickBooks before you can add them to a purchase order as line items.
After you enter the item details, the purchase order is ready to send. To save the PO without sending, click Save and close. To send the PO by email, select the Save and send dropdown. To send a saved purchase order, navigate to Expenses, find the purchase order you want to send, and then click Send under Action.
Once the supplier receives and accepts the purchase order, you can record it as an expense, bill, or check as a line item. Doing this closes the PO, connects it to the transaction, and ensures your accounting records are accurate.
Add purchase order to an expense, bill, or check
Before you can add a purchase order to a bill, you must turn on itemization in your settings. To do this, navigate to Settings > Account and settings, click Expenses, and then click edit in Bills and Expenses. Activate itemization by turning on these functions:
- Show items table on expense and purchase forms
- Track expenses and items by customer
- Make expenses and items billable
To add a PO to an expense, bill, or check, navigate to + New, then select Expense, Check, or Bill. Choose the supplier from the Payee dropdown to view its open purchase orders. Find the purchase order, then select Add to add the items from the purchase order to the item details section. Then select Save and close. After you add the purchase order, its status will change from Open to Closed.
2. Processing vendor invoices
The invoice processing workflow begins when a supplier sends an invoice after accepting a PO and delivering the goods and services. It can be broken down into three steps:
- Receiving and entering invoice data.
- GL coding the invoice.
- Two- or three-way matching the invoice, PO, and shipping receipt.
Receiving and entering invoice data
There are several ways to enter, code, and verify a supplier invoice in QuickBooks Online, including:
- Manual data entry: The user manually adds the invoice details from a paper or digital invoice into QuickBooks.
- Upload bill from computer: The user uploads a digital invoice and QuickBooks extracts the invoice details.
- Email bill to QuickBooks: The user emails a digital invoice to a QuickBooks email address and QuickBooks extracts the invoice data.
- Via the QuickBooks Business Network: If you and your supplier are a member of the QuickBooks Business Network, the supplier can send the invoice directly to QuickBooks and QuickBooks will automatically enter the invoice details.
Next, we’ll look more closely at the manual data entry and upload bill workflows.
Manual data entry and coding
To manually add a bill to QuickBooks Online, navigate to +New > Bill, then choose the supplier from the Vendor dropdown. If the bill is from a new supplier, click + Add New to set up a new supplier record.
Enter the invoice header information in the Bill no., Due date, and bill date fields, then choose the payment terms from the Terms dropdown.
Next, add and code the line item details under Category details. Categorize each line item by selecting the appropriate expense account under the Category dropdown and then write in the line item descriptions from the supplier invoice. Then, add the invoice amount in the Amount field, add applicable taxes, and click Save and close to finish entering the bill.
Upload bill from computer
To upload a digital invoice to QuickBooks Online from your computer, navigate to Expenses > Bills, and then select Upload from computer under the Add bill dropdown menu. There are two ways to upload the invoice file. You can drag it from your desktop to the Upload window in QuickBooks, or you can click Upload and then select the file from a folder on your computer.
After you upload the invoice file, QuickBooks will scan and code the invoice data and create a bill. To verify the bill or make a payment, navigate to the For review tab, then find and open the bill.
PO matching vendor invoices
QuickBooks Online doesn’t offer automated two- and three-way PO matching to verify invoices. To perform a PO match, you must manually open the bill and compare its header and line item details to those on the PO (and receipt, for three-way matching).
To manually perform PO matching, navigate to Expenses > Bills, and select the For review tab to open the list of unverified bills. From there, you can choose from several options. To compare a bill to its associated PO, click Review to open the bill you want to verify, then compare the bill details to the attached purchase order. If the details match, click Save to close the bill and change its status to Unpaid. If the details don’t match, investigate and resolve the discrepancy, edit the bill details, and then click Save to close the bill.
After the bills have been verified, they are ready for approval.
3. Automating vendor bill approval
Most versions of QuickBooks don’t have an automated bill approval process, meaning you have to manually send bills for approval. You can do this by emailing the appropriate approver, who can then log into QuickBooks, review the bill, and reply to your email with an approval or rejection.
Once the bill is approved, you can pay it within QuickBooks using one of the methods outlined in Step 4, below, or you can pay the bill outside QuickBooks using another payment method.
Setting up bill approval workflows in QuickBooks Online Advanced
QuickBooks Online Advanced features automated workflows that you can configure to manage bill approvals. You can customize workflows to record bills, route bills to the appropriate approver by value or vendor, and send reminders to approvers if they haven’t reviewed a bill by a specific date.
To set up an approval workflow in QBO Advanced, navigate to Workflows > Templates > Set up bill approval. Write a name for your workflow in the Workflow name field. Then, in the dropdown under 1. Do this in QuickBooks, select the type of workflow you want to set up. For our example, select Send for approval. Under the Assign task to dropdown, select the employee(s) who are responsible for the approval, and enter the task name (e.g., “Approval due for Bill: [bill number]”).
Next, under 2. When this happens, enter the trigger for the approval workflow. In the when dropdown, select the type of event, such as amount, or vendor name, that will trigger the workflow. In the next dropdown, set the condition for the event (greater than, equal to, etc), and in the last field, enter the amount or name. For example, to automatically assign bills over $10,000 to Deborah, your CFO, assign the task to Deborah in the Assign task to dropdown, then select amount in the first dropdown, greater than or equal to in the second, and enter $10,000 in the amount field.
You can add additional conditions to the workflow by clicking + Add another condition. When you are finished setting up the workflow, click Save and enable. You can find the new workflow under Workflows.
Using the bill approval workflow in QBO Advanced
After the bill approval workflow is set up in QBO Advanced, QuickBooks will automatically notify users when they create a bill that needs to be sent for approval. After the bill is created and saved, it will be flagged as not approved on the Pay Bills screen, and users will not be able to make a payment. Once the approver logs into QuickBooks and approves the bill, it will be flagged as approved and can be paid.
4. Making and recording vendor payments
After a bill has been entered, coded, verified, and approved, it can be paid. QuickBooks Online doesn’t include built-in bill payment features, leaving you with four options to pay bills:
- Printing a check in QuickBooks.
- Paying outside QuickBooks by ACH or credit card.
- Paying within QuickBooks using the QuickBooks Bill Pay add-on.
- Using an integrated third-party payment platform.
Let’s look at each option.
Printing checks in QuickBooks
You can choose to pay your vendor by creating and printing a check in QuickBooks.
Begin by navigating to +New > Check, and then selecting the vendor you want to pay in the Payee dropdown. Then select the bank account in the Bank Account dropdown, and fill out the check details. Check Print Later to add the check to the print queue, or click Print check to print the check right away. Finally, click Save and close to close the window.
Paying bills outside QuickBooks by ACH or credit card
If you make a vendor payment outside QuickBooks, you will need to record the payment and mark the bill paid in QuickBooks to keep your books up to date.
To record a payment made outside QuickBooks, navigate to +New > Expenses > Vendors, and select the vendor and bill you want to pay. Click Make payment, select the account you are using for the payment under the Bank/Credit dropdown, and uncheck Print later. In the Ref no. field enter the payment information, then add the Payment date and Amount, and select the bill you are paying in the Outstanding Transactions section. Record the payment by clicking Save and Close.
Paying Bills with QuickBooks Bill Pay
QuickBooks Bill Pay is an optional payment processing subscription you can add to your QBO subscription. It lets you make electronic payments to vendors without leaving QuickBooks. Note that Bill Pay online supports payments in US Dollars.
Bill Pay automatically records vendor payments in QuickBooks when you make them.
Paying bills with an integrated third-party payment platform
If you don’t want to make payments outside QuickBooks but Bill Pay doesn’t meet your needs, you can opt for an integrated third-party payment system. Most payment solutions provide multiple payment options from a single platform and automatically update QuickBooks when you pay vendors.
Challenges using QuickBooks AP workflows
QuickBooks Online is a versatile and flexible accounting software solution that is an excellent choice for growing businesses. However, although QuickBooks’ built-in accounts payable automation features help streamline manual tasks like invoice data entry, it may not be the best solution for businesses managing large volumes of complex invoices. Below are some of the challenges QuickBooks customers report.
Inefficient manual processing limits scalability
While QuickBooks automates some invoice processing tasks, it requires users to rely on manual workflows for crucial tasks like invoice matching and approvals. Customers complain that this becomes a barrier to growth as their business expands. For example, one Reddit user commented about how QuickBooks no longer meets the needs of their fast-growing business: “…I’ve been tasked with finding an AP invoicing automation system that will integrate to Quickbooks. I work for a startup that is growing quickly and our current process is very manual and leaves a lot of room for error.”
They continue describing their need for an AP automation system that can scale with their business: “Does anyone know of or use any AP invoicing systems so this process can be automated and less manual? I’d imagine this system would have an audit trail, date invoice received, auto reminders to approve after X amount of days, etc. I know Quickbooks isn’t ideal, but it’s what we’re using for now until we’re ready to make a big switch next year or so.”
Leading AP automation solutions like Stampli are designed to fully automate AP processes to maximize flexibility and scalability for growing businesses. Stampli is a “great product for workflow AP approvals,” says one QuickBooks and Stampli customer. They said that they value Stampli because it’s “automated, user-friendly, [and provides] web-based access from anywhere. [It] auto-syncs in both directions with QuickBooks.
“…No more emailing invoices around for approvals and coding. Do all of it within Stampli, and auto-update to QB Vendor records! Also, the benefit of the reverse direction push from QB to Stampli for payment information makes it easy for key approvers to check in on bill payments using Stampli. No more emailing accounting to inquire if a payment has been made.”
Limited payment functionality
To make vendor payments in QuickBooks, customers must either subscribe to QuickBooks Bill Pay or pay vendors outside QuickBooks by check, ACH, or credit card.
Some QuickBooks customer reviews indicate Bill Pay may suffer from glitches. For example, one customer reports: “THIS SOFTWARE IS SO GLITCHY AND SLOW! Some days this software works phenomenal and on the days you need it to work it doesn’t. This is especially bad when it comes to the payment feature for contractors. To pay one contractor is fine but when you need to pay multiple and use the feature included in QB it’s horrible. Every click takes at least 30 seconds to load making a job that should only take a few minutes take 1/2 your workday.”
Customers can opt to pay vendors outside QuickBooks but that may not be an ideal solution. Paying vendors outside QuickBooks requires a two-step process where customers must exit QuickBooks to pay the vendor, and then return to QuickBooks to manually record the payment.
As the leading AP integration for QuickBooks, Stampli makes vendor payments simple. It features a pre-built QuickBooks integration that seamlessly syncs payment information in real time, ensuring your QBO records are always up to date. Stampli gives you complete control over vendor payments by centralizing all payment functions on a single platform – something QuickBooks customers appreciate. “I love that everything is in one place,” said one customer. “I’m able to see all of my invoices, make notes, ask my team members questions, see my vendor’s details, and even ask questions directly to the vendors. Direct Pay is one of my favorite features!
“Before Stampli, I was making sure each invoice was in QuickBooks, then using a second program to pay our vendors. So I’d have to make a bill payment in QBs, then manually put in the amount for that vendor in the second program to pay them. Now I don’t have to do any of that. I simply select what invoices I want to pay and click pay. It’s seriously that simple. It connects to our QBs and automatically updates the bills there. It saves me so much time and potential for human error. I just received an email this week that they are able to start international ACH payments. I can’t wait to use that feature!”
Limited reporting and analytics capabilities
AP reports and analytics are essential for measuring AP department performance and proactively managing cash flow. QuickBooks Online provides basic AP reports however it doesn’t provide advanced performance reporting to help AP teams find and address bottlenecks. According to one customer, QuickBooks Online “provides us with enough reports and the ability to do monthly, quarterly and annual filings. It also easily integrates with other applications.” However, they go on to say QBO doesn’t provide the reporting capabilities they need:: “I wish QB had metrics built in and more in-depth reporting capabilities. I also wish that QB could route purchase orders for approval to budget or individual managers.”
Leading financial automation platforms provide accurate and timely reporting and analytics, enabling finance leaders to make informed decisions. Customers say Stampli’s AI-powered reporting capabilities transform how they manage accounts payable. “Stampli has brought our processes forward a generation,” says one AP manager. “Stampli’s incorporation of machine learning or A.I. (with Billy the Bot) has saved our team a lot of manual labor. We were previously coding all invoices manually, which included selecting the vendor information, invoice dates, and GL coding. Billy is like an added employee to our team! We also have an incredible amount of reporting for our AP department that wasn’t available through our last program….
“Our biggest pain points with our former software were how manual the process was of coding and approving invoices and the lack of any reporting capabilities. Stampli has solved these problems with ease! We now have a lot of automation and much more reporting capabilities than before.”
Optimize QuickBooks accounts payable workflows with Stampli
Stampli is the leading financial automation platform centered around accounts payable teams and the ideal AP solution for QuickBooks customers. It helps you maximize your QuickBooks investment by optimizing AP workflows and supporting QuickBooks’ full functionality. Stampli’s pre-built QuickBooks integration syncs vendor lists, GL accounts, POs, line items, and all native fields — ensuring your QB data is up to date, accurate, and secure.
Stampli has “revolutionized my job,” says one AP coordinator, saying it “has taken away the arduous task of sending e-mails for approvals. I can see easily what hasn’t been approved. It’s very easy to fix coding issues and then it syncs easily into QuickBooks.
“[Before using Stampli] we used to e-mail certain people to get approval for invoices and I had to manually enter the invoices into QuickBooks. [Stampli] makes it easy to upload, code, and then send it to a user for approval. I can see exactly where I am in the approval process without having to keep track of threads of e-mails. It’s easy to see rejected invoices and the reasons they were rejected when vendors e-mail asking why they haven’t received payment.
“We’ve been able to go paperless because all of our invoices are now stored by Stampli. Our credit card situation in the past was very haphazard. We didn’t always have receipts or approvals by managers. We couldn’t easily see who had uploaded receipts and who hadn’t. Now it’s very easy to make sure receipts are attached and proper approvals have been attained. Also, all of our credit card charges are under one vendor in QuickBooks and so it’s easy to look things up.”
Here are some other ways Stampli will transform your AP workflows in QuickBooks:
- Shorter invoice cycles: Stampli eliminates slow manual tasks to make invoice processing faster.
- Better accuracy: Stampli uses machine learning technology to eliminate data entry and coding errors and improve error detection and PO matching accuracy.
- Proactive cash flow management: Stampli offers accurate real-time reporting and faster invoice processing giving you complete visibility and control over spending.
- Scalability to support growth: Stampli provides seamless migration to QuickBooks Online Advanced, QuickBooks Enterprise, and 70 other ERPs, letting you grow your business without compromising financial operations.
Stampli is simply the best and easiest way to optimize accounts payable in QuickBooks today. Contact our AP & ERP experts to learn more.
