Payments

Making payments to vendors and managing outgoing cash.

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Payment Flow Overview

Vendor Payment Flow
─────────────────────────────────────────────────────────────────

┌─────────────────┐     ┌─────────────────┐     ┌─────────────────┐
│   VENDOR BILL   │     │ VENDOR PAYMENT  │     │   CLEARED       │
│   (Liability)   │ ──▶ │  (Cash Out)     │ ──▶ │   (Reconcile)   │
│                 │     │                 │     │                 │
│  GL: A/P ↑      │     │  GL: A/P ↓      │     │  No GL Change   │
│                 │     │      Bank ↓     │     │  Mark Cleared   │
└─────────────────┘     └─────────────────┘     └─────────────────┘

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Creating Vendor Payment

What Happens

Action	Result
Create payment	Payment record saved
Select vendor	Choose who to pay
Apply to bills	Bills marked paid
Payment method	Check, EFT, Credit Card
Bank account	Source of funds

Single Vendor Payment

Vendor Payment Creation
─────────────────────────────────────────────────────────────────

Vendor Payment #VP-001
├── Vendor: Acme Supplies
├── Payment Amount: $2,500
├── Payment Method: Check #5001
├── Bank Account: Operating Checking
├── Applied To:
│   ├── Bill #VB-001: $1,500 (full)
│   └── Bill #VB-002: $1,000 (full)
└── Check Date: 2024-01-20

Result:
  - Vendor A/P reduced by $2,500
  - Bank account decreased
  - Bills marked as Paid

GL Impact

Account	Debit	Credit	Why?
Accounts Payable	$2,500		No longer owe vendor (Liability ↓)
Bank Account		$2,500	Money leaves bank (Asset ↓)

Vendor Payment GL Explained
─────────────────────────────────────────────────────────────────

Before Payment:
  A/P = $2,500 (you owe vendor)
  Bank = $50,000

After Payment:
  A/P = $0 (debt cleared)
  Bank = $47,500 (-2,500)

Think: "Paying the bill = clearing the debt"

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Payment Methods

Check Payments

Check Payment Process
─────────────────────────────────────────────────────────────────

Create vendor payment (method: Check)
         │
         ▼
Print check (or handwrite)
         │
         ▼
Mail check to vendor
         │
         ▼
Vendor deposits check
         │
         ▼
Check clears your bank (3-5 days)
         │
         ▼
Mark cleared in reconciliation

EFT/ACH Payments

Electronic Payment Process
─────────────────────────────────────────────────────────────────

Create vendor payment (method: EFT)
         │
         ▼
Initiate bank transfer
         │
         ▼
Funds leave your account (same or next day)
         │
         ▼
Vendor receives funds (1-3 days)
         │
         ▼
Cleared immediately or next day

Wire Transfers

Wire Transfer Process
─────────────────────────────────────────────────────────────────

Create vendor payment (method: Wire)
         │
         ▼
Bank initiates wire
         │
         ▼
Funds sent immediately
         │
         ▼
Wire fee deducted
         │
         ▼
Clears same day

Note: Wire fees are separate expense

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Check Runs (Batch Payments)

Pay multiple vendors at once.

Creating a Check Run

Check Run Process
─────────────────────────────────────────────────────────────────

Step 1: Select bills to pay
  ├── Filter by due date
  ├── Filter by vendor
  └── Select specific bills

Step 2: Review payment list
  ├── Verify amounts
  ├── Check available balance
  └── Adjust if needed

Step 3: Process payments
  ├── Create payment records
  ├── Assign check numbers
  └── Print checks

Step 4: Mail checks

Check Run Example

Check Run #CR-001
─────────────────────────────────────────────────────────────────

Bank Account: Operating Checking
Check Date: 2024-01-20

Payments:
  Check #5001: Acme Supplies     $2,500
  Check #5002: Office Depot      $450
  Check #5003: Utility Company   $800
  Check #5004: ABC Vendor        $3,200
  ──────────────────────────────────────
  Total:                         $6,950

Starting Balance: $50,000
Ending Balance:   $43,050

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Partial Payments

Pay only part of a bill:

Partial Payment Example
─────────────────────────────────────────────────────────────────

Vendor Bill #VB-001: $5,000
         │
         ├── Payment #1: $2,000
         │   └── Bill status: Partially Paid
         │
         └── Payment #2: $3,000
             └── Bill status: Paid in Full

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Prepayments and Credits

Vendor Prepayments

Pay vendor before receiving bill:

Prepayment Flow
─────────────────────────────────────────────────────────────────

Vendor Payment (unapplied)
         │
         ├── Vendor has credit
         │
         ▼
Vendor Bill arrives
         │
         ├── Apply prepayment
         │
         ▼
Remaining balance (if any)

GL:
  On prepayment:
    Vendor Prepayment (Asset)  $1,000  Dr
    Bank Account                      $1,000  Cr

  On bill:
    Expense/Inventory          $1,000  Dr
    A/P                              $1,000  Cr

  Apply prepayment:
    A/P                        $1,000  Dr
    Vendor Prepayment (Asset)        $1,000  Cr

Using Vendor Credits

Apply credit to reduce payment:

Applying Vendor Credit
─────────────────────────────────────────────────────────────────

Vendor Bill: $1,000
Vendor Credit: -$200
─────────────────────
Net to Pay: $800

Payment applies:
  - $200 from vendor credit
  - $800 from bank account

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Voiding Payments

Void a check that wasn't cashed:

Void Payment Process
─────────────────────────────────────────────────────────────────

Original Payment:
  A/P             $2,500  Dr
  Bank Account          $2,500  Cr

Void Reverses:
  Bank Account    $2,500  Dr
  A/P                   $2,500  Cr

Result:
  - Bill reopened (unpaid)
  - Bank balance restored
  - A/P balance restored

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Quick Reference

Payment Transactions

Action	A/P	Bank Account
Vendor Bill Created	↑	—
Vendor Payment	↓	↓
Void Payment	↑	↑
Apply Credit	↓	—

Payment Methods Comparison

Method	Speed	Cost	Best For
Check	Slow (days)	Low	Standard payments
ACH/EFT	Medium (1-3 days)	Low	Regular vendors
Wire	Fast (same day)	High	Urgent, international
Credit Card	Fast	Medium (fees)	Rewards, float

Common Issues

Issue	Cause	Solution
Bill not showing	Already paid or closed	Check payment history
Insufficient funds	Low balance	Transfer funds
Wrong amount	Entry error	Void and recreate
Duplicate payment	Bill paid twice	Void duplicate

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Next Steps

• Deposits - Customer deposits
• Reconciliation - Bank reconciliation