How do Vendor Bills show on my General Ledger?
Vendor Bills are a great way of tracking what the firm owes to vendors. These Vendor Bills can be entered as firm expenses to be paid later, and can be assigned to matters for the purpose of creating billable expenses.
Vendor Bills hit multiple accounts on the General Ledger. Depending on if you are looking at it on a Cash or Accrual basis will impact the activity you see.
Vendor Bill Activity on the GL (Accrual Basis)
- Creating the Vendor Bill creates a Debit to the account the line item is assigned to, and a Credit to Accounts Payable.
The "Vendor Bill Detail" is the billable item that gets assigned to the client invoice. This will contain the line item details.
If there are multiple line items on the same vendor bill, it will create 2 entries for those line items and one total under Accounts Payable.
- When the Vendor Bill gets paid, the payment will cancel out the liability in accounts payable that the firm owes to the Vendor.
- Generating the Invoice to the client with those expenses will Credit the account the Vendor Bill line items are assigned to and debit Accounts Receivable.
- When the client pays the invoice (reimbursing the expense) that payment will Credit Accounts Receivable (lowering the client’s AR balance) and Debit the Operating Account
Vendor Bill Activity on the GL (Cash Basis)
You will not see the Vendor Bill on the GL on a Cash basis until money is actually exchanged.
- Paying the Vendor bill will Credit the Operating account and Debit the account(s) the line items are assigned to (red)
- When the client pays the invoice, their payment Debits the Operating account and Credits the line item account (blue).
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