What do you do if someone emails you an invoice? In this tutorial, what we’re gonna do is actually take you through the very first steps you would do if someone emails you an invoice asking for money from you. How do you set it up? What are you checking? How do you get the money to them? How do you take care of all of this?
So if you started a business, it’s really common that the first few things that you end up purchasing are things that you buy online. And most of us are pretty familiar with buying things online. You identify what it is, you enter your quantity, you enter your credit card information, and you’ve purchased whatever the item is. So you’re not really in a situation that someone is sending you an invoice and you have to go pay for it later. But eventually, across time, you may actually have some different vendors or suppliers that that is the way that they interact. So they will send you a document and you have to pay them at some point in time. But what do you do when it’s something that you don’t just enter your credit card information? For example, they’ve emailed you the invoice. We’re going to walk through step by step in this video tutorial of what you would do if you’re using QuickBooks. Now, remember, you do not have to use an accounting software for your small business. You are allowed to use something as simple as Excel. The important thing is that you’re capturing what it is and you’re getting the money to the person and you’re keeping organized records.
So number one, you will have gotten an email and it’s going to have an invoice in it. The invoices from your vendors are all going to look a little bit different. Now, if you’re not used to seeing invoices, that very first item can look a little bit overwhelming. So I’m going to show you a few different examples of what invoices can look like. But remember, every single person that you’re purchasing something from being the vendor, their invoices are all going to look different. So let’s take a look at a few different examples just so you can kind of take the overwhelm away from yourself. So this is one example of what an invoice might look like. They may have their logo there. They might have their company slogan and have a date. They’ll some kind of an invoice number. They’ll identify the details of what you purchased from them, what its subtotals to, how much tax they’re collecting and what the total amount is. Here’s another example of what an invoice might look like coming from a vendor. Again, you’ll see, the formatting looks a little bit different. It’ll have a different look, feel and logo, but you’re going to notice some fairly similar things where they’re oftentimes going to tell you the gist of it is, what did you buy? When do you need to pay them? And how much do you need to pay them, along with the tax component? And let’s look at a third example, just to give you one more flavor for what they could look like. So again, you’re kind of seeing that the format, the look and feel of what you’re getting from your vendors, every single invoice is probably going to look a little bit different. But it’s going to tell you, “When was this purchased?”, “What was purchased?”, “How much is it?” and “What do you owe in taxes?”. So remember that all the invoices from different vendors are going to look different, and that is completely okay. When someone sends you a document and they’re looking for money, you’re going to be identifying the vendor section up here.
One of the common misconceptions when you’re really new to it is someone sent you an invoice, and you jump right down here to create an invoice. What I want you to notice is this block here has to do with your customers. In this particular transaction, we’re actually dealing with whenever YOU are buying something. So you happen to be the customer, and this is someone that you’re buying something from. So we’re going to be dealing up here with the vendor section. So what you’re actually going to do go to is enter bills. Don’t get too fussed about the terminology of an invoice versus a bill. Honestly, you can use them interchangeably because the invoice is the invoice from the customers perspective. You’re the vendor, it’s the same document. So you’re going to double click on this guy here, and it’s going to pull up a screen that looks something like this. Now, if you’ve been paying the same person for a long time, you can easily go down to the drop down menu, and it’s going to list all of the different vendors that you typically use. So if this was a monthly invoice, you’re always getting from Dobson’s Properties, you’ll just do a drop down menu. But this is your very, very first time receiving an invoice from someone. So what are you going to do? You’re going to actually scroll all the way up here, and you’re going to click, “Add new”. So what you’re actually adding at this point in time is the master data to tell the system, “We’ve got a new vendor, we’ve got a new supplier”. You’re going to say we have a new company that we’re buying stuff from. And let’s call it, “Fake Company 101”. So you’ll enter the company name again, fake Company 101, you’ll enter all of their contact details. What happens if you don’t have their cell number, their fax number, their work number, they’re different emails. Guess what? It actually doesn’t matter. These are your records. These are your details. If you wanted to just simply enter the company name, that is actually okay. Don’t feel like you have to spend a whole lot of time on the data entry entering their phone numbers, etc. The purpose of entering this information is only if it’s going to help you in the future. Payment settings is one of the ones in here that you can go. You’re going to see some things like net 10, 15, 30 or 60 and wonder, “What does that actually mean?”. And so that is where you’ve actually agreed how fast you’re going to pay this company. So this company sends you the invoice so are you expected to pay it immediately, or did they say, you know what? We’ll send you the invoice, and you can pay us 60 days later, or we’ll send you the invoice, and you need to pay us within 10 days. Oftentimes as a default, if you’re not sure, you can just do, “Due on receipt”. And due on receipt is just a fancy way of saying you have to pay the money whenever they send you the invoice. It just means that you guys haven’t really agreed that you’re going to have a longer window of time to be able to pay them. Account setting is where you’re going to go to this drop down. And this is going to show you all of the categories to live in what we call your chart of accounts. So it’ll probably be set up as a default, and it’s going to look like a long, overwhelming list. You can populate this. And again, this is optional if you want populate this. But if you know that everything you’re buying from Fake Company 101 is always going to be professional fees, you could enter it in here. And it just lets the system know to automatically populate this whenever it comes up. And then the additional info, really remember that you are the audience for this. This additional info doesn’t go back to the company and it doesn’t go to the tax agencies. This is for you. So if for some reason you really want to remember their birthday or their website or their spouse’s name, you can enter this additional information, but honestly, you can totally skip it, and nothing bad is going to happen. Okay, we’ve entered our Fake Company 101 for professional services. We’re going to click, “Okay”. And so it’s automatically adding this to the dropdown. Now, what you’re gonna do is go back to that piece of paper we looked at the beginning that’s called an invoice, and you’re gonna populate the dollar amount. What’s really annoying is that you might be right here, and you might be saying, “Okay, well, I owe them $100. Boom. I’m all done”. And then you’re gonna say, “Great, that’s kind of all I need, right?”. And it’s gonna say you don’t have a class and that’s only if you’re using classes again, using classes is optional. You do not have to. Now, that would be the simplest situation if the company that you were buying from isn’t charging you any sales tax. Now, let’s go back and let’s say you did that step, and it turned out that you totally forgot that you owe this company not only $100, but actually owe them $100 plus tax. So if you notice what I did, I went to the bill tracker here, and I’m gonna go back to fake Company 101. And all that did was allow me to navigate back to the same screen. So what I need to do is actually enter and say, “Guess what? I owe them not only $100, I owe them $100 plus GST”. So if you look at what I did, I clicked on the drop down menu, and I clicked GST. Now, depending on where you are, you can click some of the different ones. But look at what happened as soon as I clicked that G, something got populated down here below that says, “GST on purchase $5”. So now we’re going to go back to our bill tracker, and we now have a Fake Company 101, and we see the amount we have to pay them is not the $100. We have to pay them $105. Okay, we are going to actually pay the bill because we want it off of our list. So we’re gonna go here to Fake Company, and this is the only one we’re going to pay right now. What you’re going to kind of focus on is that you’re trying to pay Fake Company, $105.
So, how are you going to pay them? By Mastercard? Visa? Debit? Well, no, because if there’s a professional service provider, they may not be sitting right in front of you with an actual machine where you can tap your card. A cheque is not the most convenient thing to be doing in 2021. And you’re probably not paying them $20 or $50 bills. So, unless you’ve set up a complicated integration with your bank, just by clicking those buttons, your bank actually hasn’t sent any money to Fake Company 101. So you’re actually going to do one more step which is to hop onto your business bank account and do the transfer of funds so the money goes from your account into their account. So you’re going to login to your business bank account. So there’s 2 different ways you can get the money to the person that you’re trying to pay. So you can choose “Bill Payments” and setup a bill payment. First, you add a new payee. If it’s a really large company, you can enter something like “Telus” and it will auto populate this for you. So the “Add payee” option works very well if you’re looking at a very large company. But what if it is, “Tiny Tim’s Little Company”. There’s no payees that match the search term that you enter. How are you going to pay them? So what you’re going to do is go under Interact E-Transfer and “Send money”. And that is how you’re getting money out of your account and into your vendor’s account. And now you know how to deal with paying an invoice. To check, go back to Bill Tracker and you can see that Fake Company 101 no longer owes any money.