# Accounts Payable

Accounts Payable (or A/P) refers to the accounting of products or services which a company has bought and needs to pay off.

## Basic Concepts

This chapter focuses on Accounts Payable (or A/P). A/P refers to the accounting of products or services that your company has bought, for which payment needs to be scheduled.

## Initial Setup

To set up &app; to handle accounts payable for a company, two preliminary things must be done. The first is to build an appropriate Account Hierarchy and the second is to register the company in &app;.

### Account Setup

There are many different ways to set up a business account hierarchy. You can start with the Business Accounts setup which is available from the New Account Hierarchy assistant, or you could build one manually. To access the prebuilt Business Accounts, start &app; and click on File New File and proceed until you see the list of available accounts, select Business Accounts.

The prebuilt Business Account hierarchy will not meet your needs exactly. You will need make adjustments for the hierarchy to function well with your particular situation. It should be close enough that it is recommended you begin with it.

Accounts Payable (or A/P) refers to products or services bought by your company for which payment has not yet been sent. This is represented on the balance sheet as a liability because you will have to pay for them. To use &app;’s integrated accounts payable system, you must first setup an account of the A/Payable type. The A/Payable account is usually a sub-account under Liabilities. It is within this account that the integrated A/P system places transactions.

    Basic A/P Account Hierarchy:

    -Assets
       -Bank
    -Liabilities
       -Accounts Payable
    -Expenses
       -AP Expenses

You need to add additional asset accounts and real expense accounts to make this hierarchy useful. The important aspects of this hierarchy are that you need an expense account and an Accounts Payable account, with account type set to A/Payable.

### Company Registration

After you have built the account structure, register the &app; file as belonging to your company. To register your company, select File Properties:

- Enter the name of your company along with contact information such as your phone number, fax number, e-mail address and website URL.

- Enter your company’s tax payer id number in the Company ID field.

## System Components

&app; has an integrated accounts payable system. The transactions generated by the A/P system are placed within the Accounts Payable account, as a record of what occurs. Generally you do not directly work with this account but use the four integrated &app; A/P application components. The A/P components are available from the Business Vendor sub-menu. These A/P components are:

- Vendors are people or companies from which you buy products or services on credit.

- Bills represent the physical bills vendors send to request payment from you. A bill contains an itemized list of things you purchased.

  In addition, GnuCash also has support for Credit Notes which represent the inverse of Bills. A credit note is usually received from a vendor to correct items that were erroneously billed or returned.

  Both document types will be set up using the same menu items.

- Jobs (optional) is where you register Vendor Jobs. Jobs are mechanism by which you can group multiple bills from a particular vendor.

- Process Payments is where you register payments to a vendor to whom you owe money.

The following sections introduce the individual Accounts Payable application components.

## Vendors

A vendor is a company or person from whom you purchase goods or services. Vendors must be registered within the A/P system.

### New

To register a new vendor, select the Business Vendor New Vendor menu item. Fill in general information about the vendor, such as Company Name, Address, Phone, Fax, etc. Below is a list of the other options:

This is what the New Vendor registration window looks like:

New Vendor Registration Window

New Vendor Registration Window

### Find and Edit

To search for an existing vendor, use the Business Vendor Find Vendor window. You select a vendor to View/Edit from the results of the search. This window is also used to look up a vendor when entering bills and processing payments.

Find Vendor Window

Find Vendor Window

If many vendors match the search criteria you provide, the search can be refined by running an additional search within the current results. The current result set is searched when the Refine Current Search radio button is selected. In fact, &app; selects this option for you after you run the initial search.

If the vendor you are searching for does not match the supplied search criteria, change the search criteria, click the New Search radio button and then the Find button. The relevant step is the New Search selection. If the vendor is not in the result of the original search, and you only search within this set, the vendor cannot be found, regardless of new search criteria.

To return a list of all registered active vendors, set the search criterion to matches regex, and place a single dot . in the text field area. Make sure Search only active data is checked, then click Find. The regular expression . means to match anything.

## Bills

A bill is a request for payment you receive from a vendor. &app; can track bills.

A credit note is the document you receive from a vendor to correct products or services rendered that you were incorrectly charged for on a bill. &app; can generate and track credit notes via the same menu entries as bills.

This section applies to both bills and credit notes. In order to avoid repeating everything twice and to keep the text easier to read it will refer only to bills. You can apply it equally to credit notes. Only where the behaviour of credit notes differs from bills this will be explicitly mentioned.

### New

When you receive a bill from a vendor and want to enter it into &app;, you must create a new bill. To create a new bill use the Business Vendor New Bill menu item, and fill in the resulting window appropriately.

New Bill Registration Window

New Bill Registration Window

When you click the OK the Edit Bill opens.

### Edit

From the Edit Bill window you can enter an itemized list of goods and services you purchased, in a manner similar to how the account register works. For credit notes you enter an itemized list of goods and services the vendor refunded instead.

Edit Bill Window

Edit Bill Window

When you have finished entering all the items, Post the bill.

### Post

When you finish editing a bill, you should Post the bill. You do not have to post the bill, you can close it and return to it later. You have to post the bill eventually. Posting a bill places its transactions into an accounts payable account. The Post Bill window appears and asks you to enter information:

Post Bill Window

Post Bill Window

### Find

To find an existing bill, use the Business Vendor Find Bill menu item. From the results of the search, you can select a bill to edit, or view.

Before you can edit a posted bill, you will need to Unpost it.

There are other ways to access an existing bill. These are similar to accessing invoices for your customers. See bus-ar-invoicefind2 for more information.

## Vendor Jobs

Vendor Jobs are used to group multiple bills and credit notes from a single vendor. Use of the vendor jobs feature is optional. The feature is useful when you have multiple jobs for the same vendor, and would like to view all the bills and credit notes for a single job.

To use vendor jobs, you must create them using the Business Vendor New Job menu item. You will see the New Job window.

New Vendor Job

New Vendor Job

To edit an existing vendor job, use the Business Vendor Find Job menu item. Select the desired job in the search results, and click the View/Edit Job button.

To select from the bills associated with a given job, use Business Vendor Find Job menu item. Select the desired job in the search results and click the View Invoices button. A window listing bills and credit notes associated with this job appears. Select a bill or credit note and click the View Invoice button to open a bill editor in the main application window.

## Process Payment

Eventually, you need to pay your bills. To do so, use the Process Payment application found in Business Vendor Process Payment.

Below is the &app; Accounts Receivable payment window.

Process Payment

Process Payment Window