Fixing Vendor Bills Paid with Direct Disbursements Sometimes users write direct checks to pay vendors for whom they've entered bills, instead of using the Pay Bills feature. Most of them use the bank account register to record checks they wrote manually. (In recent versions of QuickBooks, if you use the Write Checks command, when you enter a vendor name, QuickBooks warns you to use the Pay Bills feature if there are outstanding bills for this vendor, but you see no warnings if you record checks directly in the register.) After a while, these users notice they have a very large Accounts Payable balance, and running an A/P report displays names of vendors who have actually been paid. In addition, expenses are higher than they should be, because the expense was posted when the bill was entered, and then posted again when you wrote the direct disbursement check. Most people who do this use the vendor's physical bill to create the check. If you mark the physical bill to indicate the fact that you entered the bill into QuickBooks, you can avoid this problem. Put a 'Q' or a 'QB" on the part of the bill that you retain (not the portion you tear off and return to the vendor). In addition, when you put those paper bills on your desk to begin paying vendor bills, print an A/P Aging Detail report or an Unpaid Bills Detail report and put that on your desk too. This is another source of information about which checks should be entered through the Pay Bills command, and which can be written as direct disbursements. Now that you know how to pay vendor bills properly in the future, you still have to correct the problem and match the direct disbursement checks you wrote to the unpaid vendor bills. The easiest way to accomplish this is to replace the direct disbursement check with a "pay bills" check, using the instructions that follow. Creating a Guideline Report Print a Check Detail report (on the Banking submenu of the Reports menu), and modify it to make it easier to find the direct disbursements. By default, the report displays the current month-to-date, but you should change the date range to go back to the date when you wrote the first incorrect check. Click Modify, and then click the Filters tab to customize the report to show only the checks you want to know about. In the Filter List, select Transaction Type, and select Check from the Transaction Type drop-down list. (This eliminates the checks that were correctly written as the type Bill Payment). If there are only a few vendors that are affected, select Name from the Filter List, and then select Multiple Names in the Name drop-down list. When the Names list appears, select the affected vendors. Click OK to return to the report window, and print the report. Pay the Bills Using the Existing Check Numbers Open the Pay Bills window and begin paying the bills you already paid. Select each vendor's bill (or multiple bills if the check you wrote covered more than one bill). If you took credits when you wrote the check, be sure to use the Set Credits feature to take those credits now. Change the date to match the date of the check you already wrote and sent. When the bills are selected, and the amount of the check matches the direct disbursement check you wrote, select the option Assign Check No. at the bottom of the Pay Bills window. Click Pay & Close (or Pay & New if you have to do this again for another check), and in the Assign Check Numbers dialog, enter the check number you used when you wrote the direct disbursement to pay the vendor's bill (the Check Detail report has the check number). When QuickBooks warns you that the check number has already been used, select Keep Number. When you're finished paying bills you've already paid, using the check numbers you've already used, open the check register. Here's what you'll find: Your bank balance is much smaller than it should be. Each check number you just used appears twice, once for the direct disbursement (check type CHK), and once for the bill payment you just made (check type BILLPMT). Remove the Original Checks Delete every duplicate check that is of the type CHK. Your bank balance returns to its proper amount, the expense account is adjusted to reflect only the expenses you posted when you originally entered the vendor bills, and you've learned an important lesson about attending to details. Managing Reconciliation Problems If the checks you deleted were cleared during bank reconciliations, the Beginning Balance will be incorrect when you next reconcile the bank account. You can clear up the problem during the next reconciliation, or you can perform an "emergency reconciliation" to correct the beginning balance right away. (We do this by performing a reconciliation using the day after the last reconciliation as the reconciliation date, but some users use the same date as the last reconciliation which effectively replaces that reconciliation.) The beginning balance that displays is off by the total of the checks you deleted. Use the correct beginning balance as the ending balance for this emergency reconciliation. In the next window, clear the replacement checks to reconcile the account to the correct beginning balance for the next reconciliation.