Paying Bills With A Credit Card

Overview

In this knowledge base article, we will discuss two different methods to handle the use of credit cards as payment methods. The two methods we will discuss are 1. Entering and paying one vendor bill with a credit card and clearing the balance of the credit card liability via Bank Transfer and 2. Entering two bills in SE (one to pay off material received from a PO and one to pay the credit card bill) and paying both via two separate payment types. We will discuss the benefits and drawbacks as well as the steps to take for each method below.

In both methods we will assume that you are paying for goods received from and invoiced by a vendor with your credit card.

Enter One Bill -> Pay CC Bill with Bank Transfer

Summary

In this method we will enter a bill against the vendor’s invoice and pay it with a credit card. Then, rather than entering a second bill for the credit card bill against a credit card vendor’s account, we will simply make a bank transfer that will debit the CC liability account and credit the bank account.

Benefits/Drawbacks

This method is faster than the two bill option, but it doesn’t support due date, discount date or ledger level detail when the user goes to pay the credit card bill.

Set Up Process

Ensure that the credit card you are using has been set up as a payment method and that the correct default ledger account was added accordingly.

• Admin Administrator Card Types New

  • If your credit card type is not listed already, click New to add it here. Do not click Requires Card Info. If your card type does not exist, it can result in an error message in the Payment Types screen.

• Admin Administrator Payment Types New

• Check mark ‘Charge’ and in the next box select the Card name you added on the previous screen.

• It is important to set the default ledger account to a liability account so that when you pay your vendor with the CC, the proper ledger transactions take place.

• If needed, create a new ledger account. Accounting Manager Ledger Accounts Account New Ledger Account.

• Be sure to mark this as a liability account and check the Credit Card Box

  

Payment Process

• Create a bill “with a PO” as you normally would in the enter bills screen

• Go to the Pay Bills screen, pull up that bill and pay it with the credit card payment type you set up earlier in this process. Be sure that the ledger account on the bottom middle of the screen is defaulted to the credit card liability account you would expect to be there.

  

• At this point, you have paid the invoice for the material you received from your vendor.

• Now, fast forward to the point at which you need to pay down on your credit card bill. To do so, you will utilize the bank transfer feature.

• Accounting Bank Transfer

• Enter the proper accounts to transfer from and to, the transfer amount, a comment as desired and then process transfer.

  

• At this point you will be able to validate that the proper ledger transactions have been made

• Accounting Manager Overview Ledgers Search for and double click ledger of your choice

• In this case, when you paid the bill, $147.00 was credited to the CC Liability ledger and when you make the bank transfer, that $147.00 is debited leaving the ledger with a $0.00 balance

  

Enter Two Bills -> 1 Vendor Invoice, 1 CC Bill

Summary

In this method, we will enter a bill against a vendor invoice and enter a bill without a PO for the credit card company.

Benefits/Drawbacks

This method takes longer as you have to enter two bills. However you are able to enter multiple expenses for the credit card bill should there be late fees or miscellaneous charges as is often the case for credit card payments. Also, you are able to track the due date and discount date for the credit card bill if you handle making CC payments in this way.

Set-Up Process

• Ensure that the credit card you are using has been set up as a payment method and that the correct default ledger account was added accordingly

• Admin Administrator Card Types New

  • If your credit card type is not listed already, click New to add it here. Do not click Requires Card Info. If your card type does not exist, it can result in an error message in the Payment Types screen.

• Admin Administrator Payment Types New

  - Check mark ‘Charge’ and in the next box select the Card name you added on the previous screen.

• It is important to set the default ledger account to a liability account so that when you pay your vendor with the CC, the proper ledger transactions take place

• If needed, create a new ledger account

• Accounting Manager Ledger Accounts Account New Ledger Account

• Be sure to mark this as a liability account and check the Credit Card Box

  

• It will also be important to have a credit card vendor set up properly when using this method to pay with credit cards

• Purchasing Manage Vendors New

• Add all the relevant information for your credit card provider

• Most importantly, be sure to set up the default expense/ledger accounts for this vendor for when you enter bills without a PO.

• Purchasing Manage Vendors

• Go to “Account Info” Tab

• Find the “Default Expense Accounts”

• Add first default expense account as the credit card expense ledger that was set up for the credit card in question

• Add additional default expense categories such as misc. fees and late fees if appropriate

  

• Click Save before closing out of the manage vendors screen so that the newly created vendor is retained in SE

Payment Process

• Create a bill “with a PO” as you normally would in the enter bills screen to pay the invoice your vendor sent you for the goods received on a PO

• Go to the Pay Bills screen, pull up that bill and pay it with the credit card payment type you set up earlier in this process

• Be sure that the ledger account on the bottom middle of the screen is defaulted to the credit card liability account you would expect to be there

  

• Pull up the bill in the “vendor payment history” tab and go to the ledger transactions tab and you will notice that Accounts Payable was Debited the full amount of the payment and the American Express Liability account was credited the full amount of the payment.

  

• When you receive the credit card bill, enter a bill without a PO for the credit card vendor for the full amount of the credit card bill

• You will be able to add an expense account for additional fees assessed by the CC company as needed either before or after entering the bill

• In this case, we will assume there were no additional fees assessed and will simply add the amount of the credit card bill and create the bill

• It is important that you enter the amount billed by the credit card vendor on the expense/ledger account you created for that credit card (in this case American Express Liability)

  

• Once you have created the credit card bill and you are ready to pay it, simply go to pay bills and pay the bill by whichever method you chose

• You can again see what has happened from a ledger account perspective by finding the bill in the vendor payment history tab and clicking the “Ledger Transactions” tab within the bill