Episode 32
Episode 32: Vendor Payments vs. Contractor Payments — A Safer Way to Set Up ACH in QuickBooks
Episode 32: Vendor Payments vs. Contractor Payments — A Safer Way to Set Up ACH in QuickBooks
In this episode of QuickBooks Mastery for Small Business Success, father-daughter team Erica Northrup and Lee Davis break down the difference between vendor payments and contractor payments inside QuickBooks.
This conversation started with a real client situation: a business wanted to move away from printing checks and begin paying vendors electronically through QuickBooks. That sounds simple, but once ACH, direct deposit, contractor payments, vendor records, bill payments, and 1099 tracking enter the conversation, things can get confusing quickly.
Lee explains why business owners should be careful about manually collecting banking information from vendors and why it is better to use the ACH request process available through QuickBooks when possible. Instead of asking vendors to email banking details or send a voided check, QuickBooks may allow you to send a secure request so the vendor can enter their own information directly.
They also discuss how QuickBooks may treat vendor payments and contractor payments differently, why contractor payments can appear connected to payroll, why vendor payments connect more closely to accounts payable, and why understanding the workflow matters more than getting stuck on the labels.
If you pay vendors, contractors, subcontractors, or service providers through QuickBooks, this episode will help you think through your setup, reduce unnecessary risk, and build a cleaner payment process.
Key Takeaways
- Vendor payments and contractor payments may overlap inside QuickBooks, but they are not always the same workflow.
- Business owners should avoid manually collecting ACH or direct deposit information from vendors whenever possible.
- The safer option is to use the ACH request process inside QuickBooks so vendors can enter their own banking information directly.
- Contractor payments may be treated more like payroll, while vendor payments are generally tied to accounts payable.
- A clean vendor setup, complete contact information, W-9 collection, and accurate 1099 tracking should be part of your year-round process.
- Slowing down during setup can prevent payment errors, duplicate vendors, reporting issues, and unnecessary cleanup later.
Questions to Reflect On
- Are you still printing and mailing checks when ACH payments would be more efficient?
- Are vendors sending you banking information by email, text, or attachment?
- Do you know whether your QuickBooks subscription actually includes the payment tools you need?
- Are your vendors and contractors set up cleanly, or do you have duplicate names and incomplete records?
- Do you understand how your 1099 information is being collected, tracked, and reviewed throughout the year?
Mentioned in This Episode
Free QuickBooks Clarity Scorecard
Download at: https://lee-davis-and-company.aweb.page/unlock-clarity-free-scorecard
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Recommended Resources
- QuickBooks Clarity Scorecard
- Your vendor list inside QuickBooks
- Your current QuickBooks subscription settings
- Your 1099 report and vendor W-9 records
Timestamps
00:56 - Why vendor payments and contractor payments can feel confusing in QuickBooks
03:34 - The client situation that sparked the conversation about moving away from printed checks
07:05 - Why QuickBooks vendor payments may be safer than manually collecting banking information
13:18 - How the ACH request option works inside the vendor setup process
17:09 - The key difference between contractor payments and vendor payments inside QuickBooks
21:30 - A better workflow for setting up vendors, collecting W-9s, and paying by ACH
30:18 - What to check if you are unsure whether your QuickBooks payment process is set up correctly
Call to Action
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Download our free QuickBooks Clarity Scorecard to see whether your QuickBooks setup is giving you the financial insight you need.
Have a QuickBooks question? Send it to support@leedavisandcompany.com — your question may be featured in a future episode.
Transcript
Welcome to QuickBooks mastery for small Business Success.
Speaker A:I'm Erica Northrup.
Speaker B:And I'm Lee Davis.
Speaker A:I handle the tech and he handles the numbers.
Speaker A:And together as a father daughter team, we bring decades of experience helping small to medium sized businesses thrive.
Speaker B:We know that as a business owner, your time is best spent mastering your craft and growing your business, not getting lost in QuickBooks.
Speaker B:Managing finances can be confusing and you don't have hours to waste sorting through spreadsheets or fixing bookkeeping mistakes.
Speaker B:That's where we come in, helping you streamline QuickBooks so you can focus on building your business.
Speaker A:Each week we break it all down into simple, actionable steps so you can focus on growing your business, not fixing your books.
Speaker B:Let's embark on this journey together.
Speaker A:Welcome back to QuickBooks mastery for small Business Success.
Speaker A:Hey guys, I'm Eric Northrup and I'm here with my papa, Lee Davis, and he is back from his vacation.
Speaker A:This is episode 32, vendor payments versus contractor payment a safer way to set up ACH in QuickBooks.
Speaker A:Today we're going to talk about something that sounds very simple on the surface, paying vendors or contractors through QuickBooks.
Speaker A:But it can get confusing pretty quickly because inside QuickBooks you may see language around vendors, contractors, contractor payments, bill payments, direct deposit and ACH requests.
Speaker A:And if you're a business owner, you may be thinking, I just want to pay this person electronically.
Speaker A:Why does this feel so complicated?
Speaker A:So Papa's going to walk us through something he recently ran into with a client and explain how QuickBooks handles this, where the confusion comes in and most importantly, how to make this process safer and more efficient and cost effective.
Speaker A:So Papa, although real quick before we jump into it, how was Maine?
Speaker A:How was your vacation?
Speaker B:Oh, you know what, being on the coast of Maine and right on the ocean is.
Speaker B:And so peaceful, when you listen to the ocean water waves come in at night.
Speaker B:It is one of the most relaxing experiences in life.
Speaker B:You just lay there and listen to the water roll in and like it rolls over you.
Speaker B:Of course, I didn't care how cold the water was and actually it wasn't that cold.
Speaker B:I was in every day, what practically we were there except for the one rainy day, but I was in the water and just jumping the waves and.
Speaker A:Nice, Papa.
Speaker B:We had a great time.
Speaker A:That has always been one of our favorite spots.
Speaker A:So I'm so glad you got that.
Speaker B:Yeah.
Speaker B:And we had some great food.
Speaker B:We went to a couple of the restaurants that we really like and one rainy day we went to a favorite restaurant and just.
Speaker B:And of course they had a tornado warning while we were there, so of course they did.
Speaker B:And of course we have all new tenting equipment and.
Speaker B:And so it really was a great experience.
Speaker A:Nice.
Speaker A:I'm so grateful you got that.
Speaker A:And I look forward to be able to enjoy the family Davis camping experience once again.
Speaker A:But anyways, so back to the topic at hand.
Speaker A:So can you set this up for us?
Speaker A:What was happening with this client that inspired this podcast episode?
Speaker B:If we loan a telephone call with one of my clients and she was talking about the dilemma that they like to move away from printing checks and the expense of having their staff do that.
Speaker B:And the fact is that they use our service to.
Speaker B:For me to enter the bill.
Speaker B:And when I was listening to what she was talking about, I said, why don't we just use QuickBooks for payments?
Speaker B:Yeah.
Speaker B:And she says, I would so love that.
Speaker B:And I said, we just have to be able to send a request through for the vendor and have them complete it and then it'll pop up on my screen and it's a quick push of the button.
Speaker B:We still have to enter the bill and account for it and all of that.
Speaker B:But it's so much more efficient for them and for us because they have historically had trouble printing their checks and so their check numbers have been totally wrong and created a lot of work for me.
Speaker A:So I'm a little screwed up.
Speaker B:This is the best for both worlds and the vendor.
Speaker B:It may require some follow up, some controlling for them to fill that out, but I think that they'll do it and I think it'll be great for our client and great for us.
Speaker A: How did they handle their: Speaker A:That seems to be a part of what all this was about.
Speaker B: s QuickBooks does prepare the: Speaker B: particular client, we found a: Speaker B:And so that's really important because it costs a significant amount of money for us as a firm to file that for state reporting for that client, and the client has to pay for it.
Speaker B:So this is a much more efficient.
Speaker B: ean that we go in and put the: Speaker B:And this is something that the client can do.
Speaker B:And I think next year they will do it.
Speaker B: f course, they do provide for: Speaker B:And of course, you also have to consider if you have vendors that you pay more than $600 for and they're a LLC, they're not a corporation, then of course their 10 lines have to be done as well.
Speaker B: king at what your need is for: Speaker B:If you use Quickbook but not for this particular client, that makes a lot.
Speaker A:Of sense because I think a lot of business owners are so used to just trying to get things done quickly that they may not stop and think about what they're actually asking someone to send over.
Speaker A:They may say, just send me your banking information or send me a voided check.
Speaker A:But that can create a risk for both sides.
Speaker A:So the question becomes, how do we get the vendor set up for the electronic payment without the business owner or the bookkeeper being the middleman for sensitive baking details?
Speaker B:I think the answer is use QuickBooks, the vendor payments.
Speaker B:And because when you use the contractor payments, you still have to put the information in, they don't have a mechanism for you to request through contractor payments that information.
Speaker B:However, they do have that tool under vendor payments, under the vendor screen.
Speaker B:And so that's where the confusion sometimes lies.
Speaker B:How do I get that information?
Speaker B:But it also adds the confusion.
Speaker B:It goes into the contractor payment screen.
Speaker B:So once, once they have completed that vendor request for the ACH information, then it goes into the contractor payments.
Speaker B:And it's a bit of a conundrum because QuickBooks itself, when you use contractor payments, it's treated like payroll.
Speaker B:It's like a payroll check.
Speaker B:So if you make a mistake, it's a lot of work to fix.
Speaker B:Right.
Speaker B:And yet the vendor payments are not considered payroll.
Speaker B:So it's, again, it's a bit confusing, but if you just understand the flow of the information that we'll walk through, it should help you.
Speaker A:Okay, that is great to hear.
Speaker A:So before we get into the QuickBooks screens and the processes, can you talk about why this matters from a business operations standpoint?
Speaker A:Why should a business owner care about how vendor ACH information is collected?
Speaker B:They really should care.
Speaker B:Because if you are holding, like in the state of Massachusetts, for example, if you're holding somebody's credit card information and the state comes in and audits you, it's $5,000 a fine per card.
Speaker B:Though some states are just, they have laws that protect the consumer for you storing.
Speaker B:In the old days, lots of times when you ran that credit card on and the machine, it was that you had the card right there, it printed out on the receipt.
Speaker B:And when companies stored all that information that's not yours, you can't store a credit card.
Speaker B:And really, with theft in today around credit card that being on the rise, you cannot think the email is safe or, you know, don't send confidential information, your Social Security number or credit card through the email.
Speaker B:That's just.
Speaker B:That opens you up to all kinds of fraud and abuse.
Speaker A:Oh, that is so good.
Speaker A:So the big takeaway here is not just efficiency, it is also protection.
Speaker A:It protects the vendor because they are not emailing their banking information around.
Speaker A:It protects the business owner because they are not storing or handling that information directly.
Speaker A:And it protects the bookkeeper because they are not being asked to manually enter sensitive details that really should be submitted by the vendor.
Speaker A:So much sense.
Speaker A:Yeah.
Speaker B:And if there's a mistake, you don't want it to be on the.
Speaker B:Your client or on us.
Speaker A:Absolutely.
Speaker B:For entering that information.
Speaker B:Because I oftentimes think before I submit any payroll information for ach, I check it five times.
Speaker B:Because if you've made a mistake, you've made a mistake.
Speaker A:Right.
Speaker B:And it can happen, but you should be avoided if at all possible.
Speaker B:Because people are not necessarily patient about their paycheck when it's wrong.
Speaker B:Okay.
Speaker B:They don't get it.
Speaker A:So right.
Speaker A:Slowing down almost with anything is usually the answer.
Speaker A:And it is how you prevent mistakes.
Speaker A:And when you are rushing, that is when you make mistakes, nine times out of 10 something is going to be wrong if you're just trying to get it done as quickly as possible.
Speaker A:So good.
Speaker A:Okay, now let's talk about where.
Speaker A:Where this gets confusing.
Speaker A:Papa.
Speaker A:Because what you found is that QuickBooks uses vendor payments and contractor payments in a way that can feel like they overlap.
Speaker A:Can you explain that?
Speaker B:So I think a good example is this particular client who we took them on as a client.
Speaker B:They had a few of their vendors and they were listed in the contractor payments, but they were not being paid by direct deposit or ach, and they wanted to be.
Speaker B:And so we did set them up and we did enter the data ourselves through the contractor payment screen, which there is indeed a mechanism to do that.
Speaker B:However, I think the whole process between contractor payments is who qualifies as a contractor payment and a vendor payment.
Speaker B:And some of those vendors were listed as contractors.
Speaker B:So it is confusing to know how you consider what's a contractor payment, what's a vendor payment, and what's the process to make it efficient to you.
Speaker A:That makes a lot of sense.
Speaker A: contractors who are getting a: Speaker A:But what you're saying is that the payment setup may still route through an area called contractor payments, even if the person started as a vendor in QuickBooks.
Speaker B:That's correct.
Speaker B:And it will show in under contractor payments that that particular vendor that they're a vendor.
Speaker B:And it's so useful because some vendors would love to be paid by ach.
Speaker A:Yeah.
Speaker B:You know, and so if you have them and if it cuts down the work.
Speaker A:Yeah.
Speaker B:You producing the check, it's a win win all the way around.
Speaker A:It's one less step you don't have to do.
Speaker A:Getting that check into your bank account.
Speaker B:That's right.
Speaker B:Or sending it, or preparing it, printing it, mailing it.
Speaker B:And the vendor payments, contractor payments, they're paid the next day.
Speaker A:Yeah.
Speaker A:That's incredible.
Speaker A:So in this client situation, the key discovery was that there is a way to request ACH information from the vendor through QuickBooks.
Speaker A:Can you, can you explain how that worked, Papa?
Speaker B:Yeah, there's a.
Speaker B:When you go into the vendor program, there is a dropdown that you can request the information.
Speaker B:So I think the key is when you go in and if you're adding a new vendor or you're updating a vendor, there is a dropdown in the upper right hand corner that you can request information from the vendor.
Speaker B:I think that's exactly the language that it is.
Speaker B:Then generate a request.
Speaker B:But you.
Speaker B:It takes you through a few screens.
Speaker B:If you haven't signed up for that product and there is a no charge, they do give a certain amount of usage with a no charge.
Speaker B:So it's worth.
Speaker B:If you need to upgrade, you can at some point, but start out with the no charge piece and see how much you use it.
Speaker B:And if they go up to charge you $15 a month, fine.
Speaker B:It'll save you that in the first couple of checks.
Speaker A:Absolutely.
Speaker A:So that feels like the main practical point of this episode.
Speaker A:If you are trying to pay vendors electronically through QuickBooks, do not automatically assume that you need to collect their bank details yourself.
Speaker A:There may be a way to send them as an ACH request through the vendor setup process so they can enter the information directly.
Speaker A:That is a cleaner, safer and more efficient way is what it sounds like to me.
Speaker B:Yeah, that's correct.
Speaker B:And I think one of the challenges that I'm going to be talking to this client, and we'll probably talk to other clients too, down the road is how you follow up.
Speaker B:If your vendor doesn't complete that information.
Speaker B:How do you nicely or gently say, could you.
Speaker A:Right.
Speaker B:You probably didn't know about this request that came through your email.
Speaker B:So let me help you find it and so that you can complete it and we can get you paid.
Speaker A:Absolutely.
Speaker A:Let's spend just a minute on the risk of doing this the wrong way.
Speaker A:What are some of the problems you see when business owners manually collect ACH or direct deposit information from vendors?
Speaker B:The main risk is that we don't have the source document of their bank account, so we don't know if they've entered their information correctly.
Speaker B:All right, so we don't know.
Speaker B:And you will take that risk.
Speaker B:But the point is, if they enter the information incorrectly, they're responsible for that.
Speaker B:But we are responsible for fixing the problem, if indeed there is one.
Speaker B:But I think the risk is minimal, the process.
Speaker B:And I think the other concern is that vendors may not want to have QuickBooks have their banking information or they don't like to have it out there in any place that they don't control.
Speaker B:But again, I think in this electronic world, it probably is a minimal problem.
Speaker A:Okay, that is great to know.
Speaker A:And I'm sure from an operations standpoint, it also saves time because instead of chasing someone for their baking information, receiving it, checking it, entering it, and worrying about whether it is correct, you can send the request and let the vendor complete it.
Speaker A:That is the kind of small process improvement that can make a big difference, especially when a business is trying to clean up its bookkeeping systems.
Speaker B:Of course.
Speaker A:Yeah.
Speaker A:So good.
Speaker A:Okay, so let's make this really clear for our listeners.
Speaker A:Papa.
Speaker A:If someone is inside QuickBooks and they see vendor payments and contractor payments, how should they think about the difference?
Speaker B:I know there is a difference.
Speaker B:The contractor payments are considered payroll.
Speaker B:Vendor payments are considered accounts payable.
Speaker B:So there are two different types of payments according to the way QuickBooks looks at them.
Speaker B:And so just understanding that the difference is helpful, but knowing that they get merged together is also understanding how it works to know that they use the contractor screen really to pay both vendor payments and contractor payments.
Speaker B:And for the most part, I think that clients, if they use the vendor payments to start with, it'll be really clear how it works.
Speaker A:Yeah, that makes a lot of sense.
Speaker A:It seems like along that same lines, a business owner, they should focus on the workflow.
Speaker A:And it feels like the workflow is, who are you paying?
Speaker A:How are you paying them?
Speaker A:Do you need ACH information and are you collecting that information safely?
Speaker A:And where does QuickBooks show the payment status once it is set up.
Speaker A:Do you feel like those are like that's.
Speaker A:That a business owner should follow?
Speaker B:Yes.
Speaker B:Yeah.
Speaker B:And I think the tracking is clear because when you go in to make the contractor payments or the vendor payment will show you that the vendor is set up or direct deposit.
Speaker B:So looking at the screen, you can see.
Speaker B:Yes here.
Speaker B:And you can also make sure you select the correct vendor with the right address.
Speaker A:Right.
Speaker B:And I think again, like anything you talk about slowing down.
Speaker A:Yeah.
Speaker B:Making sure that yes, you can, but be careful.
Speaker B:And QuickBooks does have a screen that once you make a vendor payment, it will say, are you sure you want to pay this?
Speaker B:So you have an opportunity to check to see that you have the right vendor.
Speaker B:Because if you've paid the wrong vendor and that particular vendor has direct deposit, then you're going to have to chase that money back from the other vendor.
Speaker B:So it's good to make sure that you have some checks and balances in place.
Speaker A:So very good.
Speaker A:That's helpful because sometimes the words in QuickBooks can make you feel like you're in the wrong place.
Speaker A:You might think this is a vendor, not a contractor.
Speaker A:So why am I seeing this under contractor payments?
Speaker A:But the bigger issue is understanding the payment workflow and making sure the setup is done properly.
Speaker A:Would you agree?
Speaker B:Oh, absolutely.
Speaker A:Yeah.
Speaker B:Yeah.
Speaker B:That was part of my, even my own reluctance in going through this process.
Speaker B:While I knew it rung a bell to me and I knew that QuickBooks offered payments for vendors.
Speaker A:Yeah.
Speaker B:I haven't used it a lot.
Speaker B:And I believe that we're going to start to encourage my clients to use that process, that feature, you know, if they're looking to cut back.
Speaker B:Because sometimes when clients want to use credit card payments, some of their clients will charge them the fee for credit card payments.
Speaker A:They do.
Speaker B:But in some cases, ach, which is really just a bank check essentially with banking information, there is no charge for that.
Speaker A:It's a bank to bank transfer.
Speaker B:It's a bank to bank transfer.
Speaker A:Yeah.
Speaker B:So if you are looking to try and make sure you're not paying that fee to the credit card company or on your end for your client to receive that, it's beneficial because sometimes they're charged on both ends for a credit card transaction.
Speaker B:So it's really a way for businesses to have.
Speaker B:See the immediate process and, and to really be on the cutting edge of payment processing.
Speaker A:Yeah.
Speaker B:On a low budget.
Speaker A:Yeah.
Speaker A:So good.
Speaker A:Okay.
Speaker A:So let's lay out the better workflow for our listeners.
Speaker A:If a business owner wants to pay a vendor or Contractor by ACH through QuickBooks.
Speaker A:What should the process look like?
Speaker B:I think first of all, the vendor, you should make sure you have a complete setup for that vendor, the complete address, all of their contact information, the.
Speaker B:In some cases, just complete the screens in the vendor and make sure you have collected their W9 form.
Speaker B:All right.
Speaker B: en you are ready to issue the: Speaker B:And then I think you locate the button on the top right hand corner and you request the ACH information.
Speaker B:And you may even talk to your vendor about the fact that they can be paid electronically and that you can send the request through safely for them to secure payment that way.
Speaker B:And most vendors, I think, would be thrilled about being paid that way.
Speaker B:Yeah.
Speaker B:So that's the first step.
Speaker B:Right.
Speaker B:And then you look at what's your process for a handling bills.
Speaker B:Lots of times vendors will send bills through email, they send them through snail mail, they drop them off, they do all kinds of things so they can get paid.
Speaker B:So you look at your process for receiving a bill and then entering the bill.
Speaker B:And do you have the right account information?
Speaker B:We've gone over some of that in the payables screen.
Speaker B:But it's important that when you enter that bill, because once you've entered that bill, it's ready.
Speaker B:And if you have a vendor, if you have direct deposit, you can go right to that contractor screen and under that contractor, when you push the button, it will tell you have a bill to pay for that vendor.
Speaker A:Yep.
Speaker B:And you just select the bill, just make the payment, select the bill and it processes.
Speaker B:And it's much quicker, much safer than a check.
Speaker B:Actually.
Speaker B:A check has a tendency to get lost in the mail.
Speaker B:Or somebody could open up a check and they could, you could have your account information.
Speaker B:This is very secure.
Speaker B:And you get an immediate response.
Speaker B:They process it, and you can look right on the vendor file and see the payment.
Speaker B:And it comes through your bank account the next day if you've.
Speaker B:As you process your bank fee.
Speaker B:And so the whole transaction is really a great experience.
Speaker A:So very good.
Speaker A:Okay, so this is really.
Speaker A:And I think if we were to rename this episode, it should probably be entitled Slow Down.
Speaker A:So really, again, this is about slowing down just enough to set it up correctly.
Speaker A:And I think we talk about this so much on this podcast, really, a lot of the problems that people experience is when they don't set things up correctly the first time.
Speaker A:So because the quick and dirty way would be to ask them to send over their banking information and just enter it yourself.
Speaker A:But the better way is to use the tools inside of QuickBooks to request that information properly.
Speaker A:The way the vendor owns their information, the business owner avoids unnecessary risk and the process is cleaner going Forward.
Speaker A:Awesome job, QuickBooks.
Speaker A:I feel like this was a, this was an A plus.
Speaker A:A plus, absolutely.
Speaker B:And I think from our side, America, in trying to take care of clients, our clients, giving a better client experience is what it's all about for us.
Speaker A:Yeah, absolutely.
Speaker A:And I think any good business owner, I feel like ultimately that's what we're here for, is to really help our clients and improve their lives and give a great customer experience.
Speaker B:Yeah.
Speaker A:So good.
Speaker A:Okay.
Speaker A: ioned that the client handles: Speaker A: tically handling all of their: Speaker B: bout spending to prepare your: Speaker B:It might be the easier way just to push the button in QuickBooks and let them do the work.
Speaker B:But they also have some pretty significant fees.
Speaker B:And you may look online and find a ten99.com company that's been around a while that can provide the same information and actually much more efficiently or the same as QuickBooks.
Speaker B:But in some cases, if you're looking for state reporting, you definitely want to look outside of intuit.
Speaker A:So that's a great distinction.
Speaker A:Paying someone through QuickBooks is one thing, properly tracking them for year end reporting is another.
Speaker A:And the business owner should not assume that, that just because a payment went out correctly, the end of the year reporting is automatically handled correctly.
Speaker A:Would you say that is a fair assessment?
Speaker B:Yes.
Speaker B:Yeah.
Speaker B: ul when you're preparing your: Speaker B:Get the report.
Speaker B: QuickBooks has a report for: Speaker B:It should be gone over.
Speaker A:Yeah.
Speaker B:And you need to know that you have all the information correct.
Speaker B: to make a correction on your: Speaker B:So it's, it's a, again, it's your responsibility when you push that button that have the right information, the Social Security number, the address, the EIN number, if they happen to use an EIN as opposed to the Social Security because they get rejected for the wrong information.
Speaker B:So it's helpful to make sure that it's not a year end process, But a totally 365 day process tracking your information for tax purposes for your vendors.
Speaker A:I guess a good way to again say it is just slow down, slow.
Speaker B:Down and take the right Information.
Speaker B:And a lot of clients, a lot of the times I suggest that they use the scanning capability within QuickBooks because you can scan that document.
Speaker A:Right.
Speaker B:And not just you, but the client can scan that.
Speaker B:And it's so efficient.
Speaker B:When you look back at.
Speaker B:No, the client sent me this information.
Speaker B:I have it right here.
Speaker B:So it's useful.
Speaker A:So good.
Speaker A:Okay, so moving right along.
Speaker A:So what are some common mistakes business owners make with vendor payments or contractor payments?
Speaker A:Papa?
Speaker B:I think the most frequent error I see is the distinction between a contractor payment and a vendor payment.
Speaker A:Right.
Speaker B:Really?
Speaker B:From QuickBooks perspective, they consider contractor payments, payroll and vendor payments.
Speaker B:They considered accounts payable.
Speaker B:So just understanding that helps you know how to look at them.
Speaker B:Yet they go under the same screen, contractor payments.
Speaker B:So it is probably just a systems issue, the way QuickBooks platform is set up, but at the end of the day, just understanding how it works that they all wind up in the same place and you use the contractor screen to handle the end result.
Speaker B:And then there is some kind of process that QuickBooks goes through to make it easy for you to set up the vendor payments.
Speaker A:Yeah.
Speaker A:So good.
Speaker A:That first one is a big one.
Speaker A:Duplicate vendors or inconsistent names can create a mess later.
Speaker A:As we know, setting things up right.
Speaker A:The first time just sets you up for success.
Speaker A:You won't have some of the issues you have down the road if you just take that time to begin with.
Speaker A:Because then payments may be split across multiple profiles, reporting may be wrong, and it becomes harder to know what actually happens.
Speaker A:So even though this sounds like a payment topic, it also becomes a cleanup topic, doesn't it, Papa?
Speaker B:It could.
Speaker A:Yeah.
Speaker B:You know, if you jump into vendor payments and you haven't really understood your responsibility to make sure that the vendor file is complete.
Speaker B:Because if you want to set your vendor up for success and payment, that's really a great thing for you.
Speaker B:Right.
Speaker B:Your vendor will be glad to do business with you.
Speaker A:Yeah.
Speaker B:Because I always think when I do business with a company, I want them to know they're going to be paid quickly, inefficiently.
Speaker A:Yeah.
Speaker B:And efficiently.
Speaker A:Yeah.
Speaker B:And what vendor doesn't want that?
Speaker B:Right.
Speaker B:And they're glad to do business with you.
Speaker A:Absolutely.
Speaker A:They'll see your name pop up in their email or in their messages and be like, yes, I will definitely make time for that person for sure.
Speaker A:That is so good.
Speaker A:So if someone is listening and thinking, papa, I'm honestly not sure if we're doing this correctly.
Speaker A:What should they do?
Speaker B:I think they should first of all go to their setup in Quickbooks go to the gear and look and see what their subscription entitles them to.
Speaker B:Okay.
Speaker B:Start there and then if they have a question, they can give us a call.
Speaker B:You know, if they question about what do I have?
Speaker B:Do I have?
Speaker B:Because there are a number of different types of subscriptions that QuickBooks will have.
Speaker B:And I think, as we know from a couple of episodes ago, that when a particular client can get paid through QuickBooks Payments.
Speaker B:Yes.
Speaker B:That's different than if they are paying somebody through QuickBooks.
Speaker B:So there are two different types of subscriptions.
Speaker B:So just because you have QuickBooks payments doesn't mean you can pay your vendors through QuickBooks.
Speaker B:So understanding their different subscriptions.
Speaker B:And I find most clients glaze over looking at their subscriptions because handle a lot of this subscription work for them.
Speaker A:Yeah.
Speaker B:Within our firm.
Speaker B:So anyway, I think just starting there.
Speaker A:So if you are glazing over looking at your subscriptions, give us a call.
Speaker A:We'll help you out.
Speaker B:We'll be glad to look at it for you.
Speaker A:We'll be glad to look at that.
Speaker B:And give you some advice.
Speaker A:Yeah, absolutely.
Speaker A:This is one of those areas where you do not necessarily need to overhaul everything overnight.
Speaker A:Right.
Speaker A:But you do need to understand your current process, just like you said.
Speaker A:Because if your process is, someone emails us bank information, we enter it somewhere and we hope it works.
Speaker A:That is probably a sign that the workflow needs to be tightened up, doesn't it, Papa?
Speaker B:That's right.
Speaker A:Right.
Speaker B:That's a sure sign that you are open to fraud.
Speaker B:So don't do that like somebody's information, their ach information and store it somewhere.
Speaker B:Because you think if there's a mistake, you got to go back to what?
Speaker B:No, don't do that.
Speaker A:That is so good.
Speaker A:So I feel like this episode could all be boiled down into one simple takeaway.
Speaker A:So a business owner takes one thing from this episode.
Speaker A:Papa, what should it be?
Speaker B:There are some great tools.
Speaker A:Yeah.
Speaker B:In QuickBooks.
Speaker A:Yes.
Speaker B:That can help you save time.
Speaker A:Yeah, absolutely.
Speaker B:Use them.
Speaker A:I know you weren't here last week for our recording, but I actually did a solo podcast episode.
Speaker A:I don't know if listened to it yet.
Speaker A:However, this actually ties in really well for what I talked about last week.
Speaker A:And it was some of the tools that we use in our business, some of the tools outside of QuickBooks.
Speaker A:We also talked about QuickBooks as being one of those tools.
Speaker A:And Even inside of QuickBooks there are so many tools that you can lean into that can really make your business more efficient and more effective and just help you in the long Run.
Speaker A:So yes, leaning into your tools is I think is the takeaway for sure.
Speaker A:Awesome.
Speaker A:And this process, it's going to make things safer, cleaner and more efficient for you.
Speaker A:So that would be why you want to lean into this process.
Speaker A:Absolutely.
Speaker A:That is the key.
Speaker A:This is not just about paying people faster.
Speaker A:It is about building a better system.
Speaker A:A system where vendor information is cleaner, payment information is handled more safely, the business owner is not carrying unnecessary response responsibility and QuickBooks is being used in a way that supports the business instead of creating more confusion.
Speaker A:Guys, if you are listening to this and realizing that your vendor list, contractor payments or end of the year reporting process may not be as clean as you thought, this is exactly why we created QuickBooks Clarity Scorecard.
Speaker A:It is a free resource that helps you take a step back and look at whether your QuickBooks file is actually giving you clear, reliable information.
Speaker A:Because sometimes it is a lot of small workflow issues like duplicate vendors, unclear payment processes, or information being entered inconsistently that add up over time.
Speaker A:You can find the link to the QuickBooks Clarity Scorecard in our show notes or on our website@leedavisandcompany.com Papa, that was really true, Truly helpful.
Speaker A:Because I think this is one of those little QuickBooks details that can save business owners a lot of frustration and time and money at the end of the day.
Speaker A:Because time is money, right?
Speaker A:When you lean into the processes that are there, you can then leverage the tools that are there to do things that would take maybe you, even if it's 15 or 20 minutes, but you lean into a tool that could take you you no time or five seconds or whatever it might be, you're going to be able to then take that time and put that towards making more money for your business.
Speaker A:Which is what it's not all about that, but it's why we're in business.
Speaker A:We are in business to make money and be efficient at it as we can.
Speaker A:That is awesome.
Speaker A:And it's also a good reminder that just because QuickBooks uses certain labels like vendor or contractor, we still need need to understand what is actually happening behind the scenes.
Speaker A:Thank you so much Papa for walking us through this.
Speaker A:I really feel like this is going to help people so much and it's going to make a big difference and our listeners, businesses.
Speaker A:That is awesome.
Speaker A:Okay you guys, thanks so much for listening to QuickBooks mastery for small Business Success.
Speaker A:We will see you next time.
Speaker A:Have a great week.
Speaker A:Bye for now.
Speaker A:Thanks for tuning in to QuickBooks mastery for small Business Success.
Speaker B:If you enjoyed this episode, hit subscribe and stay connected with us@leedavis and company.com.
Speaker A:We know QuickBooks can be overwhelming, so we've put together a free resource to help you get started right away.
Speaker A:Grab your copy@leedavisandcompany.com and when you do, you'll also get access to our VIP email list, where we share exclusive QuickBooks tips, business strategies, and support.
Speaker B:And we'd love to hear from you.
Speaker B:If you have a QuickBooks question or a business challenge, send it our way@supporteadavidsoncompany.com we might feature it in a future episode.
Speaker A:We're here to help you simplify QuickBooks and grow your business one step at a time.
Speaker A:See you next time.
