How do bills work?

Whenever your business purchases goods and services from a vendor that needs to be paid back in short time, this is also known as Accounts Payable. 
A bill is used to record a business transaction where the items and services from a vendor have been provided to the business owner, but payment isn’t due until a later date. If you’ve already paid for an item or service in full upfront, this would be an expense instead. These bills can be anything from raw materials, utility and internet, or paying for contractors and professional services for example.
 
Bills and vendors are part of Accounts Payable which is only available on trials as well as Premium and Select plans.
 
 

Create a Bill

To create a bill, either:
  1. On the Dashboard, select the Create New... button, then select Bill
  2. Or select the Expenses section
    1. Then select the Bills sub-section underneath
    2. Select the New Bill button or the + button at the top of the list of bills.

Alternatively, if you already have a vendor set up, you can quickly create bills from this vendor using these steps:
  1. Select the Expenses section
  2. Then select the Vendor sub-section underneath
  3. Select the vendor you want to create a Bill for
  4. In the vendor profile, select either the New Bill button or the + button at the top of the list of bills.

You’ll be taken to the New Bill screen:
New bill screen with fields to fill out.
  1. Select the Add Vendor text and enter in a new vendor or choose from a pre-existing list of vendor you've used before
  2. The Issue Date is automatically set to present day, select to change it to a different date instead
  3. Next, change the Due Date to when the bill is due for payment (the default is one month from the issue date)
  4. If needed, add a number in the Bill Number field
  5. To attach an image or PDF document image to the Bill, follow the steps in How do I attach receipts to my bills and expenses? here
  6. Select the Add a Line button
    1. If needed, select the Description field and add details about the bill
    2. Next, select Add Category and choose a category or subcategory (or create your own custom subcategory instead)
    3. Specify the Rate
    4. To add taxes, select the Add Taxes link and follow the steps in How does sales tax work? here
    5. The Qty will default to 1, select and enter a new number to change the quantity if needed
  7. Repeat step 6 as needed to add more items or services to your bill
  8. Under Bill Settings are a few more options:
    1. Select Currency and Language to change to a different currency and/or language, and select Done to save
  9. When you're done, select the Save button to finish.
 

Pay a Bill

Mark an individual bill as paid or several bills in bulk using the below steps:
 
Pay an Individual Bill
  1. Select the Expenses section
  2. Then select the Bills sub-section underneath
  3. Select the bill you want to mark as paid
  4. Next, select More Actions then select Add a Payment
  5. In the Add a Payment pop-up, the Amount will be populated with the full total of the bill - this can be overwritten if the amount paid is different
  6. Next, choose the Payment Method in the dropdown
  7. The Date of the payment will default to today, select it to change it to a different date if needed
  8. If needed, in the Payment Notes field, add details about the payment
  9. Select Add Payment to finish and the bill will now be marked as Paid.
 
Bulk Pay Bills
  1. Select the Expenses section
  2. Then select the Bills sub-section underneath
  3. Check the box(es) next to the bill you want to mark as paid
  4. Select the Bulk Actions button
  5. Then select Add a Payment
  6. Choose a Payment Method
  7. The Date of payment will automatically default to present day, select to change it to a different date instead
  8. Then select Payment Notes and add details if needed
  9. Select Save to finish and the bills will now be marked as paid.
 

Bill Payment Reconciliation

Bill payment reconciliation allows you to match a bill payment with an expense to avoid over-reporting your expenses, especially with bank connections automatically importing expenses for you. Matches are made based on either: 
  • The expense matches the bill's partially paid or paid amount and date, within 10 days of the expense's date
  • The expense matches the bill's unpaid or partially paid amount within 45 days after the bill's issue date
 
The bill payment reconciliation can be accessed in two ways: 
 

Potential Bill Payments

The review potential bill payments banner is shown if a bill exists before the expense is imported in by your bank connection, and appears in any of these locations:
Banner indicating two potential expenses that could be bill payments with a link to manage them.
  • In your Bank Connections section
  • In your Expenses section, above the list of expenses
  • In your Bills section, above the list of bills
 
In the Review Potential Bill Payments page, use these steps to match your bills and expenses imported in from a bank connection together:
  1. Select the Review all link next to the banner indicating potential bill payments
  2. If you have duplicate expenses, you will be asked to resolve those first before proceeding with bill payments
  3. FreshBooks will automatically match bills to expenses for you
    Two suggested matches for two expenses and bills

    1. If you have matches that are incorrectly matched, select the checkmark to deselect it
    2. If you have matches that are correctly matched and there is nothing to change, keep these checked off
  4. Select Match and Continue or Match to proceed to the rest of your manual matches
  5. The expense will be shown on the left, either:
    Review bill payments screen with options to match or keep as expense.
    1. Select the bill to match it to on the right under the Potential Matches tab
    2. Select the Bills tab and select from the list of bills to match it to
    3. Or select the Keep as Expense button if it’s an expense and not a bill payment to skip it
  6. Select the Match and Continue button until all expenses have been matched to bills or marked as expenses.
 

Mark as Bill Payment

In the Expenses section, use the Bulk Actions button to mark several expenses imported in from your bank connection as bill payments with these steps:
  1. Select the Expenses section
  2. Then check off any box(es) next to any expense(s)
  3. Select the Bulk Actions button
  4. Next, select Mark as Bill Payment
  5. The expense will be shown on the left, either:
    Mark as bill payment screen with options to match or keep as expense.
    1. Select the bill to match it to on the right under the Potential Matches tab
    2. Select the Bills tab and select from the list of bills to match it to
    3. Or select the Keep as Expense button if it’s an expense and not a bill payment to skip it
  6. Select the Match and Continue or Match button until all expenses have been matched to bills or marked as expenses.
 

FAQs

How do I match a paid bill to an expense if the bill was created after the expense?
When paid bills are created after the expenses have been imported in by your bank connection, the bill payment reconciliation banner is not triggered. It is recommended to delete the expense after the bill is created so expense amounts are not duplicated on the Profit and Loss Report and remains accurate.


What’s the difference between a bill and an expense?
  • Bills - Purchase made from a vendor that will be paid in the future. Bills can use multiple expense categories and can be paid later and also creates liabilities in your books
  • Expenses - An immediate purchase made from a merchant. Expenses can only be assigned one expense category, and no liability is recorded since it is paid upfront
 
How do I manage my bills?
From the Bills section, hover over any bill to quickly perform any of these actions: 
Quick actions bar with four buttons over a Bill row.
  • Edit - Select the pencil icon and you’ll be taken to the edit screen of the bill where you can adjust and save afterwards
  • Delete - Select the trash can icon to delete the bill. You can view all deleted bills by selecting on the deleted link at the bottom of the list
  • Add a Payment - Select the coin iconto add a payment to the bill
  • More Actions - Select the ellipsis (...) icon for additional actions including:
    • Duplicate - Select the two papers iconto create a copy of your bill
    • Change Category - Select the pizza iconto update the category of the bill
    • Change Vendor - Select the person icon to update the vendor on the bill
    • Archive - Select the box iconto move the bill to your archived bills list
 
What happens to my bills that I created during my trial or before I downgraded?
If you've created bills while on trial or downgraded to a plan that doesn't have Accounts Payable (bills and vendors), you'll still be able to view and edit only your existing bills.