How do I enter a PO from an overseas factory?

When you send funds to your overseas factory for production, you are essentially prepaying for your inventory. In QuickBooks Online, you handle this by recording the payments as vendor credits and then applying those credits to the bill you receive when the inventory arrives.

Here is the step-by-step process:

1. Record the funds sent to the factory

When you send money for salaries, supplies, or machinery, record these payments to create a credit with the vendor.

1. Go to the + New menu.
2. Select Expense (or Check if you paid by check).
3. In the Payee field, select your factory (vendor).
4. In the Payment account field, select the bank account used to send the money.
5. In the Category column, select Accounts Payable.
6. Enter the amount and the date.
7. Select Save and close.

Repeat this for every payment you send to the factory. Each transaction creates a vendor credit that will be available to apply later.

2. Enter the PO and receive the inventory

Once the factory sends the shipment and a bill, enter it into QuickBooks Online to add the items to your inventory.

1. Go to the + New menu.
2. Select Bill.
3. In the Vendor field, select your factory.
4. Enter the bill date and due date.
5. In the Item details section (the table), select the inventory items you are receiving.
6. Enter the Quantity and the Rate (cost per item). The Amount should match the total cost of the production.
7. Select Save and close.

3. Apply the credits to the bill

Now, link the payments you made earlier (the credits) to this bill so it shows as paid.

1. Go to the + New menu.
2. Select Pay Bills.
3. Filter the list to find the bill from your factory.
4. Select the bill.
5. In the Credit Applied column, QuickBooks Online will automatically suggest the credits you created in Step 1. Ensure the total credits cover the bill amount.
6. Select Save and close.

The Result

• Your inventory is now stocked with the correct quantity and cost per item.
• The bill is marked as paid.
• When you eventually sell these items, QuickBooks Online will automatically calculate the Cost of Goods Sold (COGS) based on the cost you entered.