Difference Between Expense, Cheque, and Bill

In QuickBooks Online, choosing the right form depends on when you plan to pay and how you want to track the purchase. Here is the difference between an Expense, a Cheque, and a Bill.

Bill

Use a Bill when you receive a product or service now but intend to pay for it later. This records the liability in your accounts payable so you know what you owe.

• When to use: You receive an invoice from a supplier (e.g., a utility bill due next month) and do not pay it immediately.
• How it works: Enter the bill to record the expense. Later, use the Pay Bills feature to clear the liability and record the payment.
• Note: If you enter a bill, do not use Expense or Cheque to pay it. Always use Pay Bills to ensure the transactions link correctly and the bill is marked as paid.

Expense

Use an Expense for purchases paid for immediately, typically outside of a formal bill payment workflow. It is a flexible form for various payment methods.

• When to use: You buy office supplies with cash, pay for a meal with a debit card, or make an online payment where you are not issuing a specific cheque.
• How it works: It records the expense and reduces the selected bank or credit card account instantly.
• Payment methods: You can specify the method (Cash, Debit Card, Credit Card, etc.).

Cheque

Use a Cheque specifically when you pay by a physical or printed check.

• When to use: You are writing a check to pay for a purchase immediately.
• How it works: It records the expense and tracks the specific check number. This is ideal for maintaining a record of physical checks issued.
• Note: Because the form is specifically for checks, you do not need to select a separate payment method; “Check” is implied.

Summary

• Bill: Pay later (Accounts Payable).
• Expense: Pay now (General payment).
• Cheque: Pay now (Specifically by check).