Understanding Bills
This document provides a high-level overview of how bills work in Zoho ERP. It explains the purpose of bills, their lifecycle, different types of bills, and how they impact accounts payable.
What is a bill?
A bill is a record of money your organization owes to a vendor. Bills are typically created when goods or services are received, even if payment is made later.
Bills help you:
- Track outstanding vendor liabilities
- Monitor due dates and payment status
- Maintain accurate accounts payable records
How Bills Impact Payables
Bills directly affect your organization’s accounts payable.
When a bill is created:
- Vendor liability increases
- Payables reports reflect the outstanding amount When a payment is recorded:
- The payable balance reduces
- Cash or bank balances are updated This ensures financial statements accurately represent what the organization owes and has paid.
Difference Between Admin Expenses and Bills
Although both bills and admin expenses represent business spending, they are recorded differently based on how and when the payment is made.
| Bills | Admin Expenses |
|---|---|
| Recorded when goods or services are received from a vendor but payment is not made immediately. | Recorded for expenses incurred by administrators on behalf of the organization. |
| Create a payable to the vendor. | Do not create a payable. |
| Paid later and tracked under accounts payable. | The amount is already paid at the time of recording. |
Lifecycle of a Bill
The life cycle of a bill shows the stages a bill goes through from the time it is recorded until it is settled or cancelled. A bill is typically created as a draft, converted to open, and then partially or fully paid. In some cases, a bill may also be voided instead of being paid.
Types of Bills
Zoho ERP supports different types of bills to handle various business and compliance scenarios.
- Regular Bills: Standard vendor bills created for one-time or occasional purchases.
- Recurring Bills: Bills generated automatically at regular intervals for recurring expenses such as rent or subscriptions.
- Bills of Entry: Bills of Entry are used to record customs duty and other import-related charges for purchases made from overseas vendors or SEZ vendors. These entries help account for import costs correctly and support GST reporting and compliance requirements.
- Self-Invoiced Bills: Self-invoiced bills are bills created by the buyer when the vendor does not issue a valid invoice, such as in cases covered under the Reverse Charge Mechanism (RCM). In these cases, the buyer is responsible for recording the bill and paying the applicable tax.
Configure Preferences
You can configure the preferences of the Bills module based on business requirements. Read our help document on Bills Preferences to learn more.