Bill Payment
Definition
A bill payment is the act of paying a previously entered bill. It reduces the Accounts Payable liability and reduces cash. It should not create a new expense.
Example
Northstar Creative pays the $450 software bill entered earlier. Checking decreases by $450 and Accounts Payable decreases by $450. No new expense is recorded.
Why It Matters
Recording a bill payment correctly prevents double-counting expenses. The expense was already recorded when the bill was entered.