The accounts payable (AP) process is a fundamental component of your financial operations, concerned with managing the company’s ongoing or regular liabilities to suppliers and vendors.
This process ensures that you meet your financial obligations in a systematic and efficient manner.
Let’s elaborate on the accounts payable process step by step.
Steps of the Accounts Payable process
Invoice Submission
The AP process commences when a supplier or vendor submits an invoice to the accounts payable department. Invoices may be received in various formats, including paper invoices, email attachments, or through electronic invoicing systems.
Invoice Verification
Accounts payable clerks play a crucial role in the next step. They carefully examine the received invoice to verify its accuracy and authenticity. This verification process involves checking for errors, cross-checking the data with vendor quotations, standing contracts, or purchase orders and delivery notes,ensuring that the invoice is not a duplicate, and confirming that it complies with the organization’s policies and procedures.
Matching
Depending on the organization’s specific procedures, a 2-way (PO) or 3-way (PO and Delivery Notes) match process may be conducted.
Coding to General Ledger
Coding involves categorizing the expenses or goods and services received, allocating them to the appropriate cost centers or accounts. This step ensures that the financial transactions are accurately recorded in the company’s accounting system.
Invoice Approval Workflow
Following the matching process, the invoice is typically routed for approval within the organization. Approvers may include department heads, project managers, or others responsible for the specific purchase.
Processing for Payment
Once the invoice has received all necessary approvals, the accounts payable department then proceeds to schedule the payment. This involves determining the payment method, whether it be a check, electronic funds transfer (EFT), or another form of payment. The due date and payment terms specified in the invoice are also taken into account.
Payment, Record Keeping, Reconciliation, and Reporting
In this phase, the AP department executes payments as per the agreed terms, maintains meticulous records, and conducts ongoing reconciliation and reporting to ensure accurate financial data and compliance.
In summary, the accounts payable process is a comprehensive workflow that begins with the receipt of an invoice and ends with the payment to suppliers or vendors. It involves thorough verification, matching, approval, and careful financial record-keeping to ensure that an organization fulfills its financial obligations efficiently and accurately while maintaining good vendor relationships.
The lifesaver: how Comply’s AP automation rescues CFOs
With Comply Platform, the first and most impactful benefit is the end-to-end control you gain of the entire AP process.
Access all the data you need, distributed across personalizable charts, via a unique, at-a-glance dashboard. Based on this data you can view the status of invoice processing, identify delays and view discrepancies, make decisions and approve payments, but also route invoices or disputes to relevant managers for approval or resolution.
In addition, you can manage financial risk by reconciling invoices with orders and deliveries to identify over- or under-supply, process invoices for payment, and free up your working capital.
The possibility of making mistakes is also drastically reduced with such a system.
Enabling all steps in the accounts payable process to be monitored, even remotely, while leveraging AI and machine learning support, means nothing can escape the CEO/CFO’s eye.
