See if your information has been exposed in a data breach with our latest free tool Check Now
Finance glossary

What is the accounts payable process?

Bristol James
8 Min

When vendors and suppliers send invoices to a business for providing goods or services, the invoices are processed by that organization’s accounts payable (AP) team. Upon receiving each invoice, the AP team initiates the Accounts Payable Process which consists of recording invoice data, ensuring the invoice is accurate and correct according to the services provided, approving the invoice for payment, and processing the payment to the vendor.

A key business function, the AP cycle plays a key role in ensuring balanced cash flow management, maintaining supplier relationships, and keeping the daily operations of the business functioning. If invoices aren’t paid on time or at all, resulting in supply disruptions, the business impact can be astronomical. To improve the existing AP process within any business, understanding the business impact of accounts payable processes, as well as the current state of each step is critical.

How AP impacts your business

Receiving, processing, and paying invoices in a timely manner may seem like a menial business task, but since every business relies on suppliers and business partners to provide their own goods or services, the accounts payable process flow is one of the most important back-office operations for businesses all over the globe. Having a solid accounts payable system will permeate every aspect of your business, including:


The AP team is responsible for closing out short-term debt obligations, which are the funds owed to suppliers and business partners. By processing and completing payment requests according to the agreed-upon payment schedule, businesses signal to their suppliers that they can be trusted to pay debts in a timely manner, solidifying their standing as a reliable customer and partner. When future suppliers are deciding whether to work with your organization, the first thing they’ll look at is how the AP team manages accounts payable.

Cash Flow Management

Every payment that is disbursed is part of a business’s cash outflows. By having a clear understanding of how much cash is going out of the business – as well as how much cash is coming in – it’s much easier to optimize cash flow. The accounts receivable team works opposite the AP team and is largely responsible for ensuring cash inflows remain steady.

Supplier Relationships

No business leader wants to work with customers who are constantly late with bill payments. If the accounts payable workflow of your organization fails to pay debts on time and in full, you’re at risk of losing suppliers. Remember, your suppliers are businesses too – they rely on incoming payments to continue their operations.

Supply Chain

There are enough external factors disrupting business supply chains, don’t add another factor to the mix due to poor short-term debt management. After a few late payments, key suppliers will cease operations and refuse to distribute goods or services to delinquent clients. Without those goods, your supply chain gets disrupted, throwing all production processes out of whack and impacting a lot of downstream operations.

Expense Management

With a clear view of how much money the AP team is spending on a monthly basis, business leaders can make more informed decisions surrounding overall business expenses. Invoice payments are only one aspect of business expenses, but they might just be one of the most important components of expense management.

Financial Security

In 2021, the AFP Payments Fraud Control Survey found that nearly 71% of businesses surveyed were targets of accounts payable fraud. Because the AP team is responsible for outgoing payments, scammers often target AP experts specifically, in hopes of convincing them to send payments to fraudulent recipients. With an accounts payable system that protects against fraud, the financial integrity of a business is strengthened immensely.

The Accounts Payable Workflow

Accounts payable management follows a cyclical format. By understanding every step within the cycle and optimizing key processes, AP teams perfect the cycle and rake in the benefits associated with a well-run accounts payable process. Let’s take a look at a sample 4-step AP process for a florist:

Step 1: Receive an Invoice from Suppliers

A local florist, Flowers and More receives a bill at the end of the month for all the vases that their supplier, Vases & Co., provided for the month. At a wholesale price of $8 per vase, the invoice states that Flowers and More received 40 vases last month, totaling $320.

Step 2: Ensure the Invoice is Accurate

Once the AP team receives the invoice, they have to verify that the invoice is correct and accurate. By conducting a three-way matching process, the AP team compares the invoice with last month’s purchase orders and the warehouse’s receiving report. The AP team found that one order was missing 2 vases, and Flowers and More only received 38 vases last month.

After the AP team sends a quick email to Vases & Co., a corrected invoice is sent. The total owed is actually $304.

Step 3: Submit Invoice for Payment

With a corrected invoice in hand, the AP team at Flowers and More sends the invoice through the proper approval channels. Some businesses require a supervisor’s approval, while others have a designated payment approval contact. It’s important to separate the person in charge of verifying the invoice from the person responsible for approving payment. This adds another layer of security and an extra check, just to be safe!

Step 4: Complete Final Payment and Close the Invoice

Once the approver approves the invoice and authorizes the respective payment, the AP team can send the payment through an electronic method or by mail. Most organizations prefer electronic solutions to sending business payments as they are easier to track and faster to process. During the month-end close, the AP team will also verify that the accounts payable account balance includes all payments made within the period.

Payment platforms like Eftsure are a great way to secure the payment step of the accounts payable processes. Designed to provide continuous control monitoring and protect EFT payments, the secure platform helps insulate businesses from cyber-related financial losses, ensuring AP teams pay the right suppliers every time.

If you’re looking to implement a better accounts payable process in your business, we’ve prepared a free 8-step guide to get you started.

AP Internal Controls

Accounts payable processes are only secure as the internal controls that exist from start to finish. By employing strong internal controls – and tools that make those controls as simple as possible – businesses are curating a reliable, effective AP process. Internal controls to consider are:

  • Obligation to Pay Controls: Have a process in place to verify that your company actually owes the money. Invoice errors happen all the time, but by approving the invoice, conducting three-way matching, and auditing for potential duplicates, AP teams can get in front of those errors prior to disbursing a payment.
  • Data Entry Controls: Ensuring that the details on the invoice match what’s happening in your ERPs and other business systems is critical. Using invoice numbers, budget matches, and payment controls will help keep data entry clean and accurate. These controls are another reason to go digital, as the data entry between systems is much less error-prone than when humans manually enter the invoice data.
  • Segregation of Duties: If the same person is in charge of processing the invoice, approving the invoice, and submitting payment, there isn’t much of a chance for errors to be caught by another set of eyes. Instead, use manual check signing or payment approval, store all checks safely, and track outgoing check numbers to create a multi-layered, secure approach to paying suppliers.

If you’re interested in learning more about financial controls, download our free Financial Controls Guide here.

Common AP mistakes that will cost a business

Finding the accounts payable balance between speed and accuracy can be tricky but with the right accounts payable process flow, businesses can avoid common issues, saving time and money in the long run.

Late Payments

When entering into an agreement with suppliers, businesses will be granted certain payment terms that dictate how many days they have to complete invoice payments. Most businesses offer N30 or N90 payment windows, meaning payments are expected within 30 or 90 days of the invoice receipt. If approval workflows or other issues cause payments to be late, businesses may be responsible for paying a late fee or could lose out on that supplier relationship altogether.

Matching Errors

If the information on invoices doesn’t match purchase orders or warehouse receipts, the AP team will need to work with the supplier to get things rectified. Correcting these errors can be tedious without the right digital tools in place to flag matching errors and provide guidance on how to fix them.

Fraud and Theft

Issues related to fraud and theft can arise from outside and inside an organization. AP teams are responsible for processing payments, but if a company accidentally hires a bad actor to support the accounts payable workflow, they could end up being scammed out of large sums of money. Use fraud detection tools and secure payment systems to help mitigate payment fraud – no matter where it comes from.

Optimizing and automating the AP Process

The right accounting software and digital business tools can automate more than 75% of all accounting processes. The accounts payable cycle – a subset of the accounting cycle – is one of the first areas of opportunity when it comes to automation. Because processing and paying invoices is a fairly uniform process, there are many opportunities for automation.

  • Automating invoice processing using software solutions will result in less human effort required to validate and confirm that the obligation to pay exists.
  • With an automated approval workflow, organizations can get rid of bottlenecks often caused in this step. Instead of invoice payment approvals getting stuck in leaders’ inboxes, digital platforms like Eftsure allow approvals to be made within the tool itself. Automated reminders are often built into these tools, too, cutting back on AP teams chasing down busy executives to get approval.
  • With digital payment capabilities provided by Eftsure, once an invoice is approved for payment, the platform can fact check the invoice to make sure all account details are accurate and correct, allowing teams to safely process payments with confidence.

There are many places where organizations can start capitalizing on automation opportunities, but the AP function is usually the top choice. With so many processes that are ripe candidates for automation, businesses can experience major productivity and money-saving wins in just this one function.


  • Accounts Payable (AP) is the process of receiving, verifying, approving, and paying invoices from vendors.
  • AP affects creditworthiness, cash flow, supplier relationships, supply chain stability, expense management, and financial security, making it vital for business operations.
  • Automation tools can streamline invoice processing, approval workflows, and payment processing, improving efficiency, accuracy, and reducing the risk of errors and fraud.


Background References:


Related articles

Finance glossary

What is Australian tax law?

Australian tax law encompasses the legal rules and regulations that stipulate how taxes are assessed, collected, and distributed by public governmental authorities. …

Read more

The new security standard for business payments

Eftsure provides continuous control monitoring to protect your eft payments. Our multi-factor verification approach protects your organisation from financial loss due to cybercrime, fraud and error.