What is the Accounts Payable Process?

What Is the Accounts Payable Process?

The accounts payable process is a core financial workflow that businesses use to manage the money they owe suppliers and vendors for goods or services purchased on credit. At its heart, it’s about tracking incoming invoices, verifying them against purchase records, and paying them within agreed terms — all while maintaining accurate financial records.

In accounting terms, accounts payable refers to the short‑term liability recorded on the balance sheet representing unpaid bills from vendors and service providers.

This process is a key component of the broader procure‑to‑pay (P2P) cycle — bridging procurement (purchasing) and financial settlement.

Why Is the Accounts Payable Process Important for Businesses?

A strong accounts payable process isn’t just a back‑office duty — it’s central to financial health, compliance, and operational efficiency.

Key reasons it matters:

• Cash flow management: Ensures the business knows when it owes money and can plan payments to protect working capital.
• Supplier relationships: Timely and accurate payments build trust, potentially unlocking early‑payment discounts or better contractual terms.
• Financial accuracy: Solid controls reduce mistakes like duplicate payments or incorrect entries.
• Regulatory compliance: A structured AP process creates an audit trail and improves financial reporting accuracy.

What Are the Key Steps in the Accounts Payable Cycle?

The accounts payable process typically follows these structured steps:

1. Create and Issue a Purchase Order (PO)

A PO establishes what is being purchased, agreed prices, delivery expectations, and payment terms. It serves as the foundation for later invoice validation.

2. Receive Goods or Services

Once the supplier delivers, the receiving team verifies that the goods/services match what was ordered and documented.

3. Receive and Capture Invoices

Invoices arrive from suppliers and are recorded into the AP system — whether via manual entry or automated capture.

4. Verify and Match Invoices

This often involves invoice matching:

• 2‑way match: Invoice checked against the PO.
• 3‑way match: Invoice, PO, and receipt record are compared.

This controls errors and ensures you only pay for what was ordered and received.

5. Approval Workflow

Invoices are routed to the relevant stakeholders for approval — often with builtin delegation and escalation to avoid bottlenecks.

6. Schedule and Execute Payment

After approval, payments are scheduled and made via the appropriate payment method: electronic transfer, ACH, cheque, etc.

7. Record and Reconcile

All settled payments are recorded in financial systems and reconciled against bank statements or vendor records to ensure accuracy.

What Challenges Do Organisations Face in the Accounts Payable Process?

Even experienced finance teams struggle with common issues:

Manual Workload & Errors

• Data entry mistakes
• Lost or misplaced invoices
• Time‑consuming reconciliation

Delayed Approvals

• Approvers are unavailable or slow, which delays payments and strains vendor relationships.

Lack of Visibility

• Disconnected AP workflows make it hard to see outstanding liabilities or predict cash flow.

Compliance & Fraud Risk

• Poor controls can lead to duplicate payments, fraud, and audit issues.

How Does Automation Transform the Accounts Payable Process?

Automating AP processes addresses many pain points and vastly improves performance.

Benefits of Accounts Payable Automation

• Faster processing times — significantly reduces cycle times.
• Higher accuracy — systems perform matching and error detection automatically.
• Real‑time visibility — dashboards and reporting provide live insights.
• Reliable audit trails — all actions are logged with secure records.

Automation software such as Solvexia can ingest invoices in multiple formats, perform 2‑ and 3‑way matching, route approvals automatically, and integrate with ERPs for seamless payment execution.

What Are Best Practices for an Efficient Accounts Payable Process?

To build an AP process that’s both efficient and strategic:

1. Standardise and Document Workflows: Clear, documented steps reduce guesswork and enable consistency.
2. Use Purchase Orders Consistently: Requiring POs helps ensure that approvals are in place before invoices arrive.
3. Implement Strong Controls: Matching and verification ensure invoices align with POs and receipt records.
4. Automate Where Possible: Automation reduces errors and accelerates cycle time.
5. Monitor Performance Metrics: Track KPIs like invoice processing time, payment accuracy, and days payable outstanding to identify issues quickly.

How to Get Started With Improving Your Accounts Payable Process

Improving your accounts payable process starts with understanding your current systems and identifying where automation and efficiency gains can make the biggest impact.

1. Map Your Existing Process: Understanding current workflow helps highlight bottlenecks.
2. Identify Priorities: Which steps cause the most delays or errors? Focus automation there first.
3. Choose the Right Tools: Evaluate platforms that integrate with your ERP and financial systems — especially those that automate matching, approvals, and reconciliation.
4. Train Your Team: Ensure staff understand new tools and workflow changes to maximise adoption.

How Solvexia Helps With Accounts Payable & Finance Process Efficiency

Solvexia’s automation platform enables you to:

• Capture and validate invoice data automatically.
• Build approval workflows tailored to your business.
• Match invoices with purchase orders and receipts.
• Reconcile payment records and maintain audit trails.

By centralizing and automating these steps, Solvexia helps teams reduce cycle time, minimise errors, and increase control over financial obligations.

Explore how Solvexia empowers finance teams by automating repetitive tasks and freeing teams to focus on strategic activities.