The Accounts Payable Process

Steps

1. 1

   1. Receipt / capture of invoice

   Automatable

   The invoice arrives by email, EDI/e-invoice, supplier portal or paper, and is captured and digitised (OCR/IDP increasingly). The EDI/e-invoice channel maps to APQC PCF 10870 (maintain/manage electronic commerce); capturing the invoice and its key data maps to 10871 (audit invoices and key data in AP system), within 9.6.1 Process accounts payable. Handoff: vendor to AP clerk.

2. 2

   2. Validation / data entry

   Automatable

   Verify legitimacy, check for duplicates, capture header and line data, and validate the vendor against the vendor master. Maps to APQC elements 10869 and 10871. Decision #1, PO vs non-PO: PO-backed invoices go to matching; non-PO (services, utilities, subscriptions) go to coding and manual approval.

3. 3

   3. Three-way match (PO + goods receipt + invoice)

   Automatable

   For PO-backed physical goods, match the purchase order, goods-receipt note and vendor invoice on quantity, price and line items. A two-way match (PO to invoice) is used for services and low-value items with no physical receipt. Receiving provides the GRN, Procurement owns the PO, AP matches.

4. 4

   4. Exception handling

   Automatable

   Mismatches beyond the configured tolerance (a small % / $ band) are flagged and held, then investigated and resolved, contact the vendor, query procurement, correct the receipt, with escalation by dollar amount and discrepancy type. Maps to APQC element 10875.

5. 5

   5. Coding / GL allocation

   Automatable

   Assign the GL account, cost centre, tax codes and expense coding (especially for non-PO invoices). Relates to APQC element 10871 and feeds general accounting. Non-PO items hand off to the budget owner for approval.

6. 6

   6. Approval / authorisation

   Automatable

   Maps to APQC element 10872. Routine within-tolerance invoices auto-approve; above a value threshold they route to the budget owner / AP manager; above a higher threshold they need dual approval. Handoff: AP clerk to approver(s) per the approval-authority matrix.

7. 7

   7. Payment scheduling / payment run

   Automatable

   Schedule by due date and terms; optimise for early-payment discounts and avoid late fees; batch into a payment run. APQC measures the cycle time from receipt of invoice until approved and scheduled for payment. Handoff: AP to Treasury/Cash.

8. 8

   8. Payment execution

   Disburse via ACH, wire, cheque or virtual card. This custody/execution function must be performed by someone other than whoever entered or approved the invoice (segregation of duties). Treasury executes; the vendor receives funds.

9. 9

   9. Reconciliation / month-end close

   Automatable

   Record accruals/reversals for received-not-invoiced, reconcile the AP sub-ledger to the GL and to bank statements, and post to the GL. Maps to APQC PCF 10873 (process financial accruals and reversals), 10824 (reconcile general ledger accounts) and 10879 (adjust accounting records). Critical control: reconciliation by someone independent of AP transaction processing.