Accounts Payable Workflow Processes: A Step by Step Guide

Published on January 20, 2023

Your organization’s accounts payable workflow processes — how your organization chooses to make purchases of goods or services — can have a significant impact on your internal accounting practices.

While up-front cash exchanges are relatively simple to manage, as soon as your company starts making credit-based purchases, you’ll need to develop and implement a system that tracks and oversees these transactions.

Here is a step-by-step guide to what most successful standard accounts payable workflow processes look like.

New to A/P? Check out our introductory article: What Is Accounts Payable?

What Does “Workflow” Mean in Terms of Accounts Payable?

Put simply, accounts payable covers the management, validation, and payment of short-term debts that your company owes to its suppliers and vendors. The term workflow in accounts payable represents the policies and processes used to fulfill these financial and accounting responsibilities.

Of course, several factors can influence what this workflow may look like, such as the volume of incoming invoices, the company size, or any regulatory burdens that the business might face. And depending on the amount of labor required, these operations might be handled by a single employee or by an entire team within your financials department.

What Are the Steps in Accounts Payable Processes?


A summary of accounts payable workflow goes as follows: You receive an invoice or payment request from one of your suppliers or vendors. You’ll then need to import or capture the necessary information from these invoices to your back-office financial systems. And to avoid the potential for fraud — or paying for shipments that arrived short or damaged — you’ll also want to engage in a number of verification steps to vet the accuracy and appropriateness of the invoice. After receiving all the necessary internal approvals, you can schedule and submit the payment to the debt holder.

Let’s break that down more in-depth and cover a few accounts payable best practices in the process.

The procure-to-pay process from start to finish

Step 1: Requisitioning

Once you’ve identified that your business is in need of some good or service, you’ll need to begin the requisition process. Depending on the size of your company or the scope of the desired materials, these purchases might need to be pre-approved by various levels of management before proceeding.

These requisitions commonly focus on acquiring supplies or raw materials for your organization, but they might also focus on establishing subcontractor or consignment relationships.

Step 2: Ordering

Now that you’ve pre-authorized the desired purchase, you’ll need to let the relevant vendor or supplier know what you specifically require. Typically, this process will involve filling in and submitting a purchase order to the relevant business. Or, in the case of a service, you may need to create a request for proposal (RFP) or similar document and share it with potential vendors.

Before formalizing the order, you’ll likely want to perform some comparative shopping and negotiate with the considered supplier for the best deal available. Routinely, you’ll want your purchase agreement to outline delivery or service requirements and not payment terms.

Step 3: Receiving

Once the corresponding goods are delivered — or the related service performed — verify the quality and confirm that what was received matches with what was ordered. Ideally, any issues will be identified and resolved at this stage before proceeding to any payment phases.

During this step, it’s also wise to evaluate the historical performance of the vendor or supplier. Have they routinely delivered on time? Are quality issues becoming more frequent? How responsive are they? Do they regularly meet all contract conditions? By answering these questions, you’ll be better prepared for the next time you need to make a similar order.

Step 4: Invoicing

For these credit-based purchases, payment typically won’t be required until you receive an invoice from your supplier or vendor. And these invoices might arrive in all manner of formats — mailed records, electronic payment requests (or e-invoices), or email attachments.

However you receive them, you’ll need to capture the relevant information from these records and import it into your financial or enterprise resource planning (ERP) software. For paper documents, you’ll likely manually transcribe the records—which increases the potential of data entry errors—or employ a scanning solution that features optical character recognition (OCR) capabilities. And for electronic documents, if you lack sufficient integration functions within your A/P systems, you’ll also likely need to transcribe the data between applications manually.

Further, once these invoices have been imported, you’ll want to engage in whatever relevant categorization or coding efforts required to record these outstanding debts within your general ledger accurately.

Step 5: Validation

This phase focuses on protecting your business from the financial consequences of error and fraud. With the invoice in hand, you’ll again want to verify that what is being billed accurately matches what was delivered and what was originally ordered. You should also confirm that the particular bill hasn’t already been paid.

Routinely, organizations will require final authorizations from key financial staff before any payment can proceed. And to limit the potential of fraud, these decision-making responsibilities should be separated across various roles. For example, you should avoid having the same worker approve both the creation of new vendor accounts and the outgoing payments to those accounts.

Step 6: Scheduling

One of the responsibilities of A/P staff includes the management of cash flow within the business. And choosing when to pay outstanding bills can have a direct, substantive impact on how much capital your company has at hand. Commonly, accounts payable staff will hold off on paying invoices until just before their due date to pad available cash reserves. However, A/P staff also need to balance this practice against leveraging potential early-payment discounts suppliers offer

Whatever strategy is chosen, your financial staff must pay particular attention to contractually-established payment conditions. And depending on the cadence of the company’s payment cycle, A/P staff might need to consolidate the compensation of multiple invoices or projects into a single disbursement.

Step 7: Paying

When the scheduled date arrives, it’s time for your business to pay its outstanding short-term debts. And just as there are several channels through which you might receive an invoice, there are several payment mechanisms that your company might need to accommodate to fulfill its obligations.

Ideally, you’ll be able to electronically transfer the relevant funds, such as through an established payment portal or automatic clearing house (ACH) transaction—methods that contribute to simpler, faster payment. However, many businesses still use paper checks that need to be printed, signed, and mailed out sufficiently in advance of targeted payment dates.

Other Functions of Accounts Payable to Account for When Considering Workflow

When discussing “accounts payable processes,” many people focus on activities related to handling incoming invoices. These efforts are just a subset of the comprehensive operations covered throughout the entire purchasing and payment process.

A/P staff cover more operations than just those managed by the typical payment workflow, including

  • Managing business relationships with suppliers
  • Setting up and overseeing vendor accounts
  • Negotiating prices
  • Creating, validating, and monitoring purchase orders
  • Maintaining bookkeeping efforts related to outstanding, short-term debts
  • Scanning and storing related documentation
  • Coding invoices for tracking in the general ledger
  • Monitoring and controlling available cash flow
  • Authorizing payments

Those in charge of accounts payable management will want to keep all of these processes in mind when scoping the work of their employees.

A/P Terms You Should Know

Data capture

Any process related to converting submitted invoices or records into information accessible by your ERP software. Routinely, this data is gathered through manual transcription, software integration, or document scanning.

Data coding

This operation focuses on classifying incoming invoices, in particular, determining how the payment requests should be cataloged and displayed within the organization’s general ledger and balance sheet.

Downstream processes

Relate to any A/P operations or activities that occur after a good or service has been delivered (e.g., invoicing, payment, validation).


In contrast to traditional, paper invoices that are regularly mailed to the recipient, e-Invoices are submitted electronically, typically through a payment portal or related platform.


A bill—often submitted by a supplier or vendor—that demands payment for a delivered good or service. Routinely, these documents will identify what was delivered, the corresponding price, and by what date payment is required.

2-way and 3-way matching

The process of validating submitted invoices against existing documentation of what was delivered and ordered. Routinely, 2-way matching covers invoices and purchase orders, while 3-way matching covers invoices, purchase orders, and receipts—such as goods received note (GRN).

Purchase order (PO)

A legally-binding document between a business and a vendor that outlines the relevant details—payment terms, delivery timelines, quantity, and pricing—of a desired purchase.

Receiving report

Any records that confirm the delivery of the ordered goods or services. Ideally, this documentation will match the details outlined in the corresponding purchase order.

Upstream processes

These activities focus on the procurement phase and might cover anything from contract negotiations to comparative shopping to filling out purchase orders.


A form used to catalog and confirm the relevant documentation and verifications required for the payment approval process.

Workflow automation

Accounts payable workflow automation focuses on using technology to limit the number of human interactions required to complete your payment efforts. Ideally, this shift to automation will help reduce errors, accelerate payment timelines, and free up accounting staff. Learn more with our guide to how to automate accounts payable.

Invoiced: Your Accounts Payable Workflow Automation Solution

No matter how hard you try to keep it simple, A/P workflows can quickly become complicated. And the more manual processes you have in place, the more vulnerable you leave your business to increased opportunities for mistakes, fraud, and unwanted complications and delays.

For smooth and straightforward automation of your accounts payable processes, check out Invoiced’s A/P Automation solution. By letting technology cover the mundane work, you can focus your business and staff on what’s actually important.

Simply schedule a demo to get started today!

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