The accounts payable process involves invoice processing and vendor communications in managing a company’s financial obligations to its creditors and vendors. The accounts payable process starts with the receipt and validation of the invoices received from the vendor. Next step in the accounts payable process is the coding of the invoices with the correct General Ledger account and the data entry or data capture from invoices. The next step in the accounts payable invoice processing step is to route the invoices for approval, if that is a required step in the accounts payable process workflow. The payment files are created next in the accounts payable process and transmitted to the bank for payment to the vendors. The final step in the accounts payable process is the reconciliation of payment against the vendor invoices received and the creation of any required accounting reports.
The accounts payable process (often called the accounts payable cycle) covers every step required to manage a company’s obligations to vendors—from accounts payable invoice processing to payment and reconciliation. A well-run accounts payable processing function ensures that invoices are captured accurately, approved on time, and paid in accordance with policy and terms. An effective accounts payable procedure typically includes:
Core Steps in the Accounts Payable Cycle
- Invoice Intake & Validation
The accounts payable process begins when invoices are received (email, portal, EDI, or mail). The AP team validates supplier details, dates, PO numbers, and totals—foundational to accurate accounts payable invoice processing. - Coding & Data Capture
Next, invoices are coded to the correct GL, cost center, project, and tax. Automated capture tools reduce manual errors and accelerate accounts payable processing, strengthening the overall account payable procedure. - Matching (2-/3-Way)
PO invoices are matched to the purchase order and, when applicable, receiving documents. This step in the accounts payable cycle prevents overbilling and enforces pricing and quantity controls—critical to compliant accounts payable invoice processing. - Approval Routing
Invoices follow an approval matrix based on thresholds, departments, or projects. Automated workflows provide visibility and audit trails, standardizing the accounts payable procedure and shortening the accounts payable process timeline. - Payment Authorization & Execution
After approvals, payment files are created and transmitted to the bank (ACH, card, wire, or check). Strong controls at this stage of the accounts payable cycle reduce fraud risk and late fees while optimizing cash flow. - Reconciliation & Reporting
Payments are reconciled against vendor invoices, and exceptions are cleared. Final reports (aging, accruals, GRNI) close the loop of the accounts payable process and inform cash-management decisions.
Why Outsource the Accounts Payable Process?
Accounts payable process outsourcing lets companies leverage specialist teams and automation to speed accounts payable invoice processing, improve accuracy, and cut costs. Providers bring proven playbooks, duplicate-detection controls, and KPIs that stabilize the accounts payable cycle and standardize each accounts payable procedure across entities and locations.
Benefits of AP Outsourcing
- Faster accounts payable processing with SLA-driven turnaround
- Fewer exceptions via automated accounts payable invoice processing and 2/3-way match
- Stronger governance of the accounts payable cycle (audit trail, approvals, segregation of duties)
- Lower total cost through automation and scale
Best Practices for Invoice Processing & Controls
- Centralize intake to a monitored AP inbox/portal to avoid accounts payable invoice processing delays.
- Use GL templates and vendor-specific rules to standardize your account payable procedure.
- Track exception causes (price/qty/freight/tax) to continuously improve accounts payable processing.
- Align payment cadence with cash-flow goals while protecting early-payment discounts.
How ARDEM Helps with Accounts Payable Process Outsourcing
ARDEM applies business process automation, AI, and cloud platforms to modernize every step of the accounts payable process. We deliver rapid, accurate accounts payable invoice processing, enforce controls across the accounts payable cycle, and standardize your accounts payable procedure with real-time visibility and measurable KPIs.
Learn more in our accounts payable process outsourcing section and see how we can upgrade your accounts payable processing end-to-end. Reach out to us today for more information.