Accounts payable process and procedures: The complete guide to automated, efficient AP

In today’s fast-moving business world, every dollar—and every minute—counts. That’s why for modern finance teams, perfecting the accounts payable process and procedures (AP) isn’t just an administrative task. It’s a strategy for strong relationships, cash flow mastery, and a competitive edge.

But traditional AP is often riddled with manual data entry, late payments, duplicate payments, and strained vendor relationships. Enter accounts payable automation: the new standard for efficient accounts, better financial health, and more empowered finance teams.  

In this guide, we’ll break down the entire accounts payable process—challenges, best practices, common pitfalls, and most importantly, how automation (with platforms like Weel) puts you back in control.

What is the accounts payable process?

Accounts payable (AP) refers to the money your business owes to suppliers for goods and services received on credit. AP sits on your balance sheet as a current liability—short-term debts you need to settle.

The core goal of the accounts payable process is managing those obligations efficiently—making sure you pay vendors on time, avoid late payment penalties, maintain accurate financial records, and support your company’s cash flow requirements.

In the broader procure-to-pay (P2P) cycle, AP kicks in right after purchasing (procurement) and continues through to payment process and record keeping.

Typical accounts payable process flow chart

1. Purchase order creation
2. Receipt of goods or services
3. Supplier invoice (vendor invoice) received
4. Invoice review/matching (often a three-way match)
5. Approval workflows
6. Payment scheduling and execution (via EFT, credit card, etc.)
7. Ledger update and reconciliation

Each step carries risks—from human error to unauthorized payments—but also opportunities for process improvement and cost reduction.

The full-cycle accounts payable workflow

The full-cycle accounts payable process goes beyond just paying a bill. Let’s break down each step:

 1. Purchase Order (PO) creation  

A business unit identifies a need (say, raw materials), creates a PO, and sends it to a supplier. This sets the contractual terms, including payment terms and billing addresses.

 2. Goods or services receipt  

When goods/services arrive, the receiving team checks for accuracy—a core part of the matching process. This is where “receipt to payment” begins.

 3. Supplier invoice received  

Vendors send a paper invoice, digital invoice, or even via an electronic data interchange (EDI). The invoice includes details like amounts, due date, and applicable payment discounts.

 4. Three-way match  

Before approving an invoice for payment, the AP team checks three documents:

• Purchase order
• Goods receipt note
• Supplier invoice

The goal? Confirm the PO matches delivered goods/services and the invoice, reducing entry errors and payment fraud.

5. Approval workflows  

Invoices go to designated budget owners or department heads for sign-off. Segregation of duties is key here—so no one person controls the whole accounts payable payment process.

6. Payment scheduling

Once approved, invoices are added to the payment schedule (aligning with your payment terms—e.g., Net 30/45). Smart AP teams use digital dashboards to track all outstanding debts and future payment obligations.

7. Payment execution  

Payment is issued—often by EFT batch payments, Automated Clearing House (ACH), credit card, or even (rarely, now) paper checks. Remittance advice is sent to the supplier.

 8. Ledger update & reconciliation  

Entries are posted in the accounting software. Regular reconciliation with bank statements and the accounting ledger prevents outstanding liability buildup and ensures accurate financial records.

Tip: What is a 3-way match and why does it matter?  

A three-way match compares the PO, goods receipt, and supplier invoice before payment. This dramatically lowers duplicate invoice risk, prevents unauthorized payments, and keeps your AP team audit-ready.

Common challenges in the AP process

Traditional, manual accounts payable process and procedures leave your business exposed to major operational risks:

• Manual entry delays: Keying invoices by hand slows down invoice processing, especially as your vendor count grows.
• Lack of approval visibility: Invoices get lost in email inboxes, causing payment delay and missed supplier discounts.
• Late or missed payments: Without clear workflows, payment deadlines slip, resulting in late payment charges—or, worse, strained vendor relationships.
• Duplicate payments or fraud: Lack of systematic checks means you might pay the same bill twice or fall victim to fake invoices.
• Fragmented data: Paper invoices, spreadsheets, and disconnected systems hinder effective cash flow management and create bottlenecks in process improvement.
• Costly errors: Manual errors stack up fast, with one industry study showing over seven in ten finance teams (72%) spend up to 10 people-hours per week, or 520 hours per year on AP-related tasks that could be automated.

Why modern finance teams are embracing automation

A manual AP process isn’t just time-consuming. It slows your growth, blinds you to risks, and drains your cash reserves. That’s why finance leaders are adopting accounts payable process automation to:

• Eliminate manual data entry and human intervention
• Standardise approval processes and provide built-in audit trails
• Accelerate processing times for invoices and payments
• Minimise costly errors and late payment penalties
• Give full real-time visibility on all current liabilities

Weel: Your Secret Weapon for Modern AP

With Weel, you get:

• AI-powered invoice capture: Optical Character Recognition (OCR) extracts and auto-populates invoice data, reducing manual work.
• Automatic supplier matching: Faster upload and vendor management—no double check needed.
• Custom approval workflows: Ensure every payment gets the right eyes, with role-based access for the payable team.
• Batch EFT payments: Pay multiple vendors in a single click and avoid manual payment runs.
• Two-way Xero integration: Real-time sync, so your financial statements and accounting records are always current, cutting out entry errors and reconciliation headaches.
• Remittance automation: Suppliers are kept in the loop, supporting positive relationships with vendors.

How to improve your accounts payable process

Ready to level up your AP management? Start here:

1. Digitise your intake: Transition from paper invoices to electronic invoices and smart scanning.
2. Standardise approval workflows: Use platforms like Weel to configure multi-step checks and payment authorisation rules.
3. Real-time visibility: Dashboards track invoice receipt, approval, and payment status—keeping the payable function transparent.
4. Schedule payments: Set up future payment schedules to make the most of early-payment discounts and avoid late payment fees.
5. Align AP with procurement: Make sure every AP entry can be traced back to its originating PO—supporting audit trail and reducing unauthorized payments.
6. Reconcile regularly: Routine reconciliations protect against double payments and missing liabilities.
7. Automate reconciliation: Integrated with accounting software, your payable balance always aligns with your ledger and bank statements.

Ready to cut admin, control costs, and build an ecosystem for process automation? See how Weel’s accounts payable automation makes it simple.

Strengthening supplier relationships through efficient AP

On-time, reliable payments aren’t just a compliance obligation—they’re a strategic advantage.

• Build trust: Vendors receive funds on time, boosting your standing as a preferred partner.
• Negotiate better terms: Consistent payment terms and transparent workflows earn leverage for discounts or favourable terms.
• Avoid penalties: Late payment penalties and double payments disappear with automated processes.
• Communicate clearly: Supplier portals and status dashboards improve communication and reduce friction.

Strong vendor relationships mean better prices, priority access to materials on credit, and stronger support—critical for long-term business health.

How Weel makes AP automation simple

When it comes to payable management, Weel delivers:

• EFT batch payments: Seamlessly pay multiple vendors at once, scheduled in advance.
• Real-time integration: Every bill created or updated in Weel is instantly mirrored in Xero.
• Automated approvals: Approvers receive instant notifications—no more chasing signatures—and each step is tracked digitally.
• Full mobile and desktop workflow: Keep approvals and payment processing moving, even on the go.
• Visibility & Control: Budgets, custom user permissions, and supplier verifications protect your process from costly, unauthorized, or duplicate payments.

Frequently Asked Questions

What is the accounts payable process?  

It’s the end-to-end system for receiving, reviewing, approving, and paying invoices to suppliers, and ensuring accurate books for your business.

What are the steps of the accounts payable cycle?  

The typical cycle: PO creation → goods/services receipt → invoice capture → three-way match → approval → payment scheduling → payment → reconciliation.

How can I improve my AP process?  

Digitise invoices, automate workflows, standardise approvals, schedule payments, and use integrated accounting software for full visibility and control.

How does EFT batch payment work in accounts payable?  

Batch payments allow you to pay multiple suppliers electronically in one go, streamlining your payment process, reducing manual errors, and saving time.

Find more on accounts payable and accounts payable automation.

Conclusion

A strong, effective accounts payable process and procedures framework drives more than admin savings—it powers better cash flows, healthier supplier relationships, and smarter financial decisions.

With automated solutions like Weel, you go from manual drudgery and costly errors to a streamlined, hands-off experience. No complexity, just complete control.

Ready to streamline your AP processes? Take the product tour or book a demo with our team today!