Accounts Payable is the term used to describe money owed by an organization to its suppliers and vendors. It usually covers goods or services that have been purchased on credit.
The accounts payable process begins when invoices are received, which must then be verified against purchase orders to make sure everything matches up. The invoice will then need to be approved for payment before being entered into the Accounts Payable system.
Once in the system, the invoice will be reviewed by the Accounts Payable team who will work out a suitable payment plan, taking into consideration any discounts that may apply. When everything is agreed upon, the payment will be released and the invoice marked as paid.
This is the accounts payable step by step process in a nutshell, but it’s worth remembering that accounts payable is just one part of financial management. Your organization should also be monitoring expenses, budgeting for cash flow, and tracking vendor performance to ensure timely payments are made without compromising quality of service.