Accounts Payable Process

Handle outgoing payments in an efficient and compliant manner.

Introduction:

Purchase order:

Enter purchase order details

Send to the vendor accounting department

Send to the receiving department

Send to the senior accountant in your department

File a copy for internal records

Receiving report:

Create a receiving report

Document validation:

Gather the receiving report, PO, and vendors invoice

Double check a three-way match

Report errors to relevant team member

Confirm all documents have been amended

Payment:

Enter the invoice into the accounts payable account

Check dates to avoid penalty charges

Schedule the payment

Stamp all documents

Create voucher for the documents

Store in paid voucher/invoice file

Sources:

Related checklists:

Introduction:

The purpose of accounts payable is to provide checks and balances for all outgoing payments to vendors for their goods or services.

The aim of this process is to make certain that only bills which are legitimate are paid, and sufficient security is built into the process.

Three key factors to be checked when preparing to make payments:

what the company had ordered
what the company has received
all unit costs and calculations are correct.

To provide inbuilt security, this checklist is optimized to an accounting department where the process can be split across 4 different people. If you are a sole trader or a smaller operation, you can adapt this checklist to suit your needs.

It is important to keep your process secure to avoid double payment of bills, non-payment of bills, fraudulent payments, and payments of incorrect invoices.

Watch this video for more information:

TechnoFunc – Introduction to Accounts Payable Process

Purchase order:

Enter purchase order details

Your purchase order is the document you prepare for the vendor to outline the goods or services you are looking to receive. This should contain all the relevant information pertaining to the order.

This document outlines your needs and will be compared later in the process to the receiving order, which outlines what was provided. It will also be compared to the invoice which should note what you are being billed for.

The key to a successful accounts payable process is to have matching information clearly displayed across all documents.

Use the form fields provided below to record the vendor’s details and contents of the purchase order.

Your company name

Vendor details

Vendor – Company name

Vendor contact – First name

Vendor contact – Last name

Vendor contact – Phone number

Receiving department contact info

Receiving department contact – First name

Receiving department contact – Last name

Purchase order details

Purchase order number

Send date

Date of delivery

Goods or services being purchased

Quantity

Unit price

Date of payment

Shipping or delivery information

Further notes

Send to the vendor accounting department

Use the email widget below to send the purchasing order to the vendor so they can prepare the delivery of the goods or services your company is purchasing.

Do not forget to attach the purchase order to the email template below

Send to the receiving department

Use the email widget below to send the purchasing order to the receiving department so they know what they should be expecting and have a reference for the goods or services received.

For instance, this may be needed at the warehouse where the goods will arrive.

Send to the senior accountant in your department

Use the email widget below to send the purchasing order to the accounts payable department for internal transparency.

File a copy for internal records

File a copy of the purchase order for your own records.

It is recommended to file both a digital and physical copy of the purchase order.

File your records carefully when running the accounts payable process

Receiving report:

Create a receiving report

The receiving report is drawn up to show what goods or services have been delivered by the vendor.

Create this report by recording all the necessary information about the order.

Make sure the person responsible for receiving the order provides you with all the information listed in the checklist below.

Use the sub-checklist below to check that all key areas have been recorded.

Download a free receiving report template below.

1

Date and time of delivery
2

Name of the shipping company
3

Name of each item received
4

Quantity of each item delivered
5

The purchase order number
6

Condition of the goods on arrival

Document validation:

Gather the receiving report, PO, and vendors invoice

Contact the relevant people to gather all the documents pertinent to this transaction.

You will need the:

receiving report
purchase order
vendors invoice

Use the form field below to record you have received these documents.

Documents received

1

Receiving report
2

Purchase order
3

Vendors invoice

Double check a three-way match

A three-way match is a simple process of comparing the information across a range of different documents.

It is important to check every metric on all the documents. Any discrepancies can lead to problems in the payment, such as over-payment or double payments.

Use the drop-down to record that the information matches across the documents.

Does the information match across all documents?

For an overview of the three-way match and its importance, watch the video below.

Three-way match in an accounts payable process

Report errors to relevant team member

Record a description of the error and contact details of the relevant team member.

Use the email widget below to reach out and get the issue resolved as soon as possible.

Description of problem(s) identified during document validation

Team member – First name

Team member – Last name

Confirm all documents have been amended

Once you have notified you team member of inaccurate information, work with them to ensure all necessary adjustments have been made and the documentation is accurate.

Do not move on to the following tasks without being absolutely certain that all information is accurate.

Payment:

Enter the invoice into the accounts payable account

Now that all checks in the process have been undertaken, enter the invoice into the accounts payable account.

Check dates to avoid penalty charges

Some companies will charge interest or late fees for payments paid after the first 30 days.

Make sure you pay the vendor at the earliest date. If this system is working effectively you can try to negotiate discounts in the future for early payments.

Schedule the payment

Arrange for the payment to the receiving party to be scheduled.

Use the email widget to inform the vendor that you have scheduled the payment.

Stamp all documents

Stamp all documents either physically with paper copies or using a digital system.

Create voucher for the documents

A voucher is a system used by some accountancy departments to document the internal process the payment had gone through.

The voucher acts as a cover sheet on a completed payment. You can record the details of who worked on what stages of the payment processing, in case the information is needed for future reference.

Store in paid voucher/invoice file

Store your completed documents along with their accompanying voucher in your paid voucher/invoice file.

You can do this digitally or in paper form.

Once you have stored the information, you have completed the checklist.

Click on the completed button below to record the process as complete.

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