Accounts Payable Process

Use this accounts payable process template to handle outgoing payments and security throughout the process.

Introduction to Accounts Payable Process:

Junior Accountant 1:

Prepare purchase order

Send to the contact recorded in task 3

Send to the vendor accounting department

Send to the receiving department

Keep a copy for yourself

Send to the senior accountant in your department

Junior Accountant 2:

Draw up a receiving report

Junior Accountant 3:

Compile the receiving report, PO, and vendors invoice

Double check a three-way match

Senior Accountant:

Enter the invoice into the accounts payable account

Make sure you are paying early

Schedule the payment

Stamp all documents

Create voucher for the documents

Store in paid voucher/invoice file

Sources:

Related Checklists:

Introduction to Accounts Payable Process:

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

Junior Accountant 1:

Prepare purchase order

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 these documents.

Use the form fields provided below to record the contents of the purchase order.

Company name

Vendor name

Date of sending

Purchase order number

Name of contact

Phone number of contact

Goods or services being purchased

Date of delivery

Quantity

Unit price

Shipping or delivery information

Further notes

Date of payment

Upload your completed purchase order here

Send to the contact recorded in task 3

Use the email widget below to send the purchasing order to the individual requesting the purchase order.

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.

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.

Keep a copy for yourself

File a copy of the purchase order for your own records either digitally or in paper form.

File your records carefully when running the accounts payable process

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.

Junior Accountant 2:

Draw up 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 responisible for receiving the order provides you with all the information listed in the checklist below.

Use the subchecklist below to check a couple of key areas which should be recorded.

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

Junior Accountant 3:

Compile 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 dropdown below to record you have received these documents.

Have these documents been received?

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 dropdown to record that the information matches across the documents.

The information matches

If the information does not match, use the email widget below to reach out to the relevant person to identify the source of the issue.

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

Three-way match in an accounts payable process

Senior Accountant:

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.

Use the dropdown to confirm this step.

The invoice has been entered

Make sure you are paying early

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 future for early payments.

If a company can incentivise you to pay early they can improve their cash flow.

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.