This guide walks through each procedure in order, with the control that belongs at each step. It also covers who should do what, how to split duties on a small team, month-end checks, and a checklist you can use to review your own process.
What Do Accounts Payable Procedures Cover?
AP procedures describe how a supplier invoice moves from the purchase that created it to the payment that settles it. They also set the checks that have to pass before anyone releases company money.
A useful procedure answers five questions for every step:
- What has to happen?
- Who is responsible?
- What documents are needed?
- What has to be checked before the next step?
- What happens if something is wrong?
The point isn't paperwork. It's a process that runs the same way no matter who's on shift, and that an auditor can follow later.
AP Policy vs. Procedure vs. Workflow vs. SOP
People use these words as if they mean the same thing. They don't, and mixing them up is how manuals end up either too vague or too long.
| Document | What it sets | Example |
|---|---|---|
| AP policy | The rule | Invoices over $10,000 need controller approval. |
| AP procedure | The steps that carry out the rule | Route invoices over $10,000 to the controller after the department head approves. |
| AP workflow | The path an invoice takes | Received, verified, matched, approved, paid. |
| AP SOP | Detailed, click-by-click instructions | How to enter, code, and submit an invoice in your system. |
Most companies need all four. The policy sets the rules, the procedure applies them, and the accounts payable workflow shows how work moves. The SOP gives a new hire enough detail to do the job without asking.
The Full Accounts Payable Procedure at a Glance
Here is the standard AP procedure from purchase to archive. The orange markers show where a control check belongs.
A simplified view. Non-PO purchases like utilities or subscriptions skip the purchase order and receiving steps and rely on approval controls instead.
If you want a printable diagram for training, our accounts payable process flow chart lays out the same path step by step. The sections below explain what each procedure involves.
Procedures Before the Invoice Arrives
Most AP problems start before the invoice shows up. If nobody approved the purchase, or the vendor record is wrong, no amount of checking at the invoice stage will fully fix it.
1. Request and Authorize the Purchase
Someone asks to buy something, and a budget owner says yes before the company commits. For larger buys, the request turns into a purchase order. Spending limits decide who can approve what.
Control: Written approval limits by role and dollar amount. Purchases above a limit need a second approver.
2. Set Up and Verify the Vendor
Before a vendor can be paid, they need a record in your vendor master file. Collect the legal business name, address, tax ID through IRS Form W-9, payment terms, and bank details. Check that the vendor isn't already in the system under a slightly different name.
Bank detail changes need the most care. Fraudsters send emails that look like a real supplier asking you to "update" where payments go. This is called business email compromise, and the FBI's Internet Crime Complaint Center logged $2.77 billion in reported BEC losses in 2024 alone.
Control: Only a small group can create or edit vendors, and they can't also pay them. Every bank detail change is confirmed by calling the vendor at a phone number already on file, never one from the email that asked for the change. Log who made the change and who confirmed it.
3. Issue a Purchase Order When Required
A purchase order records what you agreed to buy: the vendor, items, quantities, prices, delivery date, and payment terms. It becomes the yardstick for checking the invoice later. Your policy should say which purchases need a PO, often by dollar amount or category.
Control: The person who creates the PO isn't the person who approves it.
4. Confirm Goods or Services Were Received
When goods arrive, receiving records what came in, how many, when, and whether anything was damaged or missing. For services, the requester confirms the work was done. This receiving record is what makes a three-way match possible.
Control: Receiving is done by someone outside AP, so the person paying the bill isn't the one confirming delivery.
Procedures When the Invoice Arrives
5. Receive and Capture the Invoice
Tell vendors where to send invoices, usually one AP email address or portal, and stick to it. Invoices that land in a manager's personal inbox are the ones that get lost or paid late. Capture the vendor name, invoice number, date, PO number, line items, tax, total, terms, and due date.
Control: Check for duplicates as the invoice comes in, using vendor, invoice number, date, and amount together.
6. Verify and Code the Invoice
Check that the math adds up, the vendor is active and approved, tax is right, and the due date matches the terms. Then assign the general ledger account, cost center, and department so the cost lands in the right place.
Control: Invoices from vendors not in the approved vendor list stop here.
7. Match the Invoice to the PO and Receipt
A two-way match compares the invoice to the purchase order. A three-way match also compares it to the receiving record, so you only pay for what actually arrived. Services and non-PO bills can't use a three-way match, so they lean on approval instead.
Many companies set a tolerance, like a 2% price difference, so tiny gaps from rounding or freight don't stop every invoice. Anything over the tolerance becomes an exception.
| Check | PO | Receipt | Invoice | Result |
|---|---|---|---|---|
| Quantity | 100 units | 95 units | 100 units | Hold 5 units until they arrive |
| Unit price | $25.00 | n/a | $25.30 | 1.2% over, inside tolerance, passes |
| Amount to pay now | 95 × $25.30 | $2,403.50 | ||
Control: Tolerances are set in policy, not by whoever is processing the invoice that day.
8. Route the Invoice for Approval
Send the invoice to the right approver based on amount, department, cost center, or vendor. Decide in advance what happens if an approver is out, rejects the invoice, or asks a question. Every approval and rejection should be recorded with a name and a time stamp.
Control: Nobody approves an invoice for a purchase they requested themselves, and approval limits match the purchasing limits from step 1.
What to Do When an Invoice Doesn't Match
A fast AP process isn't one that approves everything quickly. It moves clean invoices fast and stops the ones that need a second look. Every exception needs an owner, a status, and a next step, so nothing sits in an inbox for weeks.
| Exception | Usual owner | Next step |
|---|---|---|
| No PO number | AP | Ask the vendor or requester for the PO, or send to the budget owner for non-PO approval |
| Price above PO | Purchasing | Confirm with the vendor, then approve the difference or request a credit |
| Quantity above receipt | Receiving | Check for a late delivery or a short shipment, then hold the difference |
| Possible duplicate | AP | Compare with the earlier invoice and reject if it's a repeat |
| Unknown vendor | Purchasing | Stop and run the vendor setup procedure before anything is paid |
| Disputed goods or service | Requester | Hold payment and document the dispute with the vendor |
| Missing approval | AP manager | Escalate to the backup approver named in the policy |
Procedures for Authorizing and Making the Payment
9. Authorize the Payment
An approved invoice isn't the same as an approved payment. Before a payment run, someone reviews the batch and confirms each invoice is approved, matched, not already paid, and going to a verified bank account. That person signs off on the total.
Control: The person who releases payments can't add vendors or change bank details. Larger payments or wires need two approvers in the bank portal.
10. Pay the Vendor
Pay using the method in the vendor record: ACH, wire, check, or card. Time payments around the due date, your cash position, and any early-payment discount worth taking. Link each payment back to the invoice it settles.
Control: Use your bank's fraud tools, like positive pay for checks and ACH debit blocks, so the bank flags items you didn't issue.
Procedures After the Payment
11. Post and Reconcile
Record the payment, update the vendor balance, and tie the AP subledger total to the AP account in the general ledger. Compare large vendors' statements to your records and chase down any differences. Regular reconciliation catches missing invoices, duplicate payments, and unapplied credits before they reach the financial statements. For a full walkthrough, see how to reconcile accounts payable.
Control: Reconciliation is done or reviewed by someone who doesn't process payments.
12. Keep the Records and the Audit Trail
Store the purchase request, PO, receiving record, invoice, approvals, exception notes, and payment record together. Anyone should be able to answer later: what was bought, who approved it, what was paid, and when.
The IRS says to keep records that support items on your tax return for at least three years, and longer in some cases. Many companies keep AP records for seven years to be safe. Check the IRS guidance on how long to keep records and confirm your policy with your accountant.
Control: Records can't be edited or deleted after payment without a logged reason.
Who Does What in Accounts Payable
Procedures only work when every step has a named owner. Here's a typical split. Adjust the roles to match your team.
| Step | Requester | Budget owner | Purchasing | Receiving | AP team | Controller or treasury |
|---|---|---|---|---|---|---|
| Purchase request | Does | Approves | ||||
| Vendor setup and changes | Does | Approves | ||||
| Purchase order | Approves | Does | ||||
| Receiving | Does | |||||
| Invoice capture and coding | Does | |||||
| Matching and exceptions | Fixes | Fixes | Does | |||
| Invoice approval | Approves | |||||
| Payment authorization | Prepares | Approves | ||||
| Payment release | Does | |||||
| Reconciliation | Does | Reviews |
Notice that no single column covers vendor setup, approval, and payment release. That's the whole idea behind segregation of duties.
Accounts Payable Internal Controls
Controls are the checks built into the procedures above. Each one stops a specific kind of mistake or fraud.
| Control | What it stops | Where it sits |
|---|---|---|
| Segregation of duties | One person creating a vendor, approving its invoice, and paying it | Across all steps |
| Vendor change callbacks | Payments redirected to a fraudster's account | Vendor setup |
| Approval limits | Spending above someone's authority | Purchase and invoice approval |
| Two-way or three-way matching | Paying for wrong prices, quantities, or goods not received | Matching |
| Duplicate checks | Paying the same invoice twice | Invoice capture |
| Payment batch review | Unauthorized or wrong payments going out | Payment authorization |
| Bank fraud tools | Checks or debits you didn't issue | Payment |
| Reconciliation | Missing, duplicate, or misposted items | After payment |
| Audit trail | Transactions nobody can explain later | Every step |
To test whether these controls are working, run through an accounts payable audit checklist once or twice a year.
Segregation of duties on a small team
A three-person finance team can't split every task. That's normal. The fix is to separate the riskiest duties and add compensating controls where you can't.
| Task | Bookkeeper | Owner or controller |
|---|---|---|
| Enter and code invoices | Yes | |
| Add vendors or change bank details | Yes | |
| Approve invoices | Yes | |
| Prepare the payment batch | Yes | |
| Release payments in the bank portal | Yes | |
| Reconcile AP | Yes | |
| Review bank statements and vendor change log monthly | Yes |
The owner's monthly review of bank statements and vendor changes is the compensating control. It catches anything the smaller split can't prevent.
Month-End Accounts Payable Procedures
Month-end checks make sure every cost lands in the right period and the AP balance on the balance sheet is complete.
- Set a cutoff. Decide the last day invoices count for the month, and tell department heads.
- Record invoices received before cutoff. Clear the inbox and the exception queue.
- Accrue for received but unbilled items. If the goods came in and the invoice didn't, book an accrual.
- Review open POs and unmatched receipts. Old ones often point to missing invoices.
- Check payments made after month end. Payments in the first weeks of the new month can reveal liabilities you missed. Auditors call this a search for unrecorded liabilities.
- Reconcile the AP subledger to the general ledger. The aging report total should match the AP account.
- Review the aging report. Look for old balances, debit balances, and unapplied credits.
- Document what's still open. Note the reason and owner for each unresolved item so the next person can pick it up.
Common Problems With AP Procedures and How to Fix Them
| Problem | Fix |
|---|---|
| Invoices arrive by email, mail, portals, and text | Publish one approved submission channel and redirect vendors to it |
| Approvals buried in email threads | Use a tracked approval workflow with named backups |
| The same invoice entered twice | Check vendor, invoice number, date, and amount at entry |
| Nobody knows who owns a stuck invoice | Assign an owner and a status to every exception |
| Vendor bank details changed from an email | Require a callback to a known number for every change |
| AP reconciled only at year end | Reconcile monthly as part of the close |
| The procedure lives in one person's head | Write it down and have someone else follow it as a test |
How to Write an Accounts Payable Procedures Manual
Write down what your team actually does, then fix the gaps. A manual describing an ideal process nobody follows is worse than none.
- Map the current process. Sit with the people who do the work and trace a few real invoices from start to finish.
- Name an owner for each step. Use roles, not people, so the manual survives turnover.
- Write the approval limits. Dollar amounts by role, plus who backs up whom.
- List the controls. Matching, duplicate checks, vendor callbacks, payment review, and reconciliation.
- Write the exception rules. What to do with no-PO invoices, mismatches, and disputes.
- Add month-end steps. Cutoff, accruals, reconciliation, and aging review.
- Set record retention. Where records live and how long you keep them.
- Review it yearly. Update it when your systems, team, or approval structure change.
A simple manual outline that works for most companies:
| Section | What goes in it |
|---|---|
| 1. Purpose and scope | Which entities, purchase types, and teams the manual covers |
| 2. Roles | The responsibility matrix |
| 3. Approval limits | Dollar thresholds and backups |
| 4. Vendor management | Setup, changes, callbacks, and inactive vendors |
| 5. Invoice processing | Submission channel, capture, coding, and matching rules |
| 6. Exceptions | Each exception type, its owner, and next step |
| 7. Payments | Payment runs, methods, authorization, and bank controls |
| 8. Month-end close | Cutoff, accruals, and reconciliation steps |
| 9. Records | Storage and retention periods |
| 10. Review log | Who updated the manual and when |
Accounts Payable Procedures Checklist
Use this to review your current process. Any box you can't check is a gap worth fixing.
- Purchases are approved before the company commits
- Approval limits are written down by role
- Only a small group can add or edit vendors
- Bank detail changes are confirmed by callback
- W-9s are collected at vendor setup
- POs are used where policy requires them
- Receiving is recorded outside AP
- Vendors send invoices to one approved channel
- Duplicates are checked at entry
- Invoices are coded to the right GL account and cost center
- Two-way or three-way matching is done when required
- Match tolerances are set in policy
- Every exception has an owner and a status
- Approvers can't approve their own purchases
- Payment batches are reviewed before release
- Payment release is separate from vendor setup
- Bank fraud tools are turned on
- AP subledger ties to the general ledger monthly
- Key vendor statements are reconciled
- Month-end cutoff and accruals are done
- Records are kept for the required period
- Every approval and payment has an audit trail
Where AP Automation Fits Into Your Procedures
Software doesn't replace your procedures. It runs the repeat steps the same way every time, so your people can spend their time on exceptions, disputes, and payment decisions.
The steps that benefit most from accounts payable automation are invoice capture, duplicate checks, matching, approval routing, and keeping the audit trail. Those are the steps where manual work causes the most errors and delays. Judgment calls stay with people.
Run Your AP Procedures Inside Salesforce
If your team works in Salesforce, Quick Payable captures invoices, checks them against POs, routes approvals by your rules, flags duplicates, and logs every action in the same org. It's $100 per user per month with a 15-day free trial.
Frequently Asked Questions
Rules for purchasing, invoice submission, approval limits, vendor setup and changes, payment methods and timing, exceptions, and record retention. The procedures then explain how to follow each rule.
No. Three-way matching fits physical goods with a receiving record. Services, utilities, and subscriptions usually use a two-way match or a budget owner's approval instead.
Send them to the budget owner for approval, code them carefully, and track how often they happen. A rising number of no-PO invoices usually means people are skipping the purchasing step.
At least monthly, as part of the close. High-volume teams often reconcile key vendor statements weekly.
Keep vendor changes, invoice approval, and payment release with the owner or controller, and let the bookkeeper handle entry and reconciliation. Add a monthly review of bank statements and vendor changes as a backstop.
Limit who can change vendor records, confirm every bank detail change by calling a number already on file, require two approvers for large payments, and use your bank's positive pay or debit block tools.
The IRS minimum is three years for most records that support a tax return, with longer periods in some situations. Many companies keep AP records for seven years. Confirm your policy with your accountant.
Shyam Agarwal is a technology professional with 12+ years of experience in Salesforce consulting, development, and administration. He writes about accounts payable, AP automation, and Salesforce, drawing on his experience delivering scalable technology solutions that support business needs and improve operational efficiency.