Accounts payable process: the steps, the controls and where automation fits

The accounts payable process takes a supplier from onboarding to final payment: collect the invoice, check it, code it, match it, approve it, pay it and reconcile the payment. Each step has an owner, a control and a typical way to fail. Automation can take the reading, checking and routing. A person has to sign for approvals, bank detail changes and payment release.

The table puts all ten steps in one view, with the owner, control and failure mode for each.

#The process, step by step

Software takes the steps where the input is a document and the output is a record. People keep the steps where the output is a commitment of money.

#Steps 1 and 2: getting in

A supplier created from an emailed request, with bank details typed in from a PDF, is a common way payment fraud starts. Collect a tax form, verify the bank details through an independent channel, and have someone other than the requester approve the new record.

On the tax side, US companies collect Form W-9 so they have the supplier's taxpayer identification number, which they need for information returns. The IRS says Form W-9 is used to provide your correct taxpayer identification number to the person who must file an information return (IRS (opens in a new tab)). The threshold for filing Form 1099-NEC is $2,000 for payments after 2025, up from $600, according to the IRS instructions for Forms 1099-MISC and 1099-NEC (opens in a new tab). That is a US rule. It sets which suppliers you will report on, so keep W-9s current for any supplier likely to cross it, and check the rules for your own jurisdiction.

For invoice receipt, point every channel at one intake: the AP mailbox, supplier portal, e-invoice network and scanner. Classify what arrives (invoice, credit note, statement, reminder), then check for duplicates before anything else happens. The duplicate check is cheap and it catches money going out twice.

#Steps 3 to 5: checking

Capture turns the document into fields, and validation tests them. Do the arithmetic, check the supplier against the vendor master, check the invoice date, and look for the PO number. If you read invoices with AI, send low-confidence fields to a person. Our guide to accounts payable automation covers extraction and coding in detail.

Matching compares the invoice with the PO and, for goods, the receipt. It's the main defense against paying for things you didn't order or didn't get. Tolerances, exception types and line mapping are in our guide to three-way matching.

Non-PO invoices (rent, utilities, professional fees) skip matching, so they depend more on coding and approval. Treat that as extra risk, and give coding and approval more attention.

#Step 6: approval

Approval is where the process is most likely to be bent by convenience. An approver who sees 40 invoices a week will approve them by habit unless the system gives them the evidence in a form they can read quickly.

Show the approver the invoice image, the extracted fields, the match result and any variance. Route by an authority matrix rather than by whoever the clerk thinks of. Add reminders and escalation. Enforce segregation of duties as a hard rule: the person who raised the PO doesn't approve the invoice, and nobody approves a payment to a supplier whose bank details they just edited.

#Steps 7 and 8: posting and paying

Posting should be fully automated and idempotent, meaning a retry can't create a second bill. Attach the source PDF and store the ERP record ID against the invoice.

Payment is different. We automate the preparation and keep the release with people. Before a run, a system can compare each payee's bank details to the vendor master, hold invoices with open exceptions, and surface early-payment discounts. A named person then releases the batch, and for large batches a second person confirms it.

Key point: Automate everything up to the payment run and the checks around it. The decisions that move money or change where it goes belong to named people.

#Steps 9 and 10: after the payment

Reconcile payments to the bank statement, and review open items each month. Our guide to reconciliation automation shows how to match bank lines without hiding the breaks. At month-end, the AP subledger should agree to the ledger, and unrecorded liabilities (goods received, no invoice yet) should be accrued.

#Where the process breaks in practice

Most AP problems cluster in a few places:

• Invoices that arrive outside the intake channel, usually in a manager's inbox.
• Approvers who are away or who've left, with nobody covering.
• Receipts that are entered late, which forces false mismatches.
• Supplier bank detail changes accepted over email.
• Month-end cut-off, when invoices received in one period belong in another.
• Credit notes that never get applied to the open balance.

Each of these is a process problem before it is a software problem. Fix the process first, or automation will perform the broken version faster. Our use case on catching duplicate invoices and bank detail changes describes two of the checks worth adding early.

#Paperless AP: what it should and shouldn't mean

A paperless AP process means documents are digital from receipt to archive. People still look at them. Attach the source document to every posted record and keep an audit trail of who did what. Approvers should see the invoice on the same screen as the decision.

Be careful with printouts and scanned signatures. If approval still requires a wet signature on a paper copy, you have a paper process with a scanner in front of it.

#Measuring the process

Track a few numbers from the start:

• Cycle time from receipt to posting, and from posting to payment.
• Share of invoices that post with no human edit, by supplier group.
• Exception rate and top reasons.
• Duplicate payments caught, and any that got through.
• Early-payment discounts taken and late fees paid.
• Cost per invoice, which you can calculate with our cost per invoice calculator.

#Getting started

Map your own process against the table. For each step, write down the owner, the control you can prove and the last time it failed. The steps with a weak control and a recent failure are where to start.

If you'd like a second pair of eyes on that map, book a strategy call. We'll go through it with you and tell you which steps are worth automating and which are fine as they are.

#Frequently asked questions

#What are the steps in the accounts payable process?

Supplier onboarding, invoice receipt, capture and validation, coding, matching, approval, posting, payment, reconciliation, and period-end close. Non-PO invoices skip matching, and some companies add a separate step for tax and compliance checks.

#What is an AP workflow?

An AP workflow is the defined path an invoice follows from receipt to payment, including who handles each step, what is checked and where approvals happen. A good workflow also defines what happens to exceptions.

#Which parts of the AP process can be automated?

Capture, validation, duplicate detection, coding suggestions, matching, approval routing, ERP posting and bank reconciliation can all be automated to a large degree. Approval decisions, bank detail changes and payment release should stay with people.

#How do you automate the AP process without losing control?

Write the controls down first, such as tolerances, approval limits and segregation of duties, then encode them as rules. Log every automated action. Keep a human on approvals and payment release, and run in shadow mode before going live.

#What does a paperless accounts payable process need?

A single intake channel, digital capture of every invoice, the source document attached to each ERP record, electronic approvals tied to individual users and an audit trail. It doesn't need to remove people from the review.