What are the Steps for Accounts Payable and How to Automate

The steps for Accounts Payable cycle generally include:

  1. Invoice Capture
  2. Coding invoices with corresponding accounts and cost centers
  3. Invoice Approval
  4. Matching invoices to purchase orders
  5. Posting

The full procurement cycle may also include:

  1. Creation of a Purchase Order (Or other method of initiating a purchase)
  2. Receiving Report (for goods delivered)
  3. Vendor Invoice
  4. Invoice approval
  5. Payment
  6. Posting to subledger
  7. Reconciliation with GL

For most businesses who process accounts payable manually, there is no escaping tedious tasks that can create ongoing headaches at the end of every month. Especially when mistakes pop up as a result of manual entry—a purchase order or invoice gets lost, a check is missing a signature.

Because the process can be so tedious and prone to error, accounts payables is also time consuming. AP clerks can only process about five invoices per hour, from data entry, to checking for errors and fixing them.  

The Most Time Consuming Steps in AP Cycle Include:

  • Invoice capture and entry
  • Aligning Invoices and Purchase orders       
  • Approving Invoices
  • Getting checks signed
  • Stuffing envelopes and mailing payments

How to Automate AP

steps for accounts payable cycle steps in apA company can develop their own workflows, though this is probably not going to offer a cost advantage over simply purchasing a payments automation solution. AP Automation Software was designed to streamline the most time-consuming steps in AP and with cloud computing it is now accessile to even the smallest companies. The key benefits of AP automation include:

  • Efficiency – As we already said, the right AP automation solution will streamline the most time-consuming steps in accounts payable processing.
  • More control – With advanced workflows, administrators can control the process at every step, ensuring invoices go to the right people and are approved and reconciled quickly with fewer errors.
  • Security – A good AP software will come with user tracking built-in for greater accountability at every step. Moreover, manual entry is more vulnerable to fraud than automated entries and data capture, plus with ACH and other methods of electronic payment, you improve security over paper checks.
  • Accounting Integration – If you are using accounting software like ERP, you will want to get an AP solution that integrates directly with your accounting solution. For example, if you use Microsoft Dynamics GP for accounting, Fidesic AP lets you post directly to GP. This is a crucial time saving feature.


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