Accounts Payable (AP) – End-to-End Process

 Accounts Payable (AP) – End-to-End Process

  

Accounts Payable is a critical finance function that ensures timely and accurate payment to vendors while maintaining strong internal controls and compliance.

Below is the end-to-end Accounts Payable (AP) process from procurement to payment:

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🔹 1. Vendor Onboarding
• Collection of vendor details (Name, Address, GST, PAN, Bank details)
• Vendor due diligence & compliance checks
• Creation of vendor master in ERP (SAP / Oracle / NetSuite)

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🔹 2. Purchase Requisition (PR)
• Internal request raised for goods or services
• Approval as per company authorization matrix
• Budget availability check

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🔹 3. Purchase Order (PO) Creation
• Approved PR converted into Purchase Order
• PO sent to vendor with terms, pricing & delivery conditions
• PO recorded in ERP system

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🔹 4. Receipt of Goods / Services
• Goods Receipt Note (GRN) prepared for material received
• Service Entry Sheet (SES) for services rendered
• Quantity and quality verification

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🔹 5. Invoice Receipt
• Invoice received via email / portal / EDI / physical copy
• Invoice logged and indexed
• Basic invoice validation (Vendor, PO number, date, amount)

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🔹 6. 2-Way / 3-Way Matching
• 2-Way Match: PO vs Invoice
• 3-Way Match: PO vs GRN/SES vs Invoice
• Discrepancies resolved with vendor or procurement team

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🔹 7. Invoice Posting
• Invoice posted in ERP
• Expense or inventory accounting
• GST/VAT input tax recording
• Liability created in vendor account

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🔹 8. Approval Workflow
• Invoice routed for approval as per delegation of authority
• Compliance with internal controls and audit requirements

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🔹 9. Payment Run
• Payment proposal generated
• Due date and cash flow consideration
• Payment approval by authorized signatories

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🔹 10. Vendor Payment
• Payment processed via NEFT / RTGS / ACH / Wire / Cheque
• Payment confirmation sent to vendor
• Bank posting completed

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🔹 11. Accounting & Reconciliation
• Vendor ledger reconciliation
• Bank reconciliation
• GR/IR clearing
• Aging analysis of payables

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🔹 12. Reporting & Compliance
• AP aging reports
• Vendor balance confirmation
• GST/TDS compliance
• Support during audits (Internal & Statutory)

🎯 Key Objectives of AP Process

✔ Timely vendor payments
✔ Accurate financial reporting
✔ Strong internal controls
✔ Regulatory compliance
✔ Improved vendor relationships