What is the accounts payable process? Steps, workflow and how to improve it
Learn more about the accounts payable process and the power of AP automation to streamline accounts payable workflow and improve cash flow control.
Key takeaways
- The accounts payable process tracks what your business owes to suppliers, from receiving an invoice through to approving and making payment, and recording the transaction accurately.
- An organised and optimised accounts payable workflow helps ensure payments are made on time, reduces errors, improves cash flow visibility, and supports stronger supplier relationships.
- Manual accounts payable processes can lead to inefficiencies such as lost invoices, data entry errors, delayed payments, and difficulty scaling as invoice volumes increase.
- Automating accounts payable tasks—such as invoice capture, approval, and payment processing—can streamline operations, reduce risk, and give finance teams more time to focus on higher-value work.
The accounts payable process is the workflow a business uses to receive, approve, and pay supplier invoices.
It is essential for maintaining accurate financial records and controlling cash flow.
This guide explains how the process works, key steps involved, and how to improve it using automation.
- What is the accounts payable process?
- Why is an optimised accounts payable workflow important?
- What are the common challenges in accounts payable?
- What are the steps in the accounts payable process?
- How can you improve your accounts payable process?
- How can automation improve the accounts payable process?
- Final thoughts
- Frequently asked questions (FAQs)
What is the accounts payable process?
Accounts Payable (AP) is the money your business owes to suppliers and vendors for the goods and services you’ve received but haven’t yet paid.
It shows up as a liability on your balance sheet and is critical when tracking how cash moves in and out of your business.
The accounts payable process, also known as the “full cycle of accounts payable,” covers everything from getting a Purchase Order (PO) and invoice to actually making the payment.
At a high level:
- You receive a purchase order and an invoice from a supplier.
- You check the invoice against the PO to ensure accuracy.
- You approve the invoice.
- You authorise and send payment.
This sequence is also part of the broader P2P (Procure-to-Pay) process.
Budget Speech: 2026/2027
Download the guide to the 2026/27 Budget to review key tax, payroll, and employment changes for South African businesses.
Why is an optimised accounts payable workflow important?
If your accounts payable workflow is full of bottlenecks, you risk late payments, duplicate bills, extra fees, and frustrated suppliers.
A smooth AP process helps avoid these problems and brings many advantages.
It helps you:
Keep track of invoices
An automated AP system updates invoices in real-time, so you always know which payments are due.
Pay on time, every time
Automated reminders and scheduling help you avoid missing deadlines and incurring penalty fees.
Eliminate manual work
Automation reduces the need for manual data entry and processing, minimising the risk of errors and freeing up your team from repetitive tasks.
Speed up finance operations
With streamlined workflows and automation, your finance team can process payments quickly, allowing them to focus on higher-value tasks.
Save time for other goals
By reducing time spent on manual AP tasks, you give your team more room to tackle strategic priorities and contribute to the growth and success of the business.
Build vendor relationships
Consistent and timely payments build trust and strengthen relationships with vendors, potentially leading to better terms, discounts, and partnerships.
Avoid late fees and penalties
An organised accounts payable process ensures that payments are never missed, helping you avoid costly late fees and penalties.
Prevent fraud
Built-in controls help detect and prevent fraudulent activities by flagging suspicious transactions and enforcing proper approvals.
What are the common challenges in accounts payable?
When your AP workflow is manual, you can run into several issues, including:
- Missing invoices: paper or email invoices can get lost if they’re not recorded right away—risking late fees and upset suppliers.
- Time-consuming oversight: Sage found that 77% of CEOs spend time each month chasing overdue invoices. In fact, 4 in 10 are doing this weekly. That’s time they’re not spending on growth or new ideas.
- Errors in data entry: manual AP work can lead to typos, misplaced documents, and miscalculations—all of which skew your financial data.
- Scaling problems: rapid growth or seasonal spikes in invoices can overwhelm a manual AP process. Automated systems handle high volumes more smoothly.
- Multiple payment methods: managing everything from EFT transfers to paper cheques can get messy fast. Without the right tools, you risk mistakes and delays.
Budget Speech: 2026/2027
Download the guide to the 2026/27 Budget to review key tax, payroll, and employment changes for South African businesses.
What are the steps in the accounts payable process?
A full cycle of accounts payable process includes four key steps:
Invoice capture
First, collect the invoice—via email, mail, or a digital invoicing system—and record it in your accounting system.
Automated tools like cash flow management software can handle this step automatically.
Invoice authorisation
Then review the invoice for accuracy, including quantities, prices, and discounts.
Once you’ve verified it, the invoice needs to be approved, usually by someone in your finance team or management.
Payment processing
With the invoice approved, it’s time to pay your supplier.
Common payment methods include EFT, cheques, and virtual cards.
Make sure you match the payment to the correct invoice to avoid confusion.
Payment recording
Lastly, log the payment in your accounting system to keep your books accurate and make future reporting easier.
Automation helps here, too, by updating records without the need for extra data entry.
How can you improve your accounts payable process?
You now know what the accounts payable process is and its full cycle.
To improve your accounts payable process, apply the following best practices:
1. Cut down on cheque runs
Paper cheques can be time-consuming.
Instead of issuing them every few days, try consolidating payments and running cheques bi-weekly (or even monthly).
Fewer cheque runs mean fewer opportunities for errors and confusion, and a simpler AP workflow overall.
2. Limit access and establish controls
Ask yourself: who can change vendor information?
Limiting access to your Master Vendor File helps you keep tight control over critical details.
Assign specific roles and permissions so only trusted team members can add or update vendor info.
Everyone else can view but not edit.
3. Eliminate AP fraud
Unfortunately, accounts payable fraud is a real concern for finance teams.
In fact, 51% of organisations globally experienced fraud or economic crime in the previous two years.
In South Africa, fraud is also rising: SABRIC reports increasing digital banking and payment scams affecting businesses.
Invoice and billing fraud are particularly common, with billing schemes accounting for about 22% of occupational fraud cases, making strong controls in the accounts payable process essential.
- Setting strong internal controls.
- Watching for fake vendor accounts.
- Restricting the ability to add new vendors to authorised employees.
- Using multi-factor authentication (MFA) to secure financial systems.
- Training your team to recognise red flags and report suspicious activity.
Budget Speech: 2026/2027
Download the guide to the 2026/27 Budget to review key tax, payroll, and employment changes for South African businesses.
How can automation improve the accounts payable process?
AP automation tools let you scan invoices, match them to purchase orders, and handle tax forms all at once.
It significantly improves efficiency and reduces manual workload.
In fact, by 2030, up to 30% of current work hours could be automated with AI, according to McKinsey.
Here’s why AP automation matters:
Simplifies accounts payable
AP automation software keeps your cash flow in check and ensures invoices are paid on time.
By automating the AP process, you reduce human error and minimise costs, freeing up time and resources for other important tasks.
Boosts productivity
Manual AP processing can be a huge drain on your team’s time and energy.
Tracking every supplier agreement and processing hundreds of invoices a day can be overwhelming.
Automation handles all of the work, eliminating thousands of hours of manual data entry.
Improves cash flow control
With automated AP software, you get real-time visibility into your cash flow.
No more confusion, simply clear, up-to-date reporting that helps you manage your finances better.
Streamlines approval process
Manual approval processes often lead to late fees, missed invoices, and overworked teams.
AP automation software streamlines the entire approval process, from routing invoices for review to notifying stakeholders.
It also includes built-in permissions to prevent fraud and unauthorised purchases.
Final thoughts
With the right approach, you can sidestep common pitfalls, streamline your workflow, and make sure your finances stay in tip-top shape.
Sage has you covered.
Its accounts payable automation software solutions are designed to make your life easier.
From everything invoice handling to real-time reporting you can improve your AP through its automation and easy integrations.
Frequently asked questions (FAQs)
The accounts payable process is the workflow a business uses to manage supplier invoices, from receiving and verifying them through to payment and recording the transaction in the accounting system.
The accounts payable process typically follows four key steps:
– capturing the invoice,
– reviewing and approving it for accuracy,
– processing the payment,
– and recording the transaction in the accounting system.
Following a consistent workflow helps ensure financial records remain accurate and payments are made on time.
An efficient accounts payable process helps businesses avoid late payments, reduce administrative errors, and maintain better control over cash flow.
It also supports stronger relationships with suppliers by ensuring payments are consistent and reliable.
Common challenges include missing or misplaced invoices, time spent manually tracking payments, data entry errors, and difficulties managing increasing volumes of invoices.
These issues are more likely in manual processes without automation or clear controls in place.
Automation streamlines invoice capture, matching, and approvals, reducing manual workload and errors while providing better visibility into payments and cash flow.
When an invoice is received, it should be recorded in the accounts payable ledger with key details such as the supplier, amount, and date.
Once payment is made, the record is updated to show the transaction has been settled, helping maintain accurate financial reporting.
The process typically includes four steps: capturing the invoice, reviewing and approving it, processing the payment, and recording the transaction for reporting and reconciliation.
An efficient process helps ensure payments are made on time, reduces administrative errors, improves cash flow visibility, and supports stronger supplier relationships.
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