What is an Accounts Payable Workflow?
What is an Accounts Payable Workflow?
A Deep Dive into the Accounts Payable Workflow
The accounts payable workflow describes a company’s complete end-to-end process in the procurement and payment of transactions. In essence, a workflow maps the steps from the point at which goods are received to the point at which invoices are paid.
A streamlined AP workflow is essential for managing the consistency, accuracy, and efficiency of each step in the process from start to finish.
Rules are Important to an Effective Accounts Payable Workflow
The manual flow of documents in an organization is prone to errors. For example, invoices can be “lost” in someone’s inbox resulting in late fees and ruined business credit scores.
An effective workflow can be designed to identify and prevent any potential errors. While Accounts Payable processes may vary in complexity, the AP workflow should be explicitly designed with “rules” that clarify the logic used to confirm, verify, approve, record, and reconcile transactions.
These “rules” help standardize each step in the workflow so that successful results are achieved consistently.
Who Manages the AP Workflow?
An Accounts Payable department’s workflow can be defined and managed manually or through automation using software, and at times by delegating any of the processes to a third-party company specializing in managing business processes.
Often when people refer to “Accounts Payable workflow” they are referring to AP workflow automation. Well-implemented software workflows increase efficiency by ensuring the enforcement of processing rules and provide visibility to the status of Accounts Payable.
Who Manages Your AP Workflow is Critical to the Process!
It is important to note that Accounts Payable is typically the most complex of all financial processes, with rules that vary by vendor, line of business, and so on.
The complexity extends to how invoices get coded, the routing approval path, the rules for performing two or three-way matching in the case of invoices associated with a Purchase Order, as well as rules for routing of exceptions.
Key criteria in the selection of Accounts Payable automation software or a third-party Accounts Payable solution should be their ability to support the complex Accounts Payable requirements of the company.
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