Editing Accounts payable (section)

==Overview==
An accounts payable department is typically located within an organisation's [[Business#Finance|finance function]].<ref>Detwiler, B., [https://www.celonis.com/blog/what-is-accounts-payable-definition-process-business-objectives-metrics-and-kpis/ What is Accounts Payable? The process, business objectives and KPIs that matter], ''Celonis'', accessed 23 April 2024</ref>

An account payable is recorded in the Account Payable sub-ledger at the time an invoice is vouched for payment. Vouchered, or vouched, means that an invoice is approved for payment and has been recorded in the [[General Ledger]] or AP subledger as an outstanding, or open, liability because it has not been paid. Payables are often categorized as Trade Payables, payables for the purchase of physical goods that are recorded in Inventory, and Expense Payables, payables for the purchase of goods or services that are expensed. Common examples of Expense Payables are advertising, travel, entertainment, office supplies and utilities. ''AP'' is a form of [[credit (finance)|credit]] that suppliers offer to their customers by allowing them to pay for a [[good (economics)|product]] or [[Service (economics)|service]] after it has already been received. Suppliers offer various payment terms for an invoice. Payment terms may include the offer of a cash discount for paying an invoice within a defined number of days. For example, 2%, [[Net 30]] terms mean that the payer will deduct 2% from the invoice if payment is made within 30 days. If the payment is made on Day 31 then the full amount is paid. 

In a business, there is usually a much broader range of services in the AP file, and [[accountant]]s or [[bookkeeper]]s usually use [[accounting software]] to track the flow of money into this [[liability (accounting)|liability]] account when they receive invoices and out of it when they make payments. Increasingly, large firms are using specialized Accounts Payable automation solutions to automate the paper and manual elements of processing an organization's invoices<ref>{{Cite web |last=Haller |first=Jeff |date=2025-05-09 |title=What is APA? {{!}} DataServ |url=https://www.dataserv.com/blog/what-is-apia/ |access-date=2025-05-22 |website=www.dataserv.com |language=en-US}}</ref>.

Commonly, a supplier will ship a product, issue an invoice, and collect payment later. This is a [[cash conversion cycle]], or a period of time during which the supplier has already paid for raw materials but has not been paid in return by the final customer.

When the invoice is received by the purchaser, it is matched to the [[packing slip]] and [[purchase order]], and if all is in order, the invoice is paid. This is referred to as the three-way match.<ref>{{cite book
| last = Schaeffer
| first = Mary S.
| title = Controller and CFOs Guide to Accounts Payable
| publisher = [[John Wiley & Sons]]
| year = 2007
| isbn = 978-0-471-78589-7 }}
</ref> The three-way match can slow down the payment process, so the method may be modified. For example, three-way matching may be limited solely to large-value invoices, or the matching is automatically approved if the received quantity is within a certain percentage of the amount authorized in the purchase order.<ref>{{cite web|url=http://www.accountingtools.com/article-ap-invoice-approval-pr |title=The Invoice Approval Process |publisher=AccountingTools |access-date=2013-11-29}}</ref> Invoice processing automation software handles the matching process differently depending upon the business rules put in place during the creation of the [[workflow]] process. The simplest case is the two way matching between the invoice itself and the purchase order.

Estimates from 2009 suggested that more than a billion business-to-business invoices were being processed each week, and 97% of these were still processed manually. The average cost to process and pay a supplier invoice was between $5 and $15, with 10% processed too late to be paid within discounting terms, and nearly 2% containing errors.<ref>Parata, L., [https://www.cfoinnovation.com/accounts-payable-critical-issues-and-solutions Accounts Payable: Critical Issues and Solutions], ''CFO Innovation'', published 25 October 2009, accessed 26 June 2021</ref>

In [[household]]s, accounts payable are ordinarily bills from suppliers such as an [[electrical power industry|electric company]], [[telephone]] company, [[cable television]] or [[satellite dish]] service, [[newspaper]] [[subscription]], and other such regular services. Householders can track and pay on a monthly basis by hand using cheques, credit cards or [[internet banking]].<ref>{{cite news | url=https://www.moneysavingexpert.com/banking/budget-planning/ | title=Budget Planner How to manage your money | work=[[MoneySavingExpert.com|MoneySavingExpert]] | date=September 16, 2024}}</ref>