Managing accounts payable isn’t just about paying bills on time, it’s about keeping cash flow healthy, avoiding errors, and strengthening vendor trust. Yet, AP is often where inefficiencies pile up: late invoices, duplicate payments, manual approvals. Done right, though, AP becomes a strategic function that saves money, builds credibility, and improves business agility.

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What this blog covers:

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• What are the common challenges in accounts payable
• 15 best practices to streamline accounts payable processes
• How automation and standardization improve AP efficiency
• Ways to strengthen vendor relationships through better AP management
• The importance of tracking AP metrics and controls
• How Spendflo helps with accounts payable optimization
• Frequently asked questions on accounts payable best practices

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Common Challenges in Accounts Payable

Accounts payable teams often face recurring issues that slow down operations and increase risks. Some of the most common challenges include:

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• Manual invoice processing – time-consuming, error-prone, and difficult to scale
• Lack of standardization – inconsistent workflows across departments cause confusion
• Poor cash flow visibility – limited insight into outgoing payments affects forecasting
• Duplicate or late payments – leading to wasted cash and strained vendor trust
• Compliance and fraud risks – weak controls increase exposure to regulatory issues
• Inefficient approvals – delays in routing invoices result in missed deadlines

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15 Accounts Payable Best Practices To Streamline AP

Here are 15 practical best practices that finance teams can adopt to streamline accounts payable, reduce errors, and strengthen cash flow management. Each practice comes with clear actions, common pitfalls, and tools to support implementation.

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1. Adopt Electronic Invoicing

Switching from paper or email-based invoices to e-invoicing reduces delays and improves accuracy, especially when supported by optical character recognition tools. Vendors submit invoices through a digital system. A reliable AP system makes it easier to validate, approve, and store records.

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What to do:

• Implement an e-invoicing platform with vendor access
• Standardize formats to minimize errors
• Ensure system integration with accounting tools

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What to avoid:

• Accepting unstructured invoices (PDFs via email)
• Ignoring compliance standards in e-invoicing regions
• Delaying vendor onboarding to the system

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Tool/metric to support it: Invoice processing time per vendor

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2. Automate Approval Workflows

Manual approvals create bottlenecks. Automating the process routes invoices to the right people based on set rules, ensuring faster payments and fewer delays. Digital workflows keep approvals consistent and reduce bottlenecks. 

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What to do:

• Set approval thresholds by spend category
• Use workflow automation software
• Build escalation paths for overdue approvals

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What to avoid:

• Relying on email-only approvals
• Overcomplicating routing rules
• Ignoring mobile approval options

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Tool/metric to support it: Average invoice approval cycle time

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3. Standardize Invoice Processing

A consistent process ensures every invoice is handled uniformly, reducing errors and confusion across departments.

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What to do:

• Define clear invoice intake procedures
• Use standardized templates for entries
• Train staff on exceptions handling

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What to avoid:

• Allowing multiple formats for invoice submission
• Skipping validation of required fields
• Leaving approvals to individual discretion

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Tool/metric to support it: Invoice error rate percentage

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4. Enforce Strong Internal Controls

Controls protect against fraud, mispayments, and compliance risks by ensuring accountability in AP, creating a clear audit trail for every transaction. 

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What to do:

• Separate duties (invoice approval vs. payment execution)
• Enforce dual authorization for high-value payments
• Conduct periodic audits of AP transactions

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What to avoid:

• Allowing one person to control end-to-end AP
• Skipping regular compliance checks
• Ignoring red flags in vendor payment history

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Tool/metric to support it: Number of policy exceptions detected

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5. Set Clear Payment Policies

Defined policies help avoid confusion, late payments, and disputes with vendors, by clearly outlining approved payment methods and terms. Streamlined payment processing helps reduce errors and keep vendor trust intact. 

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What to do:

• Communicate standard payment terms to vendors
• Define rules for exceptions (e.g., urgent payments)
• Update policies as business scales

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What to avoid:

• Leaving payment terms open-ended
• Ignoring vendor contracts when setting policies
• Over-promising unrealistic payment timelines

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Tool/metric to support it: Percentage of on-time payments

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6. Use Three-Way Matching

Matching purchase orders, vendor invoices, and receipts ensures only valid transactions get paid.

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What to do:

• Implement automated three-way matching in AP software
• Train staff to handle exceptions quickly
• Flag mismatches for resolution before approval

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What to avoid:

• Approving payments without supporting documents
• Manually reconciling large volumes of invoices
• Delaying resolution of mismatches

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Tool/metric to support it: Number of unmatched invoices per month

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7. Maintain Accurate Vendor Records

Reliable records reduce errors and make vendor management smoother. A well-integrated accounting system ensures vendor records stay consistent across finance and procurement 

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What to do:

• Store up-to-date vendor data in a central system
• Regularly verify vendor banking and tax details
• Assign unique IDs to vendors

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What to avoid:

• Relying on outdated spreadsheets
• Ignoring duplicate vendor profiles
• Failing to validate vendor compliance certifications

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Tool/metric to support it: Vendor master data accuracy rate

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8. Leverage Early Payment Discounts

Paying invoices early can unlock cash savings and strengthen supplier relationships. Using electronic invoices ensures vendors get paid quickly and records stay accurate. 

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What to do:

• Track vendors offering discounts for early payments
• Prioritize these invoices in workflows
• Align AP scheduling with cash flow projections

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What to avoid:

• Missing discount windows due to slow approvals
• Overcommitting cash reserves
• Failing to negotiate better terms for volume purchases

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Tool/metric to support it: Discounts captured vs. available discounts

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9. Prioritize High-Value Invoices

High-value transactions carry more financial risk and need careful handling.

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What to do:

• Flag invoices above a set threshold for faster review
• Use tiered approval processes for large payments
• Monitor recurring high-value vendors closely

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What to avoid:

• Treating all invoices with the same urgency
• Approving high-value invoices without cross-checking contracts
• Delaying payments that affect critical operations

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Tool/metric to support it: High-value invoice approval turnaround time

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10. Monitor Duplicate Payments

Duplicate payments waste cash and strain vendor trust.

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What to do:

• Implement software that flags duplicate invoice numbers
• Run monthly reports to identify duplicates
• Train staff on spotting duplicate patterns

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What to avoid:

• Relying only on manual checks
• Ignoring small-value duplicates
• Overlooking vendor-submitted duplicate invoices

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Tool/metric to support it: Duplicate payment rate per quarter

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11. Strengthen Vendor Communication

Open, proactive communication prevents disputes and builds trust.

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What to do:

• Provide vendors with a self-service portal
• Share payment schedules transparently
• Assign AP contacts for vendor queries

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What to avoid:

• Delaying responses to vendor concerns
• Hiding payment delays until last minute
• Failing to communicate policy changes

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Tool/metric to support it: Vendor satisfaction survey scores

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12. Regularly Reconcile Accounts

Frequent reconciliations prevent errors from snowballing into bigger financial problems.

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What to do:

• Reconcile AP ledger with general ledger monthly
• Verify outstanding invoices against vendor statements
• Document and resolve discrepancies promptly

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What to avoid:

• Waiting until year-end for reconciliation
• Overlooking minor discrepancies
• Relying solely on system balances without checks

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Tool/metric to support it: Reconciliation discrepancies identified and resolved

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13. Track Key AP Metrics

Data-driven insights help optimize performance. Clean invoice data improves reporting accuracy and supports better decision-making. 

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What to do:

• Monitor metrics like invoice cycle time and cost per invoice
• Benchmark against industry standards
• Share reports with finance leadership

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What to avoid:

• Ignoring KPIs until audits
• Focusing only on cost, not accuracy
• Overloading dashboards with irrelevant data

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Tool/metric to support it: Days payable outstanding (DPO)

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14. Integrate AP With Procurement

When AP and procurement work together, errors decrease and compliance improves.

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What to do:

• Use integrated systems (like an ERP system) for purchase-to-pay
• Align vendor databases between functions
• Ensure procurement policies flow into AP workflows

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What to avoid:

• Treating AP and procurement as separate silos
• Entering vendor details manually in multiple systems
• Ignoring mismatched contract terms

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Tool/metric to support it: Rate of AP-procurement mismatches

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15. Invest in AP Training and Development

A skilled AP team prevents errors and manages exceptions more effectively.

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What to do:

• Provide training on new tools and compliance standards
• Offer workshops on fraud detection and controls
• Encourage cross-functional learning with procurement and finance

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What to avoid:

• Neglecting ongoing training
• Leaving staff unprepared for software upgrades
• Overlooking the value of cross-training

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Tool/metric to support it: Training hours completed per AP employee

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How Automation and Standardization Improve AP Efficiency

Automation and standardization transform AP from a reactive, manual-heavy process into a smooth, predictable function. Automation removes repetitive tasks like data entry, invoice matching, and approval routing - making AP automation central to cutting processing times drastically. Standardization ensures every invoice follows the same rules, reducing errors and confusion. Together, they boost efficiency, lower costs, and free finance teams to focus on strategic activities instead of firefighting.

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Ways to Strengthen Vendor Relationships Through Better AP Management

Vendors are more than just suppliers, they’re partners in keeping your operations running. Strong AP practices build trust and ensure smoother collaborations. Here are a few ways AP teams can strengthen vendor relationships.

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Offer Transparent Payment Schedules

Vendors value clarity. Sharing predictable timelines for payments reduces uncertainty and prevents disputes. Transparency helps vendors plan their cash flow more confidently.

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Resolve Disputes Quickly

Errors and mismatches happen, but what matters is how fast they’re addressed. Prompt resolution shows professionalism and builds confidence that you’re a reliable partner.

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Leverage Early Payment Programs

When feasible, offering early payments in exchange for discounts benefits both sides. Vendors get faster access to cash, while you save on costs, a win-win.

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Provide a Self-Service Portal

Giving vendors supplier portals to track invoice status and payments minimizes back-and-forth emails. This improves communication and saves time for both parties.

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Maintain Regular Communication

Regular check-ins, not just during renewals or disputes, help nurture stronger vendor partnerships. It ensures you’re aligned on expectations and future opportunities.

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The Importance of Tracking AP Metrics and Controls

Tracking accounts payable metrics is vital because it gives finance teams visibility into how efficiently money flows out of the business. Without it, late payments, duplicate invoices, or compliance gaps can quietly drain cash and damage vendor trust. Strong AP practices contribute directly to the company’s overall financial health.

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By monitoring metrics like processing cycle time, cost per invoice, or days payable outstanding, companies can catch inefficiencies early and take corrective action. Strong AP controls also reduce the risk of fraud and errors, ensuring payments are accurate and compliant. In short, tracking keeps AP lean, reliable, and aligned with overall financial strategy.

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How Spendflo Helps With Accounts Payable Optimization

Spendflo helps businesses bring order and efficiency to accounts payable by centralizing vendor data, automating renewals, and tracking spend in one place. With greater visibility, finance teams can eliminate duplicate payments, negotiate better terms, and align AP with broader procurement goals. This not only saves money but also strengthens vendor trust, making AP a value driver instead of a cost center.

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Frequently Asked Questions on Accounts Payable Best Practices

What are the most effective ways to prevent duplicate payments?

Using automated invoice matching and maintaining a clean vendor database are the most reliable ways to prevent duplicates. Regular audits also help spot and resolve errors before they escalate.

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How can automation improve accounts payable efficiency?

Automation speeds up invoice approvals, reduces manual errors, and ensures compliance with payment policies. It also frees finance teams to focus on strategic tasks instead of repetitive data entry.

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What role do vendor relationships play in AP best practices?

Healthy vendor relationships ensure smoother negotiations, fewer disputes, and better payment terms. Transparent communication and consistent payments build long-term trust.

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How often should AP processes be reviewed for improvement?

AP processes should be reviewed at least annually, though quarterly reviews are ideal for identifying inefficiencies, updating controls, and ensuring tools and policies keep pace with business growth.

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