Accounts Payable Process: Steps, Challenges, and How to Improve It

The accounts payable process is the end-to-end workflow a company uses to receive, review, approve, and pay vendor bills for goods and services. It's the full-cycle sequence that turns an incoming invoice into a completed, recorded payment, running through six steps from receipt to reconciliation.

What is the accounts payable process?

The accounts payable process is the full-cycle sequence a company follows to turn a vendor bill into a paid, recorded transaction, receiving the invoice, verifying it, getting it approved, paying it, and recording the result.

The Association for Financial Professionals tracks this as one of the core processes inside the broader accounts payable function, alongside vendor management and reporting. That distinction matters: the process is the specific mechanical sequence an invoice moves through, while accounts payable management is the broader function that sequence sits inside, its goals, its people, its KPIs.

Someone asking about the process wants the sequence itself, not the department that runs it, whether that's a bookkeeper learning it for the first time or an AP manager documenting it for a new hire.
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What are the steps in the accounts payable process?

The accounts payable process runs through six steps: receiving the invoice, verifying and matching it, coding it, approving it, scheduling and executing payment, and recording and reconciling the result. An AP clerk or someone new to the role can use this same sequence as a flowchart for what actually happens to an invoice, in order.
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• Receive the invoice: the AP department collects incoming bills from suppliers through email, postal mail, or a digital vendor portal, and the invoice enters the system.
• Verify and match: staff perform a three-way match, comparing the vendor invoice, the original purchase order, and the receiving report to confirm quantities and prices actually agree. Our 3-way matching guide covers this step in full depth, including a worked example.
• Code the invoice: the bill gets assigned to the correct general ledger account or department budget, so it lands in the right place for reporting.
• Approve the invoice: the invoice goes through internal authorization, routing to whoever holds spending authority for that amount.
• Schedule and execute payment: payment goes out by check, wire transfer, ACH, or virtual card, based on agreed terms like Net-30.
• Record and reconcile: the transaction posts to the accounting system, reducing the outstanding liability and updating financial records. Our accounts payable reconciliation guide covers what happens when this step turns up a discrepancy.

Accounts payable process vs. accounts payable workflow vs. P2P process

These three terms overlap heavily but describe different scopes, and mixing them up leads to solving the wrong problem.

The AP process and AP workflow cover the same territory, receipt through payment, but at different levels of depth: the process is the sequence itself, the workflow is the mechanics of how each step actually routes and where it tends to break.

The P2P (procure-to-pay) process is broader still, it includes the upstream side, requisitioning and issuing the purchase order, that happens before AP ever sees an invoice. If you're asking "why did this invoice get stuck," you want the workflow. If you're asking "why did we buy this in the first place," you want the P2P process.
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Where does the accounts payable process typically break down?

The accounts payable process most commonly breaks down at manual data entry, invoice exceptions, and slow approvals, and the payment step itself is rarely where the real delay happens.
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• Manual data entry: retyping invoice details by hand is slow and the single biggest source of the errors that trigger a mismatch later in the process.
• Invoice exceptions and discrepancies: an invoice that doesn't cleanly match its purchase order stalls until someone investigates it.
• Lengthy approval cycles: an invoice waiting on one slow or unavailable approver holds up everything behind it.
• Poor visibility into payment status: not being able to answer "where is this invoice right now" without asking around is its own recurring failure point.
• Fraud risk: a process without real controls is exposed to duplicate payments and fraudulent invoices slipping through unnoticed.

How do you build fraud prevention and compliance into the accounts payable process?

Fraud prevention gets built into the process through segregation of duties and the matching step itself, not bolted on afterward as a separate check.

No single person should be able to both originate a payment and approve it, that structural separation is what actually prevents one person from committing fraud alone. The three-way match doubles as a control for the same reason, an invoice that doesn't match its purchase order and receiving report gets flagged before payment goes out, not after.

For the fuller framework these controls sit inside, including how requirements differ for SOX-compliant or pre-IPO companies, see our guide to accounts payable internal controls.
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How do you improve the accounts payable process?

Improving the process means fixing the specific breakdown points above, manual entry, exceptions, and slow approvals, rather than making general efficiency claims.

The highest-leverage fixes are the ones already named: replacing manual data entry with automated capture, giving exceptions a clear resolution path instead of letting them sit, and setting approval tiers that match actual risk instead of routing every invoice the same way.

Going paperless helps too, though it solves a narrower problem than most improvement checklists imply, our accounts payable workflow guide linked above covers exactly what paperless does and doesn't fix on its own. For the complete set of practices beyond just these process-level fixes, cross-training, vendor consolidation, payment-term tracking, see our guide to accounts payable best practices.
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How do you automate the accounts payable process?

Automation removes manual work from the process by using OCR and AI to capture invoice data, running matching automatically, and routing approvals by pre-set rules instead of a person deciding where each invoice goes next.

Not every company automates every step at once, most start with data capture and matching, since those are the steps manual work slows down the most, and add automated approval routing once that's working. For the full breakdown of what to automate first and what it actually costs, see our accounts payable automation guide.

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How Flo supports the accounts payable process

Flo, Spendflo's AI agent, runs all six steps of the accounts payable process: capturing invoices with OCR and AI, running the three-way match automatically, coding to the right GL account, routing approvals by the rules a company already uses, and syncing payment and reconciliation back to the accounting system.

Because every match, approval, and payment is logged automatically, the fraud-prevention and audit-trail requirements covered above are built into the process by default, not a separate step someone has to remember. Learn more on our accounts payable page.
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Frequently asked questions about the accounts payable process

1. What are the 6 steps in the accounts payable process?

Receiving the invoice, verifying and matching it, coding it to the right GL account, approving it, scheduling and executing payment, and recording and reconciling the result. Some breakdowns split these further, ours reflects the six practical stages most companies actually follow.
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2. What is the difference between the accounts payable process and accounts payable workflow?

The process is the sequence of steps itself. The workflow is the mechanics of how each step routes, who approves what, and where things typically get stuck. They cover the same ground at different levels of depth.
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3. What's the difference between the AP process and the P2P process?

The P2P (procure-to-pay) process includes the upstream side, requisitioning and issuing the purchase order, that happens before AP ever sees an invoice. The AP process is the downstream half, starting once the invoice actually arrives.
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4. Can the accounts payable process be outsourced?

Yes, either to a BPO provider or by centralizing it into an internal shared services team. Approval authority and final payment sign-off typically stay in-house even when the rest of the process is handed off.
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5. What causes most accounts payable process delays?

Manual data entry, invoice exceptions that don't match a purchase order, and slow approvals, not the payment step itself, which is usually the fastest part once everything before it has cleared.

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6. Is three-way matching part of the accounts payable process?

Yes, it's the verification step: comparing the vendor invoice, the purchase order, and the receiving report to confirm quantities and prices agree before the invoice moves forward.
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7. How is fraud prevented in the accounts payable process?

Mainly through segregation of duties, no one person originates and approves the same payment, and through the matching step itself, which flags a mismatched invoice before payment goes out rather than after.