Accounts payable workflow: A step-by-step guide

Accounts payable might not be the flashiest part of finance, but it’s one of the most important ones. When AP workflows work well, invoices get paid on time, suppliers stay happy and finance teams stay in control. When they don’t, things quickly unravel – late payments, errors, cash flow surprises and hours lost to manual admin.

We’ll break down what an accounts payable workflow really is, how it typically works step by step and why automation is becoming essential for modern finance teams looking to scale without adding complexity.

Key takeaways:

• An AP workflow is the roadmap for paying suppliers. It covers everything from invoice receipt and approvals to payment, reporting and compliance.
• Manual AP processes don’t scale well. As invoice volumes grow, manual workflows become slower, riskier and harder to control.
• Finance teams are turning to AP automation – and for good reason. Automation improves accuracy, visibility and control, and standardised workflows, real-time insights and built-in approvals help finance teams stay on top of spend.
• Better AP workflows support better cash flow decisions. Clear payment schedules and up-to-date data make it easier to plan ahead and avoid surprises.

What is an accounts payable workflow?

An accounts payable (AP) workflow is the end-to-end process a company follows for managing supplier invoices. Think of it as the roadmap for paying your business’ bills; it covers everything from checking invoices to approving payments and keeping track of what’s been paid.

In simple terms, accounts payable is all about managing the short-term debts your company owes to vendors. The ‘workflow’ part is just the series of steps your team takes to make sure those payments happen smoothly, accurately and on time.

A well-designed AP workflow helps you avoid late fees, prevent errors and keep your internal controls tight – so your finance team can focus on more strategic work instead of chasing invoices.

Step by step: What does an accounts payable workflow look like?

Whilst every business runs AP a little differently, most accounts payable workflows follow a similar set of essential steps:

1. Purchase requisition

It all starts when someone in the business realises they need goods or services. They submit a purchase requisition outlining what’s needed and why. This request is reviewed and approved by the appropriate person, helping ensure spending stays within budget and policy.

2. Purchase order (PO) creation

Once the requisition is approved, a purchase order (PO) is created. The PO formalises the request, confirming details like pricing, quantities and delivery terms. After internal approval, the PO is sent to the vendor as an official order.

3. Receipt of goods or services

The vendor delivers the goods or completes the service. The receiving team checks that everything matches what was agreed in the PO – right items, right quantities, right conditions.

A goods received note or delivery receipt is usually created at this stage.

4. Invoice receipt

The vendor sends an invoice to the accounts payable team. When the invoice arrives, key data is captured and reviewed to flag potential duplicates, errors or signs of fraud before it moves any further.

5. Invoice processing and approval

Next comes invoice processing. The invoice details are entered into the accounting system and matched against the PO and delivery receipt (often called two- or three-way matching). If everything checks out, the invoice is approved for payment.

6. Payment processing

Approved invoices are scheduled for payment based on due dates and cash flow priorities.

Once authorised, the payment is made – typically via bank transfer, ACH or another electronic payment method.

7. Recording and reconciliation

After payment, the transaction is recorded in the accounting system and the AP ledger is updated. Regular reconciliation ensures AP records align with bank statements and the general ledger.

8. Reporting and analysis

AP data is then used to generate reports such as AP ageing, payment history and outstanding liabilities. These insights help finance teams monitor cash flow, spot inefficiencies and make better spending decisions.

9. Vendor communication

Clear, ongoing communication with vendors runs throughout the entire workflow. It helps resolve discrepancies quickly, manage payment expectations and maintain strong supplier relationships.

10. Record keeping and compliance

Finally, all relevant documents – POs, invoices, receipts and approvals – are securely stored for audits and future reference. This step supports compliance with internal policies, tax rules and financial reporting standards.

And that’s it. Pretty straightforward, right?

In practice, however, managing a manual accounts payable workflow is often more challenging than you might think. It can be time-consuming, error-prone and difficult to scale – especially as invoice volumes grow and teams become more distributed.

That’s where automation comes in. By digitising and streamlining key parts of the AP workflow, finance teams can reduce manual effort, improve visibility and keep better control over spend without slowing the business down.

Automation: Why streamlining your accounts payable workflow matters

More and more finance teams are turning to accounts payable automation – and for good reason. Automating your accounts payable workflow doesn’t just remove inefficiencies: it fundamentally changes how finance operates across the business.

If you haven’t already made the switch, now’s the time. Here are some of the key benefits of automating your AP workflow:

• Increased efficiency: By eliminating manual tasks and handovers, automation speeds up the entire AP process – from invoice capture to payment approval.
• Lower costs: Reducing manual data entry and rework helps cut operational costs. Faster processing also makes it easier to take advantage of early payment discounts.
• Greater accuracy: Automated workflows standardise invoice handling and reduce human error, minimising discrepancies and duplicate payments.
• Stronger control and compliance: Built-in approval flows and clear audit trails make it easier to stay compliant, enforce spend policies and track every transaction with confidence.
• Clear, real-time visibility: Up-to-date insight into invoice status, approvals and upcoming payments gives finance teams a single source of truth for spend and cash commitments.
• Better supplier relationships: Paying suppliers accurately and on time builds trust. Automation also helps resolve discrepancies faster, reducing friction and follow-up.
• Smarter cash flow management: With clearer payment schedules and real-time data, finance teams can plan ahead, prioritise payments and avoid last-minute surprises.

Automating your accounts payable workflow isn’t just about doing the same work faster. It’s about building a finance function that’s more transparent, scalable and in control, so teams can spend less time on admin and more time driving the business forward.

Final thoughts

A strong accounts payable workflow creates clarity, control and confidence across your finance function. When AP runs smoothly, finance teams spend less time fixing problems and more time supporting the wider business.

Whilst manual processes may work in the early days, they often struggle to keep up as companies grow. That’s why more finance teams are rethinking how their AP workflows operate and turning to automation to remove friction, improve visibility and stay in control of spend.

The result? A finance function that’s not just keeping the lights on, but actively helping the business move forward.