Accounts payable process flowchart (full AP cycle)
Accounts payable process flowchart for the whole AP cycle: invoice intake, supplier master data, duplicate and PO checks, payment runs and month-end accruals.
How it works
List every channel an invoice can arrive on
Write down all of them: the shared mailbox, the supplier portal, EDI, post, and invoices sent straight to a budget holder or a site. Any route that does not feed the intake step also skips the duplicate check, so either connect it or close it. Note which channels are automated and which need a person, because that is where the backlog forms.
Fix the supplier master data rule
State who may create or amend a supplier record, who verifies a bank detail change and how. Call the supplier on a number already held in the master file, never one taken from the invoice or the request, and keep the person who keys the change separate from the person who approves it. Record who verified, when and against which contact.
Set the matching tolerance and the non-PO route
Put your real price and quantity tolerance on the "PO, receipt and invoice agree?" decision, and state which spend requires a purchase order. Then decide what happens to a non-PO invoice that should have had one, so it is a documented exception rather than something the budget holder quietly approves.
Give the exception queue reason codes and an age
Replace the single query step with your own reason codes, for example price variance, no goods receipt, no PO, disputed delivery, or missing supplier details. Give each code an owner and agree a chase and escalation point in days. A queue without owners and ages is where invoices go to be forgotten and where period-end surprises come from.
Define the payment calendar and who approves the run
Set how often payment runs happen, how the proposal is selected (due date, payment terms, settlement discounts about to lapse) and what is excluded. Then name the approver of the proposal and the person who releases it at the bank, and keep those roles apart from the person who prepared it and from anyone who can amend supplier bank details.
Agree what is accrued at period end
Decide what the financial controller accrues for: goods and services received but not yet invoiced, plus everything still open in the exception queue. Agree who supplies that list, when in the close timetable it is produced and how the accrual is reversed in the next period, so the queue is reflected in the accounts rather than hidden in it.
Walk the map through and keep one approved version
Review the chart with an AP clerk, a budget holder, the controller and treasury, and correct it to what they actually do rather than what the policy says. Then keep the agreed version under version control and link it from your AP policy, so people work from the current diagram instead of a screenshot in an old training deck.
Frequently asked questions
What are the steps in the accounts payable process?
A complete cycle runs: receive the invoice on any intake channel and capture it into the AP system; confirm the supplier exists on the approved master file and verify any new or changed bank details; check for duplicates; determine whether a purchase order is referenced; match PO invoices against the order and the goods receipt, or send non-PO invoices to the budget holder for coding and approval; route variances and disputes into an exception queue for resolution with the supplier; post approved invoices to the ledger; prepare a payment proposal; obtain approval of the payment run; execute the payment and send remittance advice; reconcile supplier statements; and accrue for invoices not yet processed at period end.
What is the difference between the accounts payable process and invoice approval?
Invoice approval is one stage inside accounts payable. It covers a single document from receipt to being cleared for payment: capture, duplicate check, matching or coding, and approval by the right person for the value. The accounts payable process is the function around that stage. It also covers keeping the supplier master file trustworthy, managing the exception queue as a backlog with owners and ageing, grouping approved invoices into a payment proposal, getting the run approved and executed, reconciling supplier statements, and accruing for what has not been processed. If you only need the approval path in detail, use an invoice approval flowchart; if you need to show how the whole function runs and where cash actually leaves, use this one.
How should accounts payable handle a change of supplier bank details?
Treat it as a control step, not an administrative update. Verify the request by calling the supplier on a number already held in your master file, never a number given in the request itself, and speak to a known contact rather than whoever sent the email. Keep the person who keys the change separate from the person who approves it, record who verified it and against which contact, and hold payments to that supplier until the change is confirmed. Requests to redirect payments are a recurring fraud pattern, and they typically arrive as a plausible email from a real supplier's address or a close imitation of it, which is why the verification has to run outside the channel the request came in on.
Who should approve a payment run?
Someone other than the person who prepared it, and someone other than the person who can amend supplier bank details. In most organisations the AP clerk builds the payment proposal, a financial controller or finance director approves it against the delegation of authority, and treasury releases the file at the bank, often under dual control with a second bank authoriser. The approver needs to see the total per bank account and currency, the exclusions and anything unusual such as a new supplier or a first payment, rather than just a payment count. Keeping those three roles apart is the segregation of duties an auditor will look for when walking the payment cycle.
Why does accounts payable accrue for unprocessed invoices at month end?
Because accrual accounting recognises an expense in the period the goods or services were received, not the period the invoice happened to be processed. At close there are always two populations that would otherwise be missed: items received but not yet invoiced, and invoices already in the building but still sitting in the exception queue or awaiting approval. The controller accrues for both so the period's costs and liabilities are complete, and reverses the accrual when the invoices post. This is why the exception queue matters beyond AP: an unowned, unaged queue makes the accrual an estimate rather than a list.