step-by-step invoice processing flow in Accounts Payable

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We are Sharing With You step-by-step invoice processing flow in Accounts Payable . So kindly Check Out our http://www.castudynotes.com website and ALL the Best for Your upcoming Jobs.

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Below is a detailed step-by-step invoice processing flow in Accounts Payable:

Step 1: Invoice Receipt
Description: Vendor sends the invoice via email, physical mail, EDI (Electronic Data Interchange), or a supplier portal.
Responsibility: Accounts Payable (AP) team or automated system captures the invoice.

Step 2: Invoice Validation
Description: Verify the accuracy and completeness of the invoice, including:
-Supplier name and address
-Invoice date and number
-Purchase Order (PO) reference
-Itemized details (quantity, unit price, total amount)
-Tax details (if applicable)
Responsibility: AP team or OCR (Optical Character Recognition) tool validates against PO or contract.

Step 3: Purchase Order (PO) Matching
Description: Perform a 3-way match between:
-Purchase Order
-Goods Receipt (or service confirmation)
-Invoice
Objective: Ensure all values match for accurate processing.

Step 4: Exception Handling (if discrepancies exist)
Description: Resolve mismatches or errors in any of the following:
-Incorrect pricing
-Missing PO numbers
-Discrepancy in received goods/services and invoice
Responsibility: Collaborate with vendors, procurement, or receiving departments to fix issues.

Step 5: Invoice Coding (for Non-PO Invoices)
Description: Assign appropriate cost centers, general ledger (GL) accounts, and tax codes for invoices without a PO.

Step 6: Approval Workflow
Description: Route invoices for approval based on company hierarchy or system-configured workflows. Approvers validate spending and compliance with policies.

Step 7: Invoice Entry in ERP System
Description: Once approved, input validated invoices into the Enterprise Resource Planning (ERP) system for record-keeping.

Step 8: Payment Scheduling
Description: Schedule payment as per the agreed-upon payment terms (e.g., Net 30, Net 45 and Net 60 etc…).

Step 9: Payment Processing
Description: Execute payments via:
-Bank transfers
-Checks
-Electronic funds transfer (EFT)
-Payment platforms
Responsibility: Treasury or AP team processes payments.

Step 10: Reconciliation
Description: Reconcile payments with bank statements and vendor accounts to confirm successful payment.

Step 11: Record Retention
Description: Maintain records of invoices, payments, and approvals for audits and legal compliance.

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