Accounts Payable: Managing What You Owe
Accounts Payable (AP) is the process of paying vendor invoices accurately and on time. Good AP protects cash, captures discounts, and keeps vendors happy.
Learning objectives
- Explain the three-way match.
- Age payables and prioritize payments.
Step-by-step
1. Invoice intake
Every invoice needs a PO number, invoice number, date, vendor, and amount. Enter it into the AP system and code it to the correct expense account.
2. Three-way match
Compare the invoice to the purchase order and the receiving report. All three must agree before payment. Mismatches go back to purchasing for resolution.
3. Aging report
Group payables by age: current, 1–30, 31–60, 61–90, 90+. Focus on current-due to protect terms and the oldest to avoid vendor freezes.
4. Payment run
Weekly batch: pull approved invoices due within 10 days, capture any 2/10 net 30 discounts, and cut checks or ACH.
Key takeaways
- Explain the three-way match.
- Age payables and prioritize payments.
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