Optimizing your accounts payable process: A procurement leader’s guide

In today’s complex business environment, the accounts payable (AP) process is far more than just paying bills. It’s also a critical component of your procurement strategy that directly impacts cash flow, supplier relationships, and your organization’s bottom line. However, when optimized properly, your accounts payable (AP) process becomes a strategic asset rather than an administrative burden.

The challenge? Many organizations still treat procurement and payment as two separate functions. That disconnect leads to inefficiencies, missed savings, and compliance risks. But here’s the good news: It doesn’t have to be that way.

By integrating AP and procurement into one smooth, connected workflow, you can transform your purchase-to-pay cycle. Below, discover how to tackle common AP hurdles, streamline your processes, and turn this administrative function into a strategic advantage.

The accounts payable process: Why it matters

The AP process is the behind-the-scenes system that ensures you pay your vendors correctly and on time. While the exact steps may vary depending on your company’s structure, the core process typically follows a consistent flow.

The full AP cycle, step-by-step

Here’s a look at a typical eight-step AP cycle:

1. Purchase requisition and approval: Someone in your organization identifies a need and submits a request. It then routes through your approval hierarchy.
2. Purchase order creation: After approval, a team member issues a formal PO to the supplier, outlining the order details and agreed-upon terms.
3. Goods receipt: When the items or services arrive, your team confirms that everything matches the PO and then creates the goods receipt.
4. Invoice reception: The supplier sends an invoice, which enters your AP system manually or via electronic delivery.
5. Invoice matching and verification: Your team compares the PO, goods receipt, and invoice to make sure every asset has the same information.
6. Invoice approval: The invoice makes its way through your approval workflow, where you code it to the correct accounts.
7. Payment processing: Once you approve the invoice, your system schedules payment using your preferred method (ACH, check, or virtual card).
8. Record keeping and accounting: You record all transactions in your general ledger (GL) and maintain documentation for audits.

Understanding upstream vs. downstream workflows

There are two parts to every AP process: upstream and downstream workflows.
 

• Upstream includes everything before the invoice arrives, such as creating purchase requests and POs and receiving goods or services. These steps usually fall under procurement.
• Downstream kicks in after you receive the invoice and includes verification, approval, payment, and recordkeeping. This is typically finance’s territory.
   

When these two halves work in sync, you get a seamless, efficient purchase-to-pay cycle. When they don’t, you get delays, errors, and unnecessary costs.

Why you need a strong accounts payable process

When done right, your AP process becomes a hidden engine of efficiency and savings. Here’s how it can make a real impact:

• Better cash flow management: If you know exactly when money is going out, you can plan wisely, avoid surprises, and take advantage of early payment discounts
• Stronger supplier relationships: Paying on time builds trust and can open doors to more favorable terms, faster issue resolution, and priority treatment
• Increased cost savings: Keeping track of your AP process prevents overpayments and late fees while capturing every available discount
• Stronger business intelligence: AP data can help you spot trends, evaluate supplier performance, and make smarter procurement decisions
• Higher team productivity: Automation and streamlined workflows free your team to focus on strategic work instead of chasing down approvals
• Improved compliance and fraud prevention: Clear policies and controls reduce risk and align your organization with regulation
• Easier audits: With well-documented digital trails, audits become less disruptive and far less stressful
   

Having a well-documented AP process in place will also help your team protect themselves against potential roadblocks.

Common AP process challenges

Even the most well-intentioned teams run into AP roadblocks. The key is knowing what to look for and how to fix them.

Here are a few common challenges you might encounter along the way:

1. Manual data entry and paper-based processes

Manual invoice processing is time-consuming and error-prone and creates bottlenecks as paper invoices move through approval workflows.

Solution: Start by digitizing invoices—even basic scan-and-store systems are more efficient than paper. Then, move toward full automation with optical character recognition (OCR) technology and integrated systems that work with your financial systems to eliminate double entry.

2. Invoice exceptions and discrepancies

When invoices don’t match purchase orders or receiving documents, resolving delayed payments can take more time than necessary.

Solution: Use a procurement tool that uses three-way match to enforce PO number, invoice, and goods accuracy up front and sets up clear exception-handling workflows with defined escalation paths. You should also track common exception causes to address recurring issues with specific supplier invoices or internal departments.

3. Lengthy approval cycles

Invoices can get stuck waiting for approval, especially if managers are traveling or juggling priorities.

Solution: Consider implementing approval thresholds that allow automatic processing of low-value, low-risk invoices to reduce processing time. Additionally, enable mobile access for approvals on the go, and use automation to send reminders and escalate overdue items. Finally, collect critical business order information from buyers during checkout to streamline financial reconciliation and approvals on the backend.

4. Poor visibility into payment status

Without centralized tracking, your invoice’s status is a guessing game.

Solution: A real-time AP dashboard makes it easy to track invoices and payments. Some systems let suppliers check status themselves, which reduces inquiry calls. Use this visibility to optimize payment timing based on cash position and available discounts.

5. Risk of fraud

Manual processes with limited controls create opportunities for fraud schemes.

Solution: Delineate responsibilities to ensure that no single person can onboard vendors, enter invoices, and authorize payments. Then, continuously monitor for suspicious patterns with automation solutions and run regular vendor audits to detect unauthorized changes.

What is a three-way match?

Three-way matching is the gold standard verification process in accounts payable that compares three critical documents to ensure accuracy and prevent data entry errors or fraud before you authorize a payment. These documents are:

1. The purchase order 

2. The receiving report

3. The vendor invoice 

Only when all three documents align, confirming you received what you ordered and your bill is correct, should you approve the payment. This control mechanism ensures you only pay for authorized purchases you receive at the agreed-upon price.

Think of a three-way match as your financial safety net between invoice receipt and payment approval. This verification step is especially valuable when your business handles high transaction volumes or purchases complex items where discrepancies frequently arise.

While you'll likely find a three-way match to be the best approach, especially for larger processes, you may want to adjust the match type in different situations:

• Two-way match: This streamlined approach compares your purchase order against the invoice. It’s perfect for services or recurring payments without physical deliverables.

• Four-way match: For technical equipment or items that require quality inspection, this enhanced method adds inspection documentation to your verification process.
   

Pro tip: Three-way matching can be an automatic process with Amazon Business. Our system links your POs, receipts, and invoices in one place and flags only the issues that need your attention.

Building compliance and fraud prevention into your AP process

Your accounts payable department manages significant financial resources, which makes it both a prime target for fraud and subject to rigorous contract and process compliance requirements. 

But rather than tacking on controls as an afterthought, you can bake them right into your AP workflow. Here’s how:

• Protect your vendor master file with formal verification processes for new vendors and changes to existing ones. You can also require verification steps for new vendors and account changes, especially bank details.

• Deploy intelligent monitoring that automatically flags suspicious patterns in your invoice flow. Reduce manual effort by leveraging technology that can instantly identify concerning indicators like unusual payment patterns or potential conflicts of interest.

• Maintain comprehensive documentation with clear audit trails—not just for regulatory compliance but also as a powerful deterrent for fraud by enabling the detection of suspicious or unauthorized actions. Including a timestamp and an approver’s name with every action discourages bad behavior before it starts.

• Stay vigilant through regular reviews since fraud tactics constantly evolve. Performing regular reviews, conducting surprise audits, and keeping up with fraud trends will help you catch vulnerabilities early.
   

By integrating these focused protection measures directly into your daily AP workflows, you’ll create a more secure process that can help safeguard your organization without creating additional work for your team.

Enhancing efficiency with AP automation software

If you’re looking for one upgrade that delivers measurable results quickly, AP automation is a great solution. According to a recent study, 93% of CFOs say that AP automation significantly reduced invoice tracking delays for their organizations.

Here's how automation can transform your accounts payable function:

End-to-end integration 

Modern AP automation connects the entire purchase-to-pay cycle with:

• Seamless flow from purchase requisition to payment

• Elimination of manual handoffs between departments

• Real-time visibility throughout the process

• Consistent application of policies and controls

Intelligent document processing 

Advanced technologies automatically extract and validate invoice data. Here are some examples of these technologies:

• OCR technology captures data from paper and digital invoices

• Machine learning improves accuracy over time

• Automated validation confirms purchase orders and receipts

• Exception highlighting enables focused human review

Workflow automation 

Configurable rules guide invoices through your approval processes with:

• Automatic routing based on amount, department, or GL code

• Parallel processing for multi-level approvals

• Escalation paths for delayed approvals

• Mobile access to support approvals anywhere, anytime

Payment optimization 

Strategic payment execution maximizes these financial benefits:

• Scheduled payments to optimize cash flow

• Automated capture of early payment discounts

• Diverse payment methods, including virtual cards

• Supplier payment preference management

Advanced analytics and reporting 

Comprehensive data empowers strategic decision-making in these ways:

• Spend analysis by category, department, or supplier

• Process metrics like cycle time and exception rates

• Cash flow forecasting based on pending approvals

• Supplier performance tracking

How Amazon Business can help you streamline your AP process

Bringing procurement and payment together can be key to unlocking real financial impact. But to make that happen, you’ll need the right tools in your toolbox.

That’s where Amazon Business comes in. Whether you’re looking to simplify invoice processing, gain more control over cash flow, or surface new savings opportunities, our solutions are built to flex around your existing workflows. From digital invoicing that cuts out manual entry to consolidated purchasing that helps you spot spend patterns, we make it easier to run a smarter AP process.

Need more payment flexibility? Options like Pay by Invoice with extended terms can help you stay in good standing with suppliers while giving you more room to manage your budget.

The best part? You can get started in minutes. Create a free Amazon Business account today and start accessing tools that integrate seamlessly with your current systems—no rip-and-replace needed. Or if you’re ready to dive deeper, get in touch with an Amazon Business expert. We’ll review your AP process, highlight quick wins, and show you exactly where to streamline and save.