What is the End-to-End Accounts Payable Process?

Every accounts payable (AP) process consists of at least four steps–invoice capture, invoice approval, payment authorization, and payment execution. Unfortunately, many organizations do not have an efficient AP process in place, which can result in late or missed payments, mismanaged cash flow, and weakened supplier relationships.

In this blog, we review the end-to-end process of accounts payable and discuss how an automated AP process can streamline invoice-to-pay operations.

What is the Accounts Payable Process? 5 Steps

The first step toward managing accounts payable more efficiently is gaining an understanding of the end-to-end AP process. The accounts payable process is responsible for paying suppliers and vendors for goods and services purchased by an organization. This involves handling incoming bills and invoices and paying them on time and via the right payment method to ensure a positive relationship with suppliers.

As discussed, every accounts payable process can be broken down into four primary steps: invoice capture, invoice approval, payment authorization, and payment execution. We’ve added one more step to this process–analytics and optimization–with the goal of overall process improvement. Here we examine each of these five steps, describing the challenges posed by manual invoice management and the benefits realized by implementing automation.

Step 1: Invoice Capture

The invoice capture process often begins with creating a purchase order (PO) that is then submitted to a vendor. This may be when the transaction record is first created, or in the absence of a PO, the record is created when the AP department receives the invoice.

The vendor typically submits an invoice after delivery of the goods or services. Invoices may arrive in a number of ways, including email, regular mail, fax, or through a website portal. Once it arrives, the invoice is coded into the accounting system.

Manual data entry during this step leaves room for error and can also slow down the AP process–particularly if there are issues reconciling invoices with purchase orders. But if physical invoices are recorded digitally into an enterprise resource planning (ERP) system via an AP automation solution, no data entry is required. Details such as line items, amounts, and coding are instead automatically extracted using optical recognition technology and synced back to the ERP. These systems can also identify and resolve issues with PO matching.

Step 2: Invoice Approval

Next, the invoice must be matched against the PO. If it matches, it goes straight for payment. If it doesn’t, it goes through an exception handling workflow where discrepancies are resolved prior to payment authorization. If the business is not using purchase orders, the invoice follows a typical routing workflow. In this scenario, the invoice needs to make it to the individual or business unit that received the product or service. The role of that individual or unit is to verify receipt of the product or service and determine that a payment date can be set.

Routing the invoice to the proper individual often occurs via email. However, it may be unclear to the AP department who the proper person is to sign off on it, which means many invoices travel through multiple people before landing in front of the right set of eyes. This can cause significant delays.

Instead, by automating the invoice approval workflow, invoice approval requests make it to the right people much faster. Not only that, but automated reminders eliminate the need to chase down forgotten approvals. Simply send approval requests with the invoice attached as a reference to approvers who are predetermined based on vendor and invoice amounts or other routing logic based on existing policies.

Step 3: Payment Authorization

After invoice approval, the next step is payment authorization. For this to happen, the invoice needs to make its way to the finance team and the individual responsible for authorizing payment. Again, when handled manually, this can mean an email or physical documentation gets passed around for a while before finding its way to the CFO or controller for review and authorization.

With automation, you can easily queue up a payment batch and then submit it to the right person for authorization and further streamline the process by enabling approval and payment scheduling based on current cash management policies. This can even be set up to work from any device, which is convenient if the authorizer is traveling or on vacation with limited email access. Moreover, built-in internal controls, such as segregation of duties and dual approvals above certain thresholds, help prevent fraud.

Step 4: Payment Execution

Finally, after the individual or unit who received services approves the invoice, and the finance department authorizes payment, that payment can actually be made. Depending on the AP department’s processes and the vendor’s preference, payment may be sent via check, ACH, virtual card, or another method.

Manual handling of payment execution often leads to missed due dates–particularly if this process involves paper checks or follows manual handling of the capture, approval, and authorization steps as well. This can lead to unhappy vendors, extra work if the vendors call with follow-up questions, and can cause the company to lose out on the early-pay discounts many vendors offer.

In contrast, automation makes instant payment execution possible. Authorized payments are sent out immediately or on a scheduled date, and two-way sync closes invoices in the ERP system. MineralTree’s AP automation solution even pays each supplier using their preferred payment method and continuously optimizes your payment mix by leveraging faster, cost-effective ePayments, enrolling new and existing suppliers, and managing day-to-day supplier inquiries.

Step 5: Analytics and Optimization

This fifth step involves taking a closer look at internal processes to understand what’s working and what isn’t and weighing vendor relationship management with the organization’s own fiscal priorities. Ultimately, you’re looking for ways to streamline the end-to-end AP process, reduce costs, strengthen supplier relationships, and better manage your cash flow.

Manual handling of the four steps described above increases the chance of errors, slows down processes, and limits visibility and control. The right AP automation solution, however, not only minimizes those issues but makes it possible to harness the data generated by digitizing your AP process to instantly analyze performance, without manual manipulation. This, in turn, allows organizations to make data-driven decisions in alignment with strategic business objectives.

Automation allows organizations to replace manual, static reporting with real-time dashboards that visualize metrics and KPIs such as invoice aging, payment mix, and rebates––across operating units, locations, and suppliers. The leading AP automation solutions also make it easy to manage and monitor invoice processes and identify any invoices that need special attention.

How to Streamline the Accounts Payable Process with AP Automation

To summarize, manual AP processes are expensive, time-consuming, prone to fraud, and potentially damaging to supplier relationships. In addition, inefficiencies and continued reliance on paper checks lead organizations to miss out on early-pay discounts, rebates, and other savings opportunities.

MineralTree’s TotalAP solution automates your end-to-end AP process, from invoice capture through payment, helping you gain efficiency at each step while supporting specific user needs from AP staff to the CFO.

TotalAP eliminates manual data entry by automatically capturing invoice details, streamlines invoice approval and payment authorization by routing invoices quickly to the right people, and continuously optimizes payments. AP analysis features also allow organizations to make better decisions faster.

The benefits of TotalAP include:

  • Increased efficiency
  • Simplified reconciliation
  • Improved supplier relationships
  • Fraud and risk mitigation
  • Improved visibility and control
  • Maximized cost savings

Learn how MineralTree can help your organization automate and streamline the entire accounts payable process today.


We're transforming accounting by automating Accounts Payable and B2B Payments for mid-sized companies. Our award-winning solution has helped over one thousand businesses transform accounts payable from a source of inefficiency and fraud risk to a secure and strategic profit center that provides visibility into key cost drivers.