Accounts payable procedures involve issuing a purchase order, reconciling it with a receiving order when goods arrive, performing a three-way match with those two documents and the invoice, and making the payment, according to Accounting Coach. The goal is to pay only those invoices that are legitimate and accurate.
Accounts payable are the liabilities a company owes to the vendors providing it with goods or services, explains Accounting Coach. Many companies order the goods or services on credit, or account, and pay after receiving them. Accounts payable is also the term for the person or department that manages these orders and pays the invoices.
A company needs to have internal controls for accounts payable to prevent payment of fraudulent or inaccurate invoices, to prevent duplicate payments, and to reduce risk of theft, states Accounting Coach. One method of internal control is to have a separate person perform each step in the accounts payable process. Another method is to have the person that pays the invoices stamp or perforate them – and attach a vendor voucher, if there is one – to differentiate paid invoices from unpaid invoices. Some vendors send a statement and an invoice; to avoid confusion and duplicate payments, many companies have a policy to only pay invoices, not statements.