Accounts payable

Key takeaways

Short-term liability

AP represents unpaid bills or invoices for goods and services received.

Critical for cash flow

Proper AP management ensures liquidity while maintaining vendor relationships.

Process-driven

The AP cycle involves invoice receipt, verification, approval, and payment.

Automation benefits

Streamlining AP with technology reduces errors and enhances efficiency.

The accounts payable process

Invoice receipt

Vendors send invoices after delivering goods or services.

Matching and verification

Invoices are cross-checked with purchase orders and delivery receipts to ensure accuracy.

Approval workflow

Authorized personnel review and approve invoices for payment.

Payment execution

Payments are processed via checks, bank transfers, or automated systems

Real-world examples

Case study: Blue Star India’s accounts payable transformation

Blue Star Limited, one of India’s leading air conditioning and commercial refrigeration companies, faced inefficiencies in its accounts payable process due to manual handling of invoices. The company implemented Datamatics' TruBot solution to automate its AP operations. As a result:

Invoice processing time improved by 33%.

Errors caused by manual data entry were significantly reduced.

Employees could focus on strategic tasks instead of administrative work.

Frequently asked questions about accounts payable?

1) How does accounts payable differ from accounts receivable?

Accounts payable represents money a company owes to suppliers, while accounts receivable is money owed to the company by customers.

2) What happens if accounts payable increases?

An increase in AP may indicate that the company is purchasing more goods or services on credit or delaying payments to conserve cash flow.

3) Why is automation important in accounts payable?

Automation reduces processing times, minimizes errors, ensures compliance with payment terms, and provides better visibility into financial obligations.