It manages, verifies, and documents all liabilities to third parties – that is, to external service providers and suppliers. In doing so, it operates efficiently, transparently, and in full compliance with legal requirements.
What Is Accounts Payable?
As a subfield of financial accounting, accounts payable focuses on managing liabilities to so-called creditors. These include all external business partners who invoice for services or products.
The main task is to record, verify, and release incoming invoices for payment on time. The goal is to:
- safeguard the company’s liquidity,
- make optimal use of cash discounts and payment terms,
- ensure transparent and traceable invoice processing.
In short: Accounts payable ensures that the company pays its invoices accurately and on time.
Areas of Application & Responsibilities of Accounts Payable
Accounts payable is essential wherever external services are procured and need to be paid for. Many internal departments rely on it – from procurement and facility management to marketing and IT.
The core responsibilities of accounts payable lie in the timely and internally transparent handling of all accounting processes related to vendor invoices. This starts with the receipt of the invoice, continues through approval and verification processes, and ends with digital archiving.
Maintaining Vendor Master Data
A functioning accounts payable system relies on up-to-date and well-maintained vendor master data. These records contain all relevant information about suppliers and service providers – from addresses to banking details.
Vendor master data therefore forms the foundation for all downstream processes related to vendor invoices.
Why Is This Important?
Because incorrect or outdated master data can lead to erroneous payments, duplicate vendor records, or unnecessary follow-up inquiries. A clean data foundation saves time, money, and frustration.
Typical Master Data Fields Include:
- Company name and address
- Tax number and VAT ID
- Bank details including IBAN and BIC
- Payment terms (e.g., cash discount, due date)
- Contact person for inquiries or clarification
- Supplier classification (e.g., strategic, one-time, blocked)
Maintenance is usually carried out in an ERP system (e.g., SAP, Microsoft Dynamics 365 Business Central). Many companies rely on centralized master data managers or automated validation mechanisms to avoid duplicates and ensure data quality.
A Practical Example:
A new event technology service provider is contracted. To ensure proper invoice processing later on, the vendor’s master data must be completely and accurately entered into the system – including payment terms and a contact person. Only then can accounts payable operate efficiently.
Clean master data enables a wide range of automated invoice processes – such as straight-through processing (also known as “automated accounts payable processing”).
Capturing and Managing Vendor Invoices
The receipt of a vendor invoice marks the starting point of the accounts payable process. Whether received by mail, as a PDF attachment via email, or as an e-invoice, every incoming invoice must be systematically captured and accurately assigned.
What Does This Mean in Practice?
Accounts payable first checks whether the invoice is complete and complies with legal requirements (e.g., according to §14 of the German VAT Act). It is then entered into the ERP system – including vendor assignment, company code, cost center, and general ledger account.
Typical Steps in Invoice Entry:
- Document identification: Is it an invoice, credit note, or reminder?
- Vendor assignment: Does the invoice match the correct supplier?
- Account assignment: Which cost center or project is affected?
- Entry date and due date: Relevant for future payment planning.
Modern systems like easy invoice offer features for automated document capture. OCR technology (Optical Character Recognition) extracts invoice content and, in combination with invoice processing systems, suggests account assignments – saving time and reducing errors.
Review and Payment Processing of Vendor Invoices
After entry, the review follows: Do the amount, quantity, and service match the purchase order and delivery note?
The Three-Way Match – Linchpin in Accounts Payable
In invoice verification, the so-called 3-way match is commonly used: The invoice is matched against the purchase order and the delivery note. If quantity, price, and service match, the invoice can be approved for payment.
Accounts payable reviews formal and factual criteria and obtains approval from specialist departments if needed. Digital workflows ensure clear responsibilities and fast processing times.
- Once the invoice is reviewed and approved, payment is initiated – either manually or automatically.
- Cash discount periods, due dates, and liquidity requirements are taken into account.
The Goal: Accurate, on-time payments and a smooth end-to-end invoice process.
Archiving Vendor Invoices
Finally, vendor invoices must be archived properly and in an audit-proof manner. The legal basis is the GoBD, which defines strict requirements for immutability, completeness, and retrievability. Archiving is done digitally – usually directly from the invoice processing system or via a connected document management system (DMS).
Archiving is done digitally – usually directly from the invoice processing system or via a connected document management system (DMS). The legal retention period in Germany is eight years. Structured archiving protects accounts payable from legal risks, simplifies audits, and ensures traceability of all payment transactions.