The AP department is responsible for managing and processing company expenses and ensuring payments are made accurately and on time to vendors and service providers. This includes verifying invoices, processing payments, and maintaining records of all transactions.

AP affects the balance sheet by increasing liabilities under current liabilities. Additionally, AP impacts the cash flow statement by showing cash outflows for payments made to creditors.

A three-way match is a process used to ensure that the purchase order, the receipt of goods/services, and the supplier invoice all match before processing payment. This helps avoid errors and fraud.

AP payments can be made using checks, electronic funds transfers (EFT), ACH transfers, credit cards, or direct bank transfers, depending on the agreement with the supplier.

Late payments can result in late fees, damage supplier relationships, and potentially harm a company’s credit score, making it more difficult to negotiate favorable payment terms in the future.