- Owner
- AP Manager
- Effective date
- September 15, 2026
- Review cycle
- Every 12 months
1.Purpose
To pay vendors accurately and on time while protecting the company from duplicate payments, fraud and errors through segregation of duties and consistent controls.
2.Scope
Applies to vendor master maintenance, matching, scheduling and releasing payments and reconciling the accounts payable subledger. Capturing, coding and routing incoming invoices for approval is covered by the separate invoice processing SOP.
Definitions
- Three-way match
- Comparing the invoice, purchase order and receiving report to confirm price, quantity and terms agree before payment.
- Payment run
- A scheduled batch of approved invoices selected and processed for payment on a given day.
- Remittance advice
- The notice sent to a vendor showing which invoices a payment covers.
3.Responsibilities
- AP Specialist
- Maintains vendor records, matches invoices to purchase orders and receipts, and schedules payments.
- AP Manager
- Builds and releases payment runs and manages vendor statement reconciliation and exceptions.
- Controller
- Approves payment runs and reviews the accounts payable subledger reconciliation.
- Department Manager
- Requests new vendors and resolves invoice discrepancies related to their purchases.
RACI matrix
| Activity | AP Specialist | AP Manager | Controller | Department Manager |
|---|---|---|---|---|
| Set up and verify a new vendor | R | A | I | C |
| Match invoice to purchase order and receipt | R/A | I | - | C |
| Build and approve the payment run | R | R | A | - |
| Release payments | - | R/A | I | - |
| Reconcile AP subledger to general ledger | R | A | I | - |
R = Responsible, A = Accountable, C = Consulted, I = Informed
4.Materials and PPE
Materials, tools and systems
- →Accounting system accounts payable module
- →Vendor master file
- →Tax form on file for each vendor
- →Purchase orders and receiving reports
- →Payment run report and approval log
- →Remittance advice template
- →Bank positive pay file
5.Procedure
- 5.1
Receive a new vendor request
Department ManagerThe department manager submits a new vendor request with the vendor's legal name, contact information and a completed tax form before any invoice from that vendor can be paid.
- 5.2
Set up the vendor master record
AP SpecialistThe AP specialist creates the vendor record in the accounting system using the submitted tax form and banking details, coding the default general ledger account and payment terms.
- 5.3
Independently verify vendor banking details
AP ManagerThe AP manager independently verifies any new or changed vendor banking details by calling the vendor's known contact number on file, not a number provided in the change request itself.
Checkpoint: Banking details are verified by someone other than the person who entered them, using an independently sourced contact.
Warning: An unexpected request to change vendor banking details is a common fraud pattern. Verify before paying.
- 5.4
Receive the coded, approved invoice
AP SpecialistThe AP specialist pulls the coded and approved invoice from the invoice processing queue once it has cleared the approval routing described in the invoice processing SOP.
- 5.5
Match the invoice to the purchase order and receipt
AP SpecialistThe AP specialist performs a three-way match, comparing the invoice to the purchase order and receiving report for price, quantity and terms before scheduling payment.
Checkpoint: Price, quantity and terms on the invoice agree with the purchase order and receiving report within policy tolerance.
- 5.6
Resolve match discrepancies
AP SpecialistWhen the invoice does not match the purchase order or receipt, the AP specialist contacts the requesting department manager to resolve the variance before payment is scheduled.
- 5.7
Schedule the invoice for payment
AP SpecialistThe AP specialist schedules the matched invoice for payment based on its due date and terms, flagging any invoice eligible for an early payment discount.
- 5.8
Build the payment run proposal
AP ManagerThe AP manager compiles invoices due for payment into a payment run proposal, grouping by payment method such as check, ACH or wire, and totals the run before approval.
- 5.9
Review and approve the payment run
ControllerThe controller reviews the payment run proposal for reasonableness and completeness and approves it, requiring a second approver for any payment above the company's approval threshold.
Checkpoint: Every payment run has documented approval before release, with a second approval on payments above the approval threshold.
- 5.10
Release the payments
AP ManagerThe AP manager releases the approved payments through the bank's payment platform, keeping payment release separate from the person who prepared the run or entered invoices.
Warning: The person who prepares the payment run should never also be the person who releases the funds.
- 5.11
Distribute remittance advice
AP SpecialistThe AP specialist sends remittance advice to each paid vendor listing the invoices covered by the payment and files the payment confirmation with the invoice records.
- 5.12
Manage stop payments and vendor statements
AP ManagerThe AP manager processes any stop payment or void request, and periodically reconciles vendor statements to the vendor's open balance in the accounting system to catch missing or duplicate invoices.
- 5.13
Reconcile AP subledger to the general ledger
AP SpecialistThe AP specialist reconciles the accounts payable subledger total to the general ledger control account each month and reports any unexplained difference to the controller.
Checkpoint: The AP subledger total agrees with the general ledger control account before the books are closed for the period.
6.Quality checks
- →Every new or changed vendor banking detail is independently verified before payment.
- →No invoice is paid without a completed three-way match or a documented exception approval.
- →Payment runs above the approval threshold always carry a second approval.
- →The AP subledger reconciles to the general ledger every month with no unexplained difference.
7.Records
- →Vendor master file and tax forms
- →Matched invoice packets (invoice, purchase order, receiving report)
- →Payment run reports and approvals
- →AP subledger to general ledger reconciliation
8.KPIs
- →Days payable outstanding
- →Percentage of early payment discounts captured
- →Invoice-to-pay cycle time
- →Number of duplicate or erroneous payments per quarter
9.Common mistakes
- →Paying an invoice on the requester's say-so without completing the three-way match.
- →Changing vendor banking details without an independent verification call.
- →Letting the same person prepare and release a payment run.
- →Missing early payment discount windows because invoices sit unmatched too long.
10.Revision history
| Revision | Date | Description | Reviewed by |
|---|---|---|---|
| 1.0 | September 15, 2026 | Initial release | Ilia Pirozhenko |
This is a template. Adapt it to your organization, equipment and local regulations before use.
