Accounts Payable & Purchasing
PURPOSE
Accounts Payable & Purchasing establishes a consistent process for approving, purchasing, paying, and recording business expenses to maintain strong vendor relationships, protect cash flow, and ensure accurate financial reporting.
By following standardized purchasing and payment procedures, the business controls costs, prevents unauthorized spending, avoids late fees, and maintains reliable financial records.
Without a structured accounts payable process, expenses can become disorganized, cash flow may suffer, and important vendor relationships may be damaged.
PROCEDURE
Verify the business need and obtain required purchasing approval.
Select approved vendors and obtain quotes when appropriate.
Place purchase orders or complete authorized purchases.
Receive and verify all goods or services against the order.
Match invoices to purchase orders and supporting documentation.
Approve invoices for payment according to company policy.
Process vendor payments by the scheduled due dates.
Record all purchases and payments accurately in the accounting system.
File invoices, receipts, and supporting documentation for future reference.
Review purchasing activity regularly to identify cost savings, improve vendor relationships, and maintain budget compliance.
SUCCESS BEHAVIORS
The most effective teams consistently:
Verify purchases before placing orders.
Follow the approval process every time.
Pay vendors on time.
Maintain accurate records and documentation.
Look for opportunities to reduce costs without sacrificing quality.
Build strong relationships with trusted vendors.
COMMON FLOW RESTRICTIONS
Accounts payable and purchasing become ineffective when teams:
Make purchases without approval.
Lose invoices or supporting documentation.
Pay bills late and incur unnecessary fees.
Order duplicate or unnecessary items.
Fail to reconcile purchases with receipts and invoices.
Rely on memory instead of documented processes.