Free guide

Accounts Payable Training for Beginners: A Free Step-by-Step Guide

This guide is for students, new AP clerks and teams who want a practical foundation in accounts payable. It covers both sides of real AP work: purchase-order-based AP — where goods are ordered, received into inventory and matched to invoices — and non-PO or expense AP, such as utilities, services and subscriptions.

Modern AP is more than entering bills. In distribution and manufacturing especially, it means matching purchase orders to receipts and invoices, resolving exceptions, and coordinating with Purchasing, Receiving and suppliers — while still handling expense bills, GL coding and month-end close.

1. What is accounts payable?

Accounts payable (AP) is the money a business owes suppliers for goods or services bought on credit. When a company receives something now and agrees to pay later, it records a liability — an account payable — until the bill is paid.

AP’s job is to make sure the company pays the right supplier, the right amount, at the right time — and only for what it actually ordered and received.

2. The invoice workflow

Most AP departments follow a version of these steps:

1. Receive the invoice by email, portal, EDI or mail.
2. Validate the details: invoice number, vendor name, invoice date, line totals, payment terms and tax.
3. Check the PO and actual receipt when the invoice relates to ordered goods.
4. Obtain authorization from the right approver under company policy.
5. Code and enter the invoice into the ERP or accounting system.
6. Pay according to terms in a scheduled payment run.
7. Retain documentation so the transaction can be audited later.

Non-PO invoices — a utility bill or a consultant’s fee — have no receiving record, but they still need appropriate verification: confirm the service was provided, check it against a contract or prior bills, and get approval from the budget owner.

3. Purchase orders

A purchase order (PO) is the buyer’s formal, approved request to a supplier. It typically lists the vendor, items, quantities, agreed prices and delivery details. The PO sets the expectation that the receipt and invoice will later be compared against.

4. The 3-way match

A 3-way match compares three documents before payment: the purchase order, the receiving record and the supplier invoice.

Here the invoice is $48 higher than what was received (2 boxes × $24). This is an exception, and handling exceptions well is where AP adds real value. Possible causes include a partial delivery, a backorder, or a receiving error. AP works with Purchasing, Receiving and the supplier to find out which — then either waits for the rest of the shipment, requests a credit memo, or pays only for what was received, according to policy.

Two important rules: never change receiving quantities without proof, and remember that a packing slip is not proof of physical receipt — it shows what the supplier says it shipped, not what your warehouse counted.

5. Payment terms

Payment terms tell you when an invoice is due and whether an early-payment discount is available.

The clock starts according to the agreed terms — often the invoice date, but sometimes the receipt date or another date in the contract.

6. General ledger coding

Every invoice is coded to a general ledger account that classifies the cost: inventory purchases may go to an Inventory account, while services and supplies go to specific expense accounts. Accurate coding keeps financial statements and budgets reliable.

7. ACH payments & remittance advice

Many suppliers are paid electronically by ACH or similar bank transfers. Because these payments are fast and hard to reverse, always independently verify any vendor banking change — for example by calling a known contact at a phone number already on file, not one in the change request.

Remittance advice tells the supplier which invoices and credits a payment covers:

8. Month-end & reporting

At month-end, AP helps make sure liabilities are complete and accurate. Common tasks include:

• AP aging report: lists unpaid invoices by how long they’ve been open.
• Accruals: recording costs incurred but not yet invoiced.
• Unmatched / uninvoiced receipts: goods received with no invoice yet, which may need accruing.
• Vendor statement reconciliation: comparing the supplier’s statement to your records.
• Open items and unapplied credits: following up so credits are used and old items are resolved.

9. Common mistakes and how to prevent them

• Duplicate payments — check invoice numbers, amounts and dates before entry.
• Wrong quantities — match to actual receipts, not just the PO.
• Misdirected payments — verify banking changes independently.
• Incorrect GL coding — confirm the account with the approver when unsure.
• Missed discounts — track discount dates in payment runs.
• Missing documentation — attach approvals and support to every transaction.

Before releasing any payment, ask: Is it accurate? Is it authorized? Is it documented?

10. Knowledge check

Try these practice questions. Answers are shown below each one.

Note: exact procedures, approval limits and accounting treatment depend on your company’s policies and the accounting rules that apply to it. Use this guide as a general introduction.