// AP Process — End-to-End Flow

Step 1: PO Creation → Requisition → Procurement creates PO → vendor

Step 2: Goods Receipt (GR) → Warehouse confirms qty and condition

Step 3: Invoice Receipt → AP logs invoice (number, date, amount, PO ref)

Step 4: 3-Way Matching → PO vs GR vs Invoice
  Flag discrepancies exceeding tolerance (e.g., 2%)

Step 5: Approval Workflow
  < $5K → AP Manager | $5K-$50K → Dept Head | > $50K → CFO

Step 6: Payment → schedule per terms (Net 30, 2/10 Net 30)
  Methods: check, ACH, wire, virtual card

Step 7: Post to GL → update vendor balance → file for audit

// AP vs AR — Balance Sheet Impact

ACCOUNTS PAYABLE (AP)
  Money YOUR company owes TO vendors → Current Liability
  Invoice received:  Debit Expense $2,000 | Credit AP $2,000
  Payment made:      Debit AP $2,000      | Credit Cash $2,000

ACCOUNTS RECEIVABLE (AR)
  Money OWED TO your company by customers → Current Asset
  Sale on credit:    Debit AR $5,000      | Credit Revenue $5,000

Key Differences:
  AP = Liability (you owe)    | AR = Asset (owed to you)
  AP increases with purchases | AR increases with sales
  AP goal: pay on time        | AR goal: collect fast

// Invoice Types in Accounts Payable

1. PO-Based Invoices — linked to PO, requires 3-way matching
   Examples: raw materials, inventory, equipment

2. Non-PO Invoices — no PO, code to GL, manager approval
   Examples: utilities, rent, legal fees, consulting

3. Credit Notes — vendor credits for returns or overcharges
   Reduces amount owed → match to original invoice

4. Debit Notes — you issue to vendor for shortages/damages

5. Recurring Invoices — same vendor, same amount, regular schedule
   Examples: rent, subscriptions → auto-post with periodic review

Tip: PO invoices are lower risk (price pre-approved)
     Non-PO invoices need extra scrutiny and approval

// 2-Way vs 3-Way Matching

2-WAY: PO ↔ Invoice
  Compares price and amount | Used for services, consulting
  Example: PO = $10,000 | Invoice = $10,000 → ✓ Match

3-WAY: PO ↔ Goods Receipt ↔ Invoice
  Compares quantity and price across all three documents
  Used for physical goods, raw materials, inventory
  Example: PO: 500 @ $20 | GR: 500 received | Invoice: 500 @ $20 → ✓

Tolerance: Most companies allow 1-5% variance
  Within tolerance → auto-approve | Exceeds → manual review

4-WAY (less common): Adds quality inspection document
  Used in manufacturing and pharmaceutical companies

// Invoice Mismatch Resolution Process

Step 1: HOLD the invoice — do NOT pay
  Hold code: PRICE, QTY, MISSING-PO, DUPLICATE

Step 2: INVESTIGATE — check PO amendments, partial shipments

Step 3: CONTACT vendor with specifics
  "Invoice #3345 shows $22/unit, PO #4502 shows $20/unit."

Step 4: RESOLVE
  A: Vendor sends corrected invoice → process normally
  B: PO amendment approved → update PO, release hold
  C: Manager approves tolerance → process with note

Step 5: DOCUMENT — attach correspondence for audit trail

Key rule: NEVER pay mismatched invoice without resolution
  $2/unit × 10,000 units = $20,000 overpayment

// Duplicate Invoice Detection and Prevention

DETECTION — Check these fields:
  1. Invoice number (exact match)
  2. Vendor ID + amount + date (same combo = red flag)
  3. PO number on multiple invoices
  4. Slight number variations (INV-001 vs INV001)

PREVENTION — System controls:
  Unique invoice # validation per vendor
  Amount + date + vendor warning within 30 days
  PO-based blocking (prevent invoicing beyond PO value)

PREVENTION — Process controls:
  Vendor master cleanup — merge duplicate records
  Standardized entry — enter number exactly as printed
  Monthly duplicate payment audit report

RECOVERY: Contact vendor → refund or credit memo
  Document root cause → update controls

// Vendor Reconciliation Process

Step 1: Obtain vendor statement (monthly)
Step 2: Pull your AP ledger for that vendor
Step 3: Compare line by line — match invoices and payments

Common Discrepancies:
  A. Invoice on vendor statement, NOT in your ledger
     → Missed recording — locate and enter if valid
  B. Invoice in your ledger, NOT on vendor statement
     → Vendor may not have recorded your payment yet
  C. Payment amounts differ → partial payment, discount, FX
  D. Credit memo missing → follow up with vendor

Step 4: Resolve all open items with documentation
Step 5: Sign off when balances match — file for audit

// Month-End Close — AP Activities

1. Process all invoices before cutoff date

2. Accrue for received-not-invoiced (RNI)
   Debit: Expense/Inventory | Credit: Accrued Liabilities
   Reverse next month when invoice arrives

3. Clear GR/IR account — investigate items older than 30 days

4. Run AP aging analysis (Current, 30, 60, 90, 120+ days)

5. Reconcile AP sub-ledger to general ledger

6. Prepare reports: aging summary, cash forecast, vendor spend

// Vendor Claims Non-Payment — Investigation

Step 1: Check payment records by invoice #, vendor ID, date
  Verify status: cleared, pending, voided, returned

Step 2: Pull bank confirmation
  ACH → reference number | Check → cleared date | Wire → confirmation

Step 3: Provide proof of payment to vendor

Step 4: Investigate if payment was misapplied
  A. Vendor applied payment to wrong invoice
  B. Payment sent to old bank account
  C. Check lost in mail or not deposited
  D. Payment posted to duplicate vendor record

Step 5: Document resolution and update vendor master

// ERP Systems in Accounts Payable

SAP (FI-AP Module):
  MIRO — Invoice verification (PO-based)
  MIGO — Goods receipt | FB60 — Non-PO invoices
  F110 — Payment run   | FBL1 — Vendor line items
  FK10N — Vendor balance

Oracle AP: Invoice entry, matching, payment batches
QuickBooks: Enter Bills → Pay Bills workflow
NetSuite: Vendor Bills → Bill Payments + approval workflows

Tip: "I processed 200+ invoices weekly using MIRO in SAP"
  beats "I have SAP experience"

// SAP Invoice Processing

PO-BASED — Transaction: MIRO
  Enter MIRO → select "Invoice" → enter date and PO number
  System pulls PO details and performs 3-way match
  Enter invoice number, amount, tax code → Simulate → Post

NON-PO — Transaction: FB60
  Enter FB60 → vendor, date, amount, GL account, cost center
  Add tax code → Simulate → Post → routes to approval

PAYMENT RUN — Transaction: F110
  Set parameters → Proposal run (review invoices to pay)
  Payment run → generate checks/ACH/wire → Post

// Excel Functions for AP

// VLOOKUP — Match invoices to payments
=VLOOKUP(A2, PaymentData!A:D, 4, FALSE)

// SUMIF — Aging analysis by vendor
=SUMIF(B:B, "Vendor ABC", D:D)

// IF — Tolerance checks
=IF(ABS(B2-C2)/B2 > 0.02, "REVIEW", "OK")
// Flags variance exceeding 2% tolerance

// COUNTIF — Duplicate detection
=COUNTIF(A:A, A2)
// Result > 1 means duplicate invoice number

// Pivot Tables — Vendor spend analysis
// Rows: Vendor | Columns: Month | Values: Sum of Amount

// TRIM/UPPER — Data cleanup
=TRIM(A2)   // Remove extra spaces
=UPPER(A2)  // Standardize vendor names

// STAR Format Example

SITUATION: During weekly review, noticed a $47,500 invoice
  from a vendor with a slight number variation (INV-445 vs INV-445A).

TASK: Verify if revised invoice or duplicate submission.

ACTION:
  1. Compared both — same amount, date, PO, line items
  2. Checked PO — $47,500 one-time purchase, one GR only
  3. Contacted vendor — confirmed duplicate sent by new employee
  4. Rejected duplicate, added vendor to watch list

RESULT: Prevented $47,500 duplicate payment.
  Implemented control: flag same-vendor invoices within 5%
  of each other within 60 days.

// Prioritization Strategy

Priority 1: Early payment discount invoices
  2/10 Net 30 on $100,000 = save $2,000 if paid in 10 days
Priority 2: Critical vendors (late payment stops operations)
Priority 3: Invoices approaching due date (oldest first)
Priority 4: High-value invoices (impact cash flow reporting)

Efficiency techniques:
  - Batch similar invoice types together
  - Use ERP auto-match within tolerance
  - Templates for recurring invoices
  - Block 2-hour focused time for entry
  - Daily tracking: received → entered → matched → paid

// Handling Difficult Vendors

Step 1: Stay professional — "Let me pull up the details."

Step 2: Explain the hold clearly
  "Invoice #5567 is on hold — $25/unit vs PO price of $22."

Step 3: Provide clear resolution path
  "Send revised invoice at $22/unit → processed in 2 days."

Step 4: Document in writing — follow up every call with email

Step 5: Escalate if needed — loop in AP Manager or Procurement
  Never make payment commitments outside your authority