How to Manage Accounts Payable Effectively: Best Practices

Managing accounts payables (AP) effectively is crucial for maintaining a healthy cash flow. It also ensures that obligations are met on time, prevents disruptions in operations, and solidifies trust with vendors.

Delayed payments can severely impact business operations. 64% of companies face delayed payments, with suppliers typically waiting an average of 43 days to receive funds.ⁱ

Businesses implementing robust processes for managing accounts payable operations are in a stronger position to build trust and credibility. This article will look at some of the best practices for AP management, including AP strategies, financial planning tips, and utilizing AP tools to streamline operations for large and small businesses.

Managing accounts payable efficiently starts with using the right payment solutions. With Wise Business, you can make payments at the mid-market exchange rate, reduce transaction fees, and integrate with accounting tools like QuickBooks for seamless cash flow management. Signing up to Wise Business allows access to BatchTransfer which you can use to pay multiple invoices in one go.

Strategies for Effective Accounts Payable Management

Accounts payables refer to the amounts a business owes for goods or services received but not yet paid. Developing the right AP strategies can not only save time, but having robust processes in place also provides a sense of relief from potential manual errors.

Automating AP Processes

Leveraging AP tools can enable businesses to automate several processes, including invoice approvals, payment scheduling, and reconciliation, thereby saving time and minimizing late payments.

Automated AP systems can improve financial functions such as cash flow management by providing real-time visibility into outstanding liabilities and enhance security by preventing potential errors.

Setting Up Clear Approval Workflows

Establishing structured approval workflows is essential for effective AP processes and financial control. Manual approval processes often cause delays, and key functions such as fraud detection are usually limited in scope due to a lack of time and resources.

Defining clear roles and responsibilities ensures invoices are reviewed and approved promptly, reducing bottlenecks and delays. AP tools that use features such as multi-level approvals can streamline accounts payable management and improve compliance.

Implementing a Three-Way Matching System

A three-way matching system is a critical AP strategy that helps businesses maintain accuracy and prevent financial discrepancies in accounts payable management.

The three-way matching process involves cross-verifying three key documents before approving a payment:²

1. Purchase Order (PO): Confirms the order details, including the agreed-upon price, quantity, and terms.
2. Invoice: Ensures the vendor’s bill matches what was ordered and received.
3. Receiving Report (Goods Receipt): Verifies that the goods or services were delivered and accepted in the correct quantity and condition.

Implementing a three-way matching system creates a structured process that prevents errors and reduces fraud risks. The system can be further streamlined by using AP tools to automate three-way matching, making it faster and reducing manual errors.

Regular AP Audits and Reconciliation

Frequent audits help identify duplicate invoices, fraudulent activities, and payment errors. By reconciling AP records with bank statements and financial reports, businesses can detect discrepancies early and maintain accurate financial statements.

Centralizing AP Processes

A decentralized AP system can lead to inconsistent approval workflows, payment delays, and compliance risks. Centralizing accounts payable, whether that is through a dedicated AP team or an AP automation platform, ensures greater visibility, standardization, and improved financial control.

Common Challenges in Managing Payables

Managing accounts payable (AP) can be complex, especially as businesses scale. Some common challenges companies face:

1. Late or Missed Payments

Poor tracking of invoices can lead to overdue payments, damage vendor relationships, and result in late fees.

2. Manual Processing Errors

Data entry mistakes, duplicate invoices, and incorrect amounts can cause significant financial issues and lead to an unclear or inaccurate picture of the business's financial performance.

3. Managing International Accounts Payable

Paying international vendors has added complexities, including costly currency exchange rates, bank fees, and long processing times.

4. Fraud and Security Risks

Invoice fraud and unauthorized transactions are a growing concern, especially as cyber threats become more sophisticated. Eliminating fraud requires stringent measures and controls across workflows

5. Cash Flow Management Issues

Poor visibility into outstanding payables can disrupt financial planning. Having accurate and timely AP strategies in place leads to healthier cash flow over time and improved forecasting.

Top Tools to Streamline Accounts Payable

Accounts payable management software enables businesses to optimize AP management. Here are some top options:

QuickBooks Online

QuickBooks Online is a full-service solution that includes automated invoicing, expense tracking, bill management, and integration with Wise for seamless reconciliation. It’s best for small to mid-sized businesses looking for an all-in-one financial planning and cash flow management tool.

Plans start at $18/month and up depending on business size.³

Xero

Xero includes AP automation, multi-currency support, invoice reconciliation, and real-time financial reporting. It’s best for businesses needing strong integrations with third-party AP tools and cloud-based accounting. Xero also connects to Wise Business.

Plans start at $29/month.⁴

Bill.com

Bill.com is an AI-driven AP automation tool with features such as approval workflows, invoice scanning, and automatic payments. It’s most suited for businesses that process high invoices and want to streamline effective AP processes.

Bill.com plans have a user license fee, starting at $45/user/month.⁵

Tipalti

Tipalti is a global vendor payments platform with additional functionalities such as tax compliance automation, fraud detection, and real-time payment tracking. It is best for businesses managing international accounts payable and multi-currency transactions.

Plans start at $99/month with custom pricing solutions available.⁶

SAP Concur

SAP Concur is an enterprise solution that automates invoice matching, expense reporting, and integration with ERP systems. It is best for large enterprises that need advanced AP strategies and expense management.

Features to Look For When Choosing AP Tools

When selecting accounts payable (AP) tools, businesses should consider the following key features to ensure efficient AP management and cash flow management:

Automation & Workflow Management

The solution should reduce manual data entry and speed up invoice approvals. It should also ensure smooth AP processes with automated notifications and approvals.

Multi-Currency & International Payments

Multi-currency and international payment functionality are essential for businesses managing international accounts payable. The system should also support global transactions with competitive exchange rates.

Invoice Processing & Three-Way Matching

AP tools should have features such as invoice processing and automated three-way matching. This should include functionalities such as matching purchase orders, invoices, and receipts to prevent overpayments or fraud.

Integration with Accounting & ERP Systems

Most AP tools can sync with popular software solutions such as QuickBooks, Xero, SAP, and other financial platforms. This allows businesses to centralize financial data and gain deeper visibility into financial health for better decision-making.

Real-Time Reporting & Analytics

AP tools provide insights into cash flow management and pending liabilities. This data allows businesses to plan budgets and monitor spending patterns more closely.

Security & Compliance

AP tools ensure data encryption and fraud prevention. They also help businesses maintain compliance with tax regulations and financial reporting standards.

The Easy Way to Manage Accounts Payable Internationally

Managing accounts payable across different currencies can be challenging, but Wise Business offers a seamless solution for international AP processes.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. With Wise, businesses can streamline accounts payable, cut unnecessary fees, and ensure smooth financial planning for global operations.

Key Features of Wise Business for AP Management:

• International Payments at the Mid-Market Rate – Avoid hidden markups and reduce foreign exchange costs.
• Seamless Accounting Integrations – Connect with QuickBooks and other AP management tools to automate reconciliation.
• Multi-Currency Management – Pay vendors in over 40 currencies while holding and converting funds as needed.

Open a Wise Business account online

Some key benefits of Wise Business include:

No monthly account fees just a simple one-off fee for account details Free invoicing tool to generate and send invoices. Create invoices using the Wise invoice generator or invoice templates. Accounting integrations, including a QuickBooks Bill Pay connection. Bill payments will be synced, matched, and categorized in QuickBooks for simple reconciliation. BatchTransfer. Fast payment of up to 1,000 people.

Sources:

1. 64% of SMBs Face Delayed Payments | PYMNTS.com.
2. What Is Three-Way Matching & Why Is It Important? | NetSuite.
3. QuickBooks® Online Pricing & Free Trial | Official Site
4. Xero
5. Pricing & Plans | BILL
6. Tipalti Pricing and Plans
   All sources checked March 2025