The Accounts Payable Glossary

If you have recently discovered accounts payable, or even if you are familiar with the process, you will know that a lot of terminology is involved. In this glossary, we will be breaking down all things AP, including the most common and advanced finance definitions. 

At Documation, our finance process automation solutions make light work of complex tasks but it is essential to first understand how each of our solutions runs.

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What is Accounts Payable?

Accounts payable (AP) outlines the funds that a company is obligated to pay to its suppliers for received goods or services. Essentially, it represents the sum of money that a company has agreed to pay their suppliers in the future. On a company’s balance sheet, accounts payable are commonly documented as a liability.

Individuals within departments are responsible for managing the invoice cycle and the accounting process. They generate comprehensive financial reports to verify that the company maintains a good financial position.


What is AP Automation?

AP Automation is a technical solution used for handling accounts payable processes digitally rather than manually. This means that certain tools are used to digitalise the approval, payments and receipts of invoices. As a whole, this will enhance the efficiency of the AP process and will minimise any manual errors that could occur, whilst maximising your ROI.

There are some companies who still choose to track their accounts payable manually, but this entails them needing to use a spreadsheet which takes up a lot of time and opens up more opportunity for error.


What are the Benefits of AP Automation?

No more paper trail

Moving to AP Automation will eradicate the endless paper trail. This not only is better for the environment, but it also reduces overall printing costs and saves a lot of office space.

Eliminate duplicates

Using AP Automation means you can automatically detect any duplicates and reject them. You can also take advantage of early payment discounts as the process of paying online is much easier and quicker, saving your company money.

Faster processing

You won’t have to wait for the usual processing times that come with manual AP processes. It will also highlight any exceptions so you can navigate these easily and fix any errors rapidly.

Increased visibility

You can easily navigate through budgets and costs, ensuring all spending is allocated in the correct place and approved by an authorised employee. It also allows you to easily see if the spending is in accordance with specific company guidelines.

Free your AP team

By streamlining the AP process, your team isn’t stuck doing time-consuming data entry and enquiries meaning they are available to work on other important jobs.

What is ERP Integration?

ERP integration refers to the process of connecting the Enterprise Resource Planning (ERP) system with the accounts payable function. This integration aims to streamline and enhance the efficiency of the accounts payable process and enables real-time sharing of relevant financial data, such as invoices, purchase orders, and payment information, between different departments and systems within an organisation.

Benefits of ERP Integration

Data accuracy

When data is inputted through an ERP, this can automatically be transferred into the AP system. This helps to keep data consistently up to date and eradicate any possible errors.

Improved visibility and reporting

ERP integration provides businesses with a view of their financial data which improves the visibility into any AP metrics. It also creates detailed reports, which aid organisations with their decision-making.

Ensured compliance

When you integrate your accounts payable process with ERP, it maintains standardised and controlled processes meaning you will always comply with any financial regulations and internal policies.

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A Completed Glossary for All Things AP

AP Turnover: This is how quickly an organisation pays for their invoices. A high turnover ratio signifies the invoices are being paid off quickly.

Asset: Something that has value to the organisation and can contribute to generating revenue.

BPM Software: Business process management software. Examples are all of our solutions.

Cash Flow: This is how much money is flowing in and out of a business. If there is a positive cash flow, there are more incomings than outgoings.

Cloud-Hosted: The ability to make files available through the internet. This allows easy edits and sharing whilst being held securely.

Compliance: Ensuring all laws and regulations are adhered to during any accounts payable process.

Digital Transformation: Integrating different forms of technology into all areas of an organisation.

E-Invoicing: The electronic generation, submission and processing of invoices.

Goods Receipt: A document that confirms that the goods specified in the purchase order have been received in the expected quantity and condition.

Invoice: A bill sent from the supplier for the goods or services they have provided. This will include information such as the unit price, quantity, total amount and any other information that is relevant.

Liability: Something that is owned by a business that either must be paid within a year or are more long-term debts. This is known as current and non-current liabilities.

Pain Points: Pain points are challenges or issues that businesses face, causing operational difficulties and hindering overall efficiency.

Purchase Order: The initial document generated when a company decides to purchase goods or services. This will outline the description, price and quantity.

Purchase Requisition: An initial, internal request made by an employee who needs to order goods or services for their company.

Roadmap: A strategic plan that outlines the key stages and milestones of a project or initiative, providing a visual guide for business implementation and objective achievements.

UiPath Robotic Processes: A process that uses automation software to streamline and optimise repetitive tasks, such as data extraction and invoice processing, improving efficiency and reducing manual effort.

Workflow: The sequence of steps that are adhered to when completing a task. In accounts payable, workflow steps may include invoice data capture, invoice matching, approvals, and payment processing.


What Other Solutions Are There?

As well as accounts payable, there are also other automation solutions that can streamline your processes. These include invoice matching, purchase to pay, expense management solutions and remittance delivery. For each of these terms, we will describe what they are and their common benefits.

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Invoice Matching 

Invoice matching includes comparing and verifying key information on an incoming invoice with corresponding documents or records to ensure accuracy and validity before making a payment. An example of this may be checking your stock to ensure it is the same amount that is on the invoice, or comparing invoices with purchase receipts. 

One of the most common invoice matching approaches is the three-way match. This involves comparing the purchased order, the goods receipt and the invoice. The accounts payable department will check the three documents against one another to ensure they match and everything is as it should be. This will help to prevent any overpayments, underpayments and errors in the AP process. Some companies would use a two-way match instead, which is the same process but it only includes the invoice and purchase order.


Key Benefits of Invoice Matching

Improved efficiency

Eliminating the manual invoice matching process leads to faster processes, less storage costs, more efficient working and immediate access to any documents, data, information or audit trails.

More productive AP teams

The accounts payable team can prioritise adding more value, for example by improving supplier compliance instead of manually matching invoices and removing duplicates.

No duplicate invoices

Any vendor invoices are paid on time with a better discount uptake, no losses and improved supplier relationships.

Time well spent

The AP team would be less invested in handling and chasing match exceptions and instead can utilise easy-to-use tools and resolve any issues which opens up the business to early payment discounts.

Improved matching

Efficiency is increased by fine-tuning the matching process and easily pinpointing any suppliers and users who don’t comply.

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Expenses Management

Expense management involves the systematic control and oversight of an organisation’s expenditures by tracking employee expense claims, gaining access to manage reports and reducing the number of errors. By approving expenses in a timely manner, you can maintain positive supplier and employee relationships and create more accurate and reliable financial records.

The main benefits of expenses management include:

Credit card statement upload

A statement is imported into the solution by your credit card provider and put into the holder’s in-tray for them to complete.

Mobile receipt capture

Almost any paper receipt can be captured, optimised automatically and digitally stored in a secure place for when they need to be retrieved.

Approval and QA workflow

Express management includes the same workflow options for review and approvals and the chance for a claim to be QA-checked and approved.

Multi-currency and multi-company

It doesn’t matter how many companies you have or where you are in the world, express management can capture receipts and process claims in a timely and secure manner.

Real-time posting and retrieval integration

Documation uses an Enable platform which brings up-to-date posting and retrieval of expense claims.


Purchase to Pay

Purchase to pay (P2P) solutions are the systems or platforms designed to streamline and automate the procurements and AP process within a company. They cover the end-to-end cycle from the initial purchase requisition to the final invoice payments. 

Key features include requisitioning for formalising requests, purchase order (PO) management for creating and tracking detailed orders, and automated invoice processing to capture, extract, and verify data against POs and receipts. These solutions also include vendor management for centralised supplier information, receipt and goods inspection upon deliveries, and payment processing for secure and timely payments. Reporting and analytics tools provide insights into spending and vendor performance, while compliance management ensures adherence to internal policies and external regulations throughout the procurement and payment workflow.



Main Benefits of Purchase-to-Pay


Time is saved when the P2P process is used because requests are easier to raise, approve and monitor.

Control purchases

Uncontrolled spending on goods and services is avoided because approved suppliers are used, controlling any purchasing decisions before orders are put through.

Apply rules

P2P ensures approval rules are brought in and risk areas are monitored to ensure constant compliance.

Verify and match

The P2P process makes invoices easy to verify and match. You can request a credit note as soon as it is found which offers full visibility and control to the procurement department.

Save money

With purchase to pay, you can identify any opportunities for savings or discounts whilst reducing your supplier list and improving the overall buying process.

Remittance Delivery

Remittance delivery is the process of transmitting payment details and funds to a supplier after invoice approval. It involves providing remittance advice to the supplier and conveying key payment information such as the invoice number, amount, and payment date. This facilitates easy reconciliation for the supplier and increases financial transparency. Efficient remittance delivery is crucial for maintaining positive supplier relationships and accurate record-keeping.

The most common benefits of remittance delivery include:

PDF import directly from finance systems

This makes all PDFs accessible whenever they are needed, and they can be automatically imported no matter which finance system you use.

PDF creation from available sources

PDFs can be created from print files, text files or databases whilst integrating with all finance systems.

Simple exception handling which reduces errors

Using remittance delivery with machine learning can make exception handling easy which reduces the overall time and number of errors.

Powerful search and validation tools

Filter your results by the supplier to be able to easily view them whenever it is needed.

Securely archived remittances

All data and money transfers are held securely within an archive.