Full Cycle Accounts Payable: The Ultimate Guide

full cycle accounts payable

In full cycle accounts payable — also referred to as procure-to-pay (P2P), both Accounts Payable (AP) and Procurement or Purchasing departments are functions within the greater P2P process. In short, each department has a hand in full cycle accounts payable.

Join us as we illustrate what full cycle accounts payable is, where it sits in each department, and show how with the help of technology, both procurement and AP departments can deliver more control and provide more value throughout the full cycle of P2P.

What Full Cycle AP Is

Full cycle accounts payable begins in each department when procurement has gone through the steps to procure a good or service from a vendor and accounts payable has received an invoice. Accounts payable then verifies the invoice is valid and goods have been delivered, then pays the invoice. Full cycle accounts payable is also an umbrella term which both procurement and accounts payable take part of. It is essentially another way of describing the entire procure-to-pay process, which has become exponentially more sophisticated in recent years with the need for more alignment and control given the rise of fraud.

Here is where accounts payable staff touch the full cycle accounts payable process.

Three-Way Matching

When an invoice comes in, it’s not just a matter of accounts payable stamping it and printing out a check for payment once funds are available. To ensure control, an AP specialist or accountant will need to verify that the invoice is valid. The invoice verification process is performed by an accounts payable specialist where they three-way match:

  • Purchase orders from procurement for goods or services that were agreed to;
  • Delivery receipts, or receival reports that either receiving or an AP specialist generates when the services were performed or goods have been delivered;
  • Invoices that might have accompanied the shipment or were sent separately to another department or directly to AP.

As author notes for the Small Business Chronicle, businesses can lose money by paying excessively for services or goods, which can happen when different purchasing documentation doesn’t match. The author adds, “You can counter this problem by establishing a three-way matching process for all of your expenditures.”

Payment Authorization

Financial news provider the Nilson Report noted that annual payment card fraud had reached a staggering $27.85 billion, with more fraudsters than ever usurping cards to siphon money from unsuspecting victims. With many businesses preferring to use cards to make any number of different payments, they too can be victims of this growing trend.

Given the frequency and ease at which accounts payable fraud can be committed, checking for legitimacy and segregating duties (i.e. AP processor, approver, additional approver) can counteract possible instances of fraud, and even potentially within the company.

Deliver control with multi-step approvals for invoices over an identified dollar threshold. By setting limits for invoice approvers, they can approve the invoice but there will need to be an additional approver to make a decision on the invoice before payment can be issued. This, in addition to ensuring legitimacy of the invoice will enable full cycle accounts payable functions to process payments in a timely manner without processing a large lump sum on behalf of a fraudulent invoice.  

Vendor Engagement

Full cycle accounts payable doesn’t end when a check or digital payment is processed and recorded in a company’s financial system. Full cycle staff can also act as ad hoc customers for vendors, often accounts payable, since they are in frequent communications with vendors regarding invoices and payments. Accounts payable is charged with maintaining positive vendor relationships after procurement created them. In AP, is often done by means of a vendor portal, where vendors can see the status of their invoices and ask questions. Vendor portals save both parties time and gives room for working out payment terms when opportunities arrive; this includes early payment discounts.

Where AP and Procurement Align in Full Cycle Accounts Payable

Full cycle accounts payable generally runs from procurement identifying the goods or services required, to accounts payable issuing payment for goods or services. Here is where Procurement processes meet Accounts Payable processes and tips to improve full cycle accounts payable:

  • Purchase Order: When a business decides it wants to procure something, purchasing or procurement will create a purchase order. Accounts payable doesn’t have to be involved at this point, even with full cycle AP. But one of the advantages of connecting accounts payable software with purchasing is that systems and departments can be aligned when a vendor invoice is received. Which provides visibility for both departments on open and closed POs.
  • Confirming Receipt of Goods or Services: Invoice fraud is a real thing, with Experian noting last year that 52 percent of respondents in a Lloyds Bank survey said they’d experienced it. Accounts payable can combat this by confirming goods and services were delivered by confirming receipt. This can be done by connecting with the receiving department or department that received good or service. By means of a packaging slip or invoice communications which connects stakeholders, this sets the stage for a more controlled invoice processing and verification function.
  • Vendor Invoice: Don’t leave anything to chance whenever vendors submit invoices. Having accounts payable departments follow concrete steps every time an invoice is received will help guarantee that no payment is issued by mistake from fraudulent invoices to duplicates. This in addition to paying vendor invoices on time to maintain positive relationships. Not every company does this though, with the Lloyds Bank survey mentioned a moment ago noting that just 20 percent of companies review their invoices and 37 percent have no process to prevent invoice fraud.

Upstream vs. Downstream Procure-to-pay

It’s also important to distinguish between the so-called upstream and downstream roles that procurement and accounts payable can serve. Here’s what each does:

  • Upstream: Procurement is responsible for pre-contract functions which includes sourcing goods/services, developing vendor relationships, and contracts.
  • Downstream: Accounts Payable is responsible for post-contract functions such as verifying invoices are valid, goods/services have been received, and paying invoices on time.

How Technology Delivers More Control and Value During the Full Cycle of Accounts Payable

The truth is, full cycle accounts payable work involves multiple departments with different tools but with the help of technology, both departments including their tools can be integrated to ensure the entire procure-to-pay life cycle is seamless and controlled. Here are four good technological tools that can do this.

Purchase Order Automation

Purchase Order Automation or PO Automation is a centralized software system procurement uses to automate the purchase order workflow by automatically sending a purchase requisition to the appropriate approver for a decision. After approval, PO automation tools then automatically send the PO to the vendor.

Accounts Payable Automation

Accounts Payable Automation or AP Automation tools streamlines the accounts payable invoice approval and payment processes. AP Automation streamlines processes by automatically: extracting invoice data, identifying the correct approvers and routing for approval, and payment.


Accounts payable can yield enormous amounts of data that can then be analyzed and spot signs of potential fraud. The digital revolution has made it so that data for not only AP, but also Purchasing can be available in reporting dashboards to make more informed procurement and payment decisions.

Machine Learning, or AI

It can’t be emphasized enough: Data review needn’t just happen manually in full cycle accounts payable work. Machine-learning software or artificial intelligence can pore through seemingly-countless lines of numbers and accounting information, pulling together trends and doing so more efficiently over time. And when the base-level assessments are done, human staff can come in for more high-level analysis.

Bottom Line

Bottom line, delivering control over full cycle accounts payable processes can only happen when both functions (Procurement, AP) are automated and/or connected to a financial system. Automation mitigates errors, helps identify process laggards, and sets the financial system as the one source of truth.

Want automation software that to take your full cycle accounts payable process to the next level? Call Stampli today.

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