Accounts Payable: Process more efficiently with AI

Checking invoices, initiating payments and maintaining relationships with service providers: The effort involved in accounts payable is high, especially for large companies. More and more companies are therefore turning to artificial intelligence (AI) to make accounting more efficient. Because AI-supported automation in accounting can save up to 40 percent of the costs incurred. This was found by the McKinsey Global Institute in a study back in 2017. We explain which tasks an accounts payable department is responsible for and how AI can make processes leaner.

Accounts Payable Definition

accounts payable definition

The German generally accepted accounting principles (Grundsätze ordnungsgemäßer Buchführung, GoB) set out the general rules for accounting. The German Commercial Code (HGB) puts these rules into legal form. Accounts payable is a specific area of accounting that must follow these rules.

In commercial practice, accounts payable is an important part of a company's financial accounting. In this area, all payables to suppliers and other service providers are recorded and managed.

Accounts Payable is responsible for reviewing incoming invoices, entering invoice data into the accounting system, and paying payables on time.

The department works closely with Purchasing to reconcile supplier invoices and resolve discrepancies. It also plays an important role in preparing financial reports and providing data for budgeting and financial planning.

Efficient accounts payable is critical to maintaining a good relationship with suppliers and ensuring the company's liquidity. Errors in accounts payable can lead to delays in payments and problems with suppliers. Therefore, accuracy and diligence in this area is important.

This is how Accounts Payable works

In accounts payable, the process usually looks like this: The department records, checks, and manages a company's invoices and payables. In the process, accounts payable first receives and checks supplier invoices. In the next step, it enters this data into an accounting system. It then checks the information and compares it with purchase orders and deliveries. If everything is correct, the payment is released.

Accounts payable prepares payments and creates payment orders. These are then forwarded to the management or the responsible employees to have them released. After approval, Accounts Payable executes the payments to external suppliers in the final step.

The goal of accounts payable is to keep track of payment transactions to ensure that one-time and regular payments are made on time to avoid cash discounts and late payments.

The accounts payable process thus plays a critical role in ensuring the smooth running of business operations and maintaining positive supplier relationships.

accounts payable example

Accounts Payable Example

In accounts payable, a company's liabilities to its suppliers and service providers are recorded and managed. A classic example is the purchase of goods from a supplier. Let's take a look at an example from accounts payable.

Ordering office supplies

Assume that the company "Muster GmbH" orders office supplies from its supplier "Schreibwarenhandel Schmidt". The purchasing manager of Muster GmbH sends an order for stationery, pens and toner by e-mail to the supplier. The supplier confirms the order and delivers the goods to the address of Muster GmbH. The invoice is received by e-mail.

Accounts Payable then creates a posting in the system to record the payable to Schmidt Stationery. In the process, the "Payables to suppliers" account is increased.

The posting record would then look like this:

Debit: Input tax 19 Euro and purchase of goods 100 Euro to Credit: Trade payables (vendor account: Schreibwarenhandel Schmidt) 119 Euro

This accounting record reflects the fact that the company has an obligation to pay 119 euros once the goods are delivered and it has an input tax claim of 19 euros. The purchase of goods of 100 euros reflects the net value of the goods.

Reconciliation and payment

After receipt of the goods in the warehouse and comparison of the delivery with the delivery bill, the accounts payable department of Muster GmbH compares the invoice from Schreibwarenhandel Schmidt with the delivery bill. If there is an order reference, it compares the delivered goods with the order and ensures that the prices and quantities are correct. After the check, the invoice is released for payment.

As soon as the payment is due or ahead of time to take a discount, the accounting department transfers the amount due to the supplier. The transaction is marked as paid in the system and the liability is eliminated from the vendor account.

The posting record would then look like this:

Debit: Trade payables (vendor account: Schreibwarenhandel Schmidt) 119 Euro to Credit: Bank 119 Euro

This posting record reflects the payment of the liability. This means that the vendor account is credited (debit entry), while the bank balance is reduced (credit entry).

GoB and HGB as a framework

This process demonstrates well how accounts payable accounting is carried out in practice. The process is also in line with the principles of proper accounting (GoB) and the German Commercial Code (HGB).

Here are the links to the GoB and the HGB:

  • German generally accepted accounting principles (GoB): According to GoB, every business transaction, including the one described here, must be recorded correctly, completely, systematically and promptly. In the example, each phase of the process is properly documented, from the order to the payment of the invoice.
  • German Commercial Code (HGB): According to the HGB (in particular, sections 238-241 and 257), business books and records must be kept in such a way that they provide a clear overview of the company's business relationships and financial position. In the example, this is ensured by the accurate recording of liabilities and subsequent payment. In addition, the HGB (in Section 246 (1)) sets out the realization principle, which states that expenses and income should only be recognized when they have been legally incurred. This is ensured in the process described, as the liability is not posted until the goods are delivered and the invoice is received.
  • In addition, according to the HGB and GoB, the Muster GmbH must keep all relevant documents (such as purchase orders, delivery bills and invoices) for a certain period of time (usually 10 years in Germany) in order to be able to present these documents in the event of an audit. It is also important to note that bookkeeping and document storage must be in a form that allows an expert third party to have an overview of the business transactions and the company's situation within a reasonable period of time. Thus, in the event of an audit, all bookings and documents must be traceable.

Accounts Payable vs. Accounts Receivable

In accounting, accounts receivable and accounts payable are two important sub-areas. Accounts payable deals with a company's liabilities to service providers. Incoming invoices are recorded and checked here and payments to suppliers are arranged. The department is responsible for ensuring that liabilities are paid on time and thus maintaining a positive business relationship.

In contrast, accounts receivable is responsible for a company's outstanding receivables from customers or debtors. In doing so, it creates outgoing invoices, monitors incoming payments and sends out reminders to collect outstanding receivables.

Accounts Receivable helps ensure that the company can enforce its financial claims and maintain a healthy cash flow.

Both areas are essential to ensure efficient and smooth accounting and to safeguard the financial stability of a company.

Accounts Payable Tasks

In practice, the accounts payable department performs a wide range of tasks. What are these?


  • Task: Accounts Payable Invoice Verification checks incoming invoices for accuracy and consistency with purchase orders or contracts made.
  • Example: The accounts payable clerk performs the important task of verifying a vendor invoice to ensure that the goods delivered or services rendered meet the agreed-upon terms.

Invoice posting

  • Task: recording and posting of audited invoices in the accounting system.
  • Example: The department books an invoice on office supplies as a cost to the appropriate expense account.

Payment preparation

  • Task: compilation and preparation of incoming invoices. 
  • Example: Accounts Payable creates a list of vendor invoices due and prepares payments.

Supplier communication

  • Task: communication with suppliers regarding payments, open items and reconciliation of accounts.
  • Example: Accounts payable clarifies open questions about an invoice directly with the supplier to resolve discrepancies.

Account reconciliation

  • Task: reconcile individual items in vendor accounts to internal records to ensure accuracy of entries.
  • Example: Accounts payable compares the open invoices in the system with the supplier's bank statements to identify possible differences.


  • Task: Processing of reminders and preparation of reminder letters for defaulting payments.
  • Example: Accounts payable activities include responding to a vendor reminder, investigating the reason for the delay, and communicating the expected payment duration.


  • Task: Secure storage and management of invoices, payment receipts and other relevant documents.
  • Example: Accounts Payable ensures that all invoices and payment documents are properly filed to allow for later review.

Master data acquisition

  • Task: Maintain and update vendor master data in accounting system.
  • Example: Accounts Payable updates a vendor's contact information to ensure that future invoices are assigned correctly.

Posting of returns and credit notes

  • Task: recording returns or credit notes and clearing them with open invoices.
  • Example: Accounts Payable posts a credit memo from a vendor to offset a return and reduce the outstanding receivable.


  • Task: Preparation of reports and evaluations on open liabilities and payment transactions.
  • Example: Accounts payable prepares a report on current payables to inform management about the financial situation.

Goals of Accounts Payable 

The effort that companies invest in accounts payable pursues these goals:

Cost efficiency

An accounts payable department reduces costs by efficiently managing outstanding invoices and payments, allowing companies to use fewer resources and less time to complete accounting processes.

Compliance with payment deadlines

The department helps companies meet payment deadlines. Timely payment prevents delays and penalties and improves the relationship with suppliers.


Accounts payable accounting ensures transparency in financial transactions. Because: It clearly records all posted invoices and payments so that they can be easily tracked.

Avoidance of double payments

Accounts payable prevents double payments. This is ensured by accurate recording of all open items and payments made. In interaction with accounts receivable, the department thus ensures a healthy cash flow.

Strengthening supplier relationships

A well-organized accounts payable department strengthens the relationship with suppliers. In this context, punctual payments promote trust and can lead to better negotiating conditions.

Liquidity management

Accounts payable helps manage liquidity. Companies can thus better estimate how much capital is needed for the payment of liabilities.

Risk minimization

The department minimizes financial risk. To do this, it carefully checks accounts payable invoices and thus avoids fraudulent or erroneous transactions.

Tax advantages

Companies can take advantage of tax benefits with accounts payable accounting. Because: Timely processing of invoices can result in tax benefits.

Compliance and audit capability

Accounts payable helps companies comply with regulations and simplifies audits. In the process, accurate records facilitate the control of financial data by external auditors.

Improvement of the corporate reputation

Good accounts payable improve the reputation of companies. Reliable handling of payables signals professionalism to business partners.

accounts payable ki

Digitalization in Accounts Payable: AI as a decisive Factor

Digitization has now also reached the accounts payable department. Many companies now process invoices and receipts digitally. Among other things, the extraction of important data from documents and the transfer of this data to subsequent workflows is automated.

To optimize accounts payable, companies need, above all, software that works with Artificial Intelligence How can companies benefit from this?

Automation of routine tasks

AI can automatically handle repetitive tasks such as the entry of accounts payable invoices. This reduces manual intervention, minimizes errors and increases efficiency.

Fraud and error detection

AI can identify discrepancies and suspicious patterns to detect potential fraud or errors. This supports the security and accuracy of accounting.

Optimization of payment terms

AI can analyze data and use historical payment patterns to agree optimal payment terms with suppliers. This makes it possible to better exploit discounts and rebates.

Improve data quality

With accounts payable AI software, companies can identify discrepancies and inconsistent data to improve the quality of accounting data. This enables more reliable reporting and analysis.

Proactive budget control

AI-based analytics can detect budget variances at an early stage, allowing appropriate action to be taken in time and budget overruns to be avoided.

Optimization of payment processes

By applying AI, payment processes can be optimized and payments can be triggered automatically when certain criteria are met. This leads to more efficient payment management.

Improvement of supplier relations

Smooth and timely invoice processing through AI helps strengthen supplier relationships and can lead to better negotiation terms.

Real-time analyses and reports

AI-powered dashboards enable real-time analysis and reporting on open payables, spending patterns, and other relevant metrics. This enables companies to make informed and strategic decisions.

Cost saving

By automating processes and eliminating errors, companies can reduce accounting costs and use resources more efficiently.

Simplify Accounts Payable with Konfuzio

With Konfuzio, companies can simplify their invoice management and make it more efficient. The software provides an all-in-one tool for accounts payable. With this tool, companies can automatically capture, classify and evaluate unstructured data, such as invoices from suppliers.

To make this quick and easy, Konfuzio has trained its software on over 100,000 documents. In particular machine learning and Deep Learning make it possible that companies no longer have to work with extracting, classifying and further processing data from documents.

Contact one of our experts now and find out more about how Konfuzio can make your accounts payable accounting more efficient!

FAQ about accounts payable

What is accounts payable?

Accounts payable is a financial process that records and manages a company's liabilities. It includes the recording, monitoring and payment of invoices to suppliers and creditors. Accounts payable is important for a company's financial integrity and cash flow management.

What does accounts payable do?

Accounts payable is responsible for managing outstanding supplier invoices and payments in a company. Their tasks include monitoring and recording important information in incoming invoices, posting payables, carrying out payment transactions and maintaining supplier accounts. The department ensures that the relevant payments to suppliers are made properly and on time, which helps to maintain a smooth business relationship with suppliers. In addition, Accounts Payable plays an important role in the preparation of financial reports and compliance with legal requirements.

What is the difference between accounts receivable and accounts payable?

Accounts receivable manages customer debts, while accounts payable concerns the company's liabilities to suppliers. Accounts receivable deals with outstanding payments from customers, while accounts payable records invoices still to be paid to suppliers. Both functions are important for proper accounting and the financial health of businesses.

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