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AP Process Flow:
The AP Process Flow starts once the needs for any material or Service are identified at the production
department or any other department.
1. Production Department will raise the Purchase Requisition (PR)through
Procurement/Commercial Team.
2. The commercial team or the procurement team will get bids or quotes from different vendors
and finalize the vendor.
3. Once the vendor is finalized, they will issue a Purchase Order (PO)to the Vendor.
4. Vendor will deliver the goods/services to our warehouse/factory.
5. The warehouse person will enter the receipt of goods in Goods Received Note (GRN).[In case of
services, it is Service Receipt Note (SRN).
6. Simultaneously, Vendor will send the invoice copy to Accounts Payable (AP) Team.
7. AP team will do a 3-way matchbetween Invoice, PO & GRN/SRN and process the Invoice.
8. Payment will be made to the vendor based on the Payment Terms.
Once in a while, we will do a Vendor Reconciliation. We will obtain statements of account from Vendor
and reconcile with our books. This activity will ensure that no invoice is missed or any incorrect
accounting is rectified.
JOURNAL ENTRIES
The Accounting Treatment starts at step- 5 once the goods are received. We will pass an accrual entry
for this.
Entry-1 – Receipt of Goods /Services.
Expense Account Dr
To SRN/GRN Control Account Cr
(This SRN/GRN Control Account is a control Account which will be knocked off once the invoice is
processed by AP Team. This is a liability Account)
Entry-2 Invoice Processing (3-way match)
SRN/GRN Control Account Dr
To AP Control Account Dr
AP Control Account Dr
To Vendor Account
(AP Control Account will be knocked off once the vendor is due for payment. This AP Control Account is
a liability Account)

Entry-3 Payment Entry:
Vendor Account Dr
To Bank Account.

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Accounts Payable (AP) Process Flow

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Accounts Payable (AP) Process Flow