What’s the difference between accounts payable and purchase to pay?

A supplier invoice lands in your inbox, and nobody can find an approved order for it. Accounts payable (AP) covers receiving, checking, approving, recording and paying supplier invoices. Purchase to pay (P2P) is the whole process, from the first request to buy, through purchasing approval, ordering and receipt, to invoice processing and payment.

Both can be automated. Which one you need depends on where the problem starts: with an invoice waiting to be processed, or with a purchase nobody checked before the order went out.

What accounts payable covers

Accounts payable manages the money a business owes its suppliers. Day to day, the work starts when an invoice arrives and runs through the checks needed to record and pay it correctly.

The team captures the supplier, invoice number, amount and VAT. They check for duplicates and, where there’s a purchase order, compare the invoice with the order and the evidence of receipt. Any difference in quantity or price gets investigated before the invoice moves on.

Approval depends on the purchase and the rules you’ve agreed. An invoice that matches an authorised order and a recorded receipt may pass straight through. One without a PO usually needs someone to confirm what was bought, where the cost belongs and whether it should be paid.

Once the checks are done, the invoice is posted to the accounting system and scheduled for payment on the agreed terms. Releasing the payment may sit with a separate finance or treasury team, under its own controls.

AP automation handles much of the capture, matching and routing, leaving the team a queue of exceptions to resolve and a record of what happened to each invoice. Our guide to what AP automation covers goes into more detail.

What purchase to pay covers: the P2P process

Purchase to pay includes AP, plus the purchasing steps that happen before an invoice exists. It connects whoever asks for the purchase with the budget holder, whoever confirms delivery and the team that pays. The main stages of the P2P process are:

1. Requisition. Someone asks to buy goods or services.

2. Approval. The request is checked against budget and purchasing rules.

3. Purchase order. The approved request becomes an order to the supplier.

4. Receipt. Delivery of the goods, or completion of the work, is recorded.

5. Invoice. The supplier invoice is captured and checked against the order and receipt.

6. Payment. The approved invoice is posted and paid on the agreed terms.

It starts with a requisition: a request for something the business needs, with the items or services, the expected cost and the cost centre. That request is checked against budget and purchasing rules before anyone commits to an order.

Once approved, the requisition becomes a purchase order to the supplier, recording what has been authorised, including quantities and agreed prices. From that point finance can see the commitment, well before it turns into an invoice.

When the goods arrive, someone records receipt against the PO. For services, the business needs some confirmation that the work was done. AP uses that evidence when it checks the supplier’s invoice.

Matching the invoice to both the order and the receipt is three-way matching. A clean match carries on under your rules; a discrepancy goes to the person who can resolve it. Approved invoices are then recorded and scheduled for payment.

Why the difference matters

By the time AP sees an invoice, the order has usually been placed and the goods may already have arrived. AP can question a charge or stop a wrong payment, but the chance to approve the purchase before it happened has gone.

Here’s an illustrative example. A department has £10,000 left in its purchasing budget. Its manager orders £7,000 of equipment, then a colleague asks for another £5,000 before the first invoice arrives. If the second approver only looks at posted invoices, the £7,000 is invisible. Count the commitment and only £3,000 is left.

P2P controls bring that check forward. They can also test a request against an agreed supplier contract before the order goes out, which matters when someone is buying from a different supplier at a higher price despite a negotiated agreement.

AP automation makes the resulting invoices quicker to process. Purchasing controls deal with the decisions that created them. The two work together, at different points in the cycle.

Should you automate AP first or go straight to P2P?

Starting with AP makes sense when purchasing is reasonably under control and invoice handling is the bottleneck. Maybe approved POs already exist, but the team still types invoice details into the ERP and chases approvals by email. Automating capture, matching and the invoice approval workflow goes straight at that work.

It can also be a sensible first stage if you plan to extend into purchasing later. Keep that plan in mind when you look at how the software handles POs, receipts and ERP data.

A wider P2P project deserves a look when the recurring problem is unapproved buying. The warning signs: POs raised after the invoice arrives, departments spending before checking their budgets, finance repeatedly asking who authorised an order. Faster invoice capture won’t change any of those habits.

P2P also involves more people. Requesters have to raise purchases the agreed way, budget holders need clear approval responsibilities and someone has to record receipt. No software can check an invoice against a delivery nobody booked in.

Where to start

Take a recent invoice that caused trouble and trace it back to the original purchase. Was the delay manual entry, a missing approval or a price discrepancy? Or was there no authorised order to check it against at all?

That tells you what to automate first. We work on both AP and purchase to pay, set up around your purchasing rules and ERP: checking requests against budgets, turning approved requests into POs, and matching invoices to orders and receipts with exceptions routed for review.