What Does Full Cycle Accounts Payable Mean?


Companies have two major business cycles: the revenue cycle and the expenditure cycle. Full-cycle accounting is the act of completing all necessary accounting activities within a business activity. Full cycle accounts payable is part of the larger purchasing and expenditure cycle. The full cycle of accounts payable entails matching documents, approving invoices, issuing checks and recording payments.

The Accounts Payable Cycle

Three major documents are involved in the accounts payable process: a purchase order, a receiving report and a vendor invoice.

  • When the company is ready to make a purchase, a purchasing department will send a purchase order to a vendor. This document details the merchandise requested, the price and the quantity. The purchase order triggers the vendor to send the goods.
  • Once the company receives the goods, the receiving department will complete a receiving report. This report documents the exact goods contained in the shipment. If the shipment contains any damaged items, the employee notes it in the report.
  • The vendor sends a vendor invoice requesting payment for the goods or services rendered. This document is sent to accounts payable and triggers the payment process.

Accounts payable then performs specific steps to complete the payment process:

  1. After receiving the vendor invoice, accounts payable performs a three-way match of the information on the purchase order, receiving report and vendor invoice to ensure the information is consistent.
  2. If accounts payable can verify that the goods on the vendor invoice were ordered and received by the company, the invoice is approved for payment processing. This is done through a voucher, signature or stamp.
  3. In large companies, the actual payment is processed by the treasury department. However, accounts payable is responsible for issuing payments in most small companies. After an invoice is vouched for, accounts payable sends the vouched documentation along with a check to a company check signer. 
  4. After the check signer approves and signs, accounts payable mails the check and marks the invoice as paid in the accounting system.

Full Cycle Accounts Payable Roles

Accounts payable job descriptions are often labeled as "full cycle." This means the accounts payable employee is responsible for every part of the payment process. According to Accounting Tools, potential responsibilities include three-way matching, reviewing expense reports for accuracy, applying payment discounts and issuing payments to vendors.

Related Searches

Promoted By Zergnet


You May Also Like

  • What Does the Word "Staffing" Mean?

    Staffing refers to the process of recruiting, hiring, orientating, retaining and firing employees. Staffing is a human resources term, and inside staffing...

  • What is the Accounting Cycle?

    The accounting cycle is the set of steps used to process accounting information. It begins at the start of an accounting period...

  • What is a Revenue Cycle?

    A revenue cycle is the process businesses use to describe the financial progression of their accounts receivables from the very beginning, when...

  • Accounts Payable Supervisor Job Description

    An accounts payable supervisor is responsible for overseeing the entire accounts payable department as well as directing staff in processing invoices and...

  • What Does an Accounts Payable Person Do?

    Whether keeping financial records for a business or your own household expenses, the ability to handle accounts payable is a vital skill....

  • How to Complete the Accounting Cycle

    Accounting cycles occur on an annual basis and a quarterly or monthly basis. The term "cycle" simply means a period of time...

  • Accounts Payable Process in Manufacturing Companies

    In the manufacturing sector, corporate leadership knows that managing inventory purchases while heeding the accounts payable process is not a cakewalk. Given...

  • Accounts Payable Document Control Procedures

    Document control procedures are critical for processing accounts payable invoices. They will help ensure that you properly record all accounts payable invoices...

  • The Average Salary of Accounts Payable

    Accounts payable employees or clerks usually handle company purchases, including office supplies, employee uniforms or equipment. Accounts payable employees are also responsible...

  • What Is Full Cycle Accounting?

    The full accounting cycle is a set of necessary steps to process, approve and record transactions to generate financial statements.

  • What Is Full Cycle Recruitment?

    Full cycle recruitment, or full life-cycle recruiting, is the process a recruiter uses when placing a candidate. The process begins when the...

  • What Is a Full Cycle Bookkeeper?

    The bookkeeper for a business is someone who keeps a record of the daily financial transactions for a company. This process of...

  • What Is Accounts Payable in Closing Entries?

    Closing the books is a process that determines net income or net loss for a period. It allows a business to compare...

  • Accounts Payable Audit Procedures

    Accounts payable is a critical portion of your financial records and can be subject to fraud without careful reconciliation and oversight. Strong...

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

Is DIY in your DNA? Become part of our maker community.
Submit Your Work!