supplierpayment

Supplier payment refers to the process by which a company settles obligations to its suppliers for goods or services. It includes the intake and verification of supplier invoices, the matching of invoices to purchase orders and receiving reports (three-way matching), the authorization of payments, and the transfer of funds to suppliers along with remittance advice.

Typical workflow involves receipt of an invoice, validation and dispute resolution, approval in accordance with internal controls, scheduling payments according to negotiated terms, execution of payments using the chosen method, and reconciliation of accounts payable. Payment terms describe agreed-upon timing and discounts, such as net 30 or net 60 days, and may include early payment discounts like 2/10 net 30. Payment methods range from traditional checks to electronic transfers (ACH or wire), corporate credit cards, virtual cards, and supplier portals.

Effective supplier payment supports working capital management and supplier relationships. Key metrics include days payable outstanding (DPO), payment cycle time, and discount uptake. Supplier financing options, such as dynamic discounting or supply chain finance, can optimize cash flow.

Technology plays a central role through accounts payable automation, electronic invoicing, ERP integration, and supplier portals, enabling faster processing, reduced errors, and better visibility into payment status. Risks include duplicate or fraudulent payments, late payments harming supplier relationships, and regulatory or tax compliance issues. Strong controls include three-way matching, segregation of duties, audit trails, and regular reconciliation.