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Updated March 2023

Financials don’t get more fundamental than the accounts payable process. AP is a structural pillar for an enterprise, no matter how big or complex operations might be. Unfortunately, many companies still struggle with accounts payable, both in form and concept, especially as they’re just starting to spread their operational wings and take flight.

Thankfully, Embark’s Accounts Payable Excel Template is here to provide some basic guidance and direction, along with a few best practices for good measure. While our template is more stepping stone than permanent fixture, it will come in handy as you develop your accounting procedures and build out your team. So bend it to your needs, integrate our best practices into your processes, and start seeing what an effective AP strategy can mean for your company.

Embark's Accounts Payable Excel Template

The Role of Accounts Payable

Accounts Payable is such a basic component of every company’s bookkeeping and accounting workflows, enterprises often overlook its power. However, that oversight could be costing you money and opportunity if you don’t have an underlying AP strategy to lead the way.

Simply put, your accounts payable ledger isn’t just about who you owe money to but, perhaps more importantly, a well-timed and precise mechanism that can enhance your capital structure so you make the most of every dollar.

As our AP template demonstrates, your accounts payable details everyone you owe money to, invoice numbers and dates, payment details, as well as all payment due dates. And as we’re about to explain, it’s that last component in the AP equation – the due dates – that provides the basis for your strategery.


Accounts Payable Strategy: Stretch Your Capital

Invoices and purchase orders will stagger themselves from here to eternity, where some vendors need a quick turnaround and others are content with longer due dates. Obviously, this notion only grows in potential impact as both your operations and vendor list expand. However, an effective AP strategy can efficiently juggle those different payable dates so everyone gets paid on time, while also freeing capital for you to use elsewhere in the interim.

Now, while it makes sense to extend those payables as far as possible to maximize your short-term cash flow, do so with a bit of caution. More often than not, your best bet is to find a happy medium with your AP strategy, one that gives you enough wiggle room to put your capital to good use, but not to the point where you jeopardize good relationships with that lengthy list of supplier names.

Also, for effective cash management, it’s helpful to negotiate AP terms at least as long as your AR terms. Likewise, you want your AR terms either on par or better than your creditor terms to make sure you have enough liquidity to pay your bills. Also, keep in mind that some vendors will offer discounts for early payment, a factor that might outweigh any benefits to extending those payables.

Accounts Payable Best Practices

Suffice it to say, accounts payable is more than just managing debt or a liabilities line item. It’s about streamlining your finances and balancing vendor relationships with the opportunity costs of those payables.

While those dollars might eventually be destined to line the pockets of your vendors, there’s plenty they can do for you between now and then. Therefore, take these best practices to heart as you develop your own AP strategy, one that keeps you accountable for your payables but also allows you to grow and innovate.

Monthly Reconciliation

Before you close your books, make sure to reconcile your accounts payable balance with your general ledger, preferably on a monthly basis. Doing so ensures you have a neat and tidy AP on the balance sheet.


An effective AP strategy can help you stay financially sound. Since AP is part of working capital – itself a crucial component of many debt covenant calculations – actively monitoring your AP balance through effective debt governance is essential.

Further, with revolving lines of credit – and depending on your company’s specific terms – overdue AP can reduce the allowable borrowing base, again showing the importance of tracking your AP with comprehensive governance. Likewise, effective overall governance can minimize the impact of human error on AP journal entries with sound internal controls, policies, and procedures.

Delegation of Authorities (DoA)

Speaking of internal controls, the DoA plays a vital role in your AP by requiring different levels of review based on an invoice’s dollar amount. For example, a DoA could mandate:

  • Manager review and approval for invoices $25,000 or less
  • VP review up to $100,000
  • CFO review up to $200,000
  • CEO review up to $300,000
  • Board of Directors review for everything above

Remember, as risk and potential financial impact increase, so should the level of scrutiny and necessary approvals.

Accounts Payable Systems & Reporting

For businesses with more complex accounting, a centralized system with a robust AP module will foster consistency and efficiency, automating certain functions that will ultimately improve accuracy and timeliness in your payables and reporting.

Implementing an integrative system also lets your accounts payable department provide a more thorough perspective of the bigger accounting picture to leadership, including key metrics and how the many moving parts work in conjunction with each other.

Make Detailed, Consistent AP Journal Entries

Complete your accounts payable reconciliation every month for every active vendor, as well as for employees and their associated expenses, incorporating the procedure into your month-end checklist as a reminder. This is a simple but effective way to stay on top of your AP and possibly save your team some headaches and frustration down the road.

Obviously, we've designed our accounts payable template – as well as our Accounts Receivable Excel Template – with startups, young(ish) companies, and small businesses in mind as they develop their accounting procedures and systems. But at some point, you’re better off moving away from good ol’ Microsoft Excel – or Google Sheets, for that matter – and toward comprehensive systems that encompass AP and the other components of your company’s accounting requirements.

That said, once you've reached that stage and outgrown the basic needs so conveniently filled by our AP Excel spreadsheet, remember that you’ll always have a partner in Embark to help guide your growth and build a rock-sound financial foundation. It’s what we do.

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