Accounts Payable (AP) and Accounts Receivable (AR) are the day-to-day engine of most finance teams and the most common entry-level roles. Master these and you're immediately employable.
Accounts Payable (money going out)
AP is about paying suppliers correctly and on time.
The 3-way match (a core control)
Before paying a supplier invoice, match three documents:
- Purchase order (PO) — what we agreed to buy and at what price.
- Goods received note (GRN) — what actually arrived.
- Invoice — what the supplier is charging.
If all three agree, the invoice is approved for payment. If they don't (wrong price, wrong quantity, goods not received), you query it before paying — this prevents overpayment and fraud.
Good AP practice
- Code invoices to the right nominal account and VAT rate.
- Respect payment terms (e.g. 30 days) — pay on time, not early or late, to protect cash and relationships.
- Handle supplier statements and reconcile the purchase ledger.
Accounts Receivable (money coming in)
AR is about invoicing customers and getting paid.
- Raise accurate, timely sales invoices.
- Maintain the sales ledger (who owes what).
- Run an aged debtors report — how overdue each customer is (30/60/90 days).
Credit control — the skill that protects cash
Getting customers to pay on time is vital because profit tied up in unpaid invoices is not cash. Effective, professional credit control:
- Sends invoices and statements promptly and clearly.
- Follows a structured chase cycle (polite reminder → firmer follow-up → phone call → final notice).
- Stays firm but professional — you want the money and the relationship.
- Understands tools like payment plans, stop credit, and, as a last resort, escalation.
A key metric is Debtor Days (average time customers take to pay): lower is better for cash flow.
Put it to work
An invoice is £120 more than the PO. List the steps you'd take before paying it — then try the invoice discrepancy lab.