Accounts payable

Accounts payable (AP) is the function and the ledger that tracks what a business owes to its suppliers. In Business Central and Dynamics 365 Finance, AP transactions are created by posted vendor invoices and credit memos — generated either from purchase orders (matched to receipts) or entered standalone — and settled by payment journals that produce bank files. Standard AP features include payment terms, payment discounts, partial payments, ageing reports, payment proposals, three-way matching, and vendor statements. AP entries post simultaneously to the vendor ledger and the general ledger, with currency revaluation handled by period-end routines.

In practice, three-way matching (purchase order, receipt, and invoice must agree before an invoice posts) is the control that catches most billing errors before they hit the ledger — a vendor invoicing for a quantity or price that doesn't match what was actually ordered and received gets held for review rather than posted automatically. Payment proposals then batch approved, due invoices into a single payment run, applying early-payment discounts where terms allow, rather than someone manually deciding which invoices to pay each week.

Where confusion shows up: an invoice that's entered but not yet posted has no effect on the vendor ledger or the GL at all — it exists only as a draft the AP clerk can still edit freely. Once posted, correcting it means a credit memo or a reversing entry, the same immutability rule that applies to the general ledger itself. This trips up new AP staff who expect to edit a "wrong" invoice directly the way they might in a spreadsheet; the audit trail exists specifically to prevent that.