A plain-English reference for the vocabulary of accounts payable, written for US finance teams. Every term is defined in one or two sentences, grouped by where it appears in the AP cycle, and linked to a deeper guide where one exists. Upload an invoice to see the fields these terms describe pulled straight out of the document.
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Accounts payable borrows vocabulary from accounting, procurement, logistics, and software vendors, then abbreviates most of it. The same concept picks up three names depending on who is speaking, and two different concepts frequently share one acronym. A new AP hire, an auditor, and a software salesperson can hold the same conversation and each mean something different by "matching" or "accrual".
Vendor bill, supplier invoice, and purchase invoice all describe one document. Goods received note, GRN, and receiving report describe another. Nobody standardizes, so search results and system fields never quite line up.
To an accountant, an accrual is an expense recorded before the invoice arrives. To an AP clerk, "the accrual" often means the GRNI balance sitting between receipt and invoice. Both are right, and they are not the same account.
PO, GRN, GRNI, DPO, ERS, RTP, and STP arrive without expansion in vendor demos and audit requests. Guessing wrongly at one of them can send a control test off in the wrong direction.
Touchless, straight-through, and no-touch describe the same outcome with different measurement rules. Knowing what a vendor counts as touchless is the difference between a real benchmark and a slide.
The terms are grouped the way an invoice actually moves through a business: the documents that start the process, the matching and control steps, the accounting entries, the payment terms, the metrics that measure the function, and the automation vocabulary that has grown around it. Each definition is short enough to quote and specific enough to act on.
Invoice, bill, purchase order, purchase requisition, goods received note, credit memo, debit memo, remittance advice, proforma invoice, statement.
Two-way, three-way, and four-way matching, tolerance, exception, segregation of duties, vendor master data, duplicate payment.
Accrual, GRNI, trade payables, journal entry, GL coding, accrued expense, prepaid expense, close.
Net 30, net 60, due on receipt, EOM, ROG, 2/10 net 30, COD, CIA, early payment discount, dynamic discounting.
Cost per invoice, DPO, AP turnover, first-time match rate, touchless rate, invoice cycle time, discount capture rate.
OCR, IDP, data extraction, straight-through processing, touchless processing, RPA, ERS, e-invoicing, AP automation.
Three ways finance teams put a shared vocabulary to work.
Send this page on day one. It covers the documents, controls, and metrics a new clerk will meet in their first month, in the order they will meet them.
Confirm what a term means before you agree to a control test or a vendor benchmark. Ask specifically how any vendor measures touchless rate.
Tip: Definitions differ between vendors more than the marketing suggests.
Upload an invoice at the top of this page. The extractor pulls the invoice number, dates, payment terms, PO number, tax, totals, and every line item, which is most of the document vocabulary in one view.
Anyone who has to speak the language of accounts payable precisely, whether or not they work in it full time.
The vocabulary of the job, defined in the order an invoice moves through it.
Precise definitions for the entries and cutoffs that get questioned at close.
Shared definitions for control tests, exception categories, and matching rules.
What each invoice field actually represents before you map it into a schema.
Accounts payable (AP) is the money a business owes its suppliers for goods and services it has already received but not yet paid for. It is a current liability on the balance sheet, and it is also the name of the department that receives, verifies, records, and pays vendor invoices. AP covers everything from the arrival of an invoice to the moment the payment clears. Last updated July 2026.
| Term | Definition |
|---|---|
| Invoice | A seller's request for payment, listing what was supplied, the amount owed, and the payment terms. To the buyer it is a bill; to the seller it is a sales invoice. See invoice vs bill. |
| Bill | The same document viewed from the buyer's side. QuickBooks and Xero call the payable document a bill, which is why the words are used interchangeably in AP. |
| Receipt | Proof that a payment was made, issued after the money changes hands. An invoice asks for payment; a receipt confirms it. See invoice vs receipt. |
| Purchase order (PO) | A buyer's formal offer to purchase specific goods or services at agreed prices. It becomes a contract when the seller accepts. See purchase order vs invoice. |
| Purchase requisition | An internal request to buy something, approved before a PO is raised. It never leaves the business. See purchase requisition. |
| Goods received note (GRN) | The receiving record confirming what physically arrived, in what quantity, and in what condition. The third document in three-way matching. See goods received note. |
| Service entry sheet | The services equivalent of a GRN, confirming that work described on a PO was actually performed. |
| Proforma invoice | A preliminary quote formatted like an invoice, issued before goods ship. It is not a demand for payment and does not enter accounts payable. See proforma invoice. |
| Credit memo | A document from the vendor reducing what you owe, typically for a return, an overcharge, or a damaged shipment. See credit memo vs debit memo. |
| Debit memo | A document from the buyer, or from the vendor, increasing the amount owed. Buyers issue them to claim a deduction; vendors issue them to correct an undercharge. |
| Vendor credit | The credit balance sitting on a vendor account after a credit memo is recorded, waiting to be applied against a future invoice. See what is a vendor credit. |
| Remittance advice | A note sent with or after a payment telling the vendor which invoices the payment covers. It is what stops payments landing as unapplied cash. See what is remittance advice. |
| Vendor statement | A periodic list from the supplier of every invoice, credit, and payment on your account. Reconciling it against your ledger catches missing invoices and unapplied credits. |
| W-9 | The IRS form a US business collects from a vendor to capture its legal name and taxpayer identification number, so 1099 reporting can be filed correctly at year end. |
| 1099-NEC | The IRS information return used to report payments to non-employee US contractors and certain vendors. AP is usually the function that has to produce the underlying payment data. |
| Term | Definition |
|---|---|
| Two-way matching | Comparing the invoice to the purchase order. Prices and quantities must agree before the invoice is approved for payment. |
| Three-way matching | Comparing the invoice, the purchase order, and the goods received note. The strongest routine control in AP, because it proves the goods actually arrived. See three-way matching. |
| Four-way matching | Three-way matching plus an inspection or quality record, used where condition on arrival matters. See 2-way vs 3-way vs 4-way matching. |
| Tolerance | The permitted variance between documents before an invoice is treated as an exception, set as a dollar amount, a percentage, or both. |
| Exception | An invoice that fails matching or validation and needs human investigation. Exception rate and exception handling cost drive most of AP's workload. See invoice exception handling. |
| Invoice coding | Assigning the general ledger account, cost center, and any project or class to an invoice so the expense lands in the right place. See what is invoice coding. |
| GL coding | The chart-of-accounts side of invoice coding: choosing the general ledger account that the expense belongs in. See what is GL coding. |
| Segregation of duties | The control principle that the person who approves an invoice, the person who sets up the vendor, and the person who releases the payment must not be the same person. |
| Vendor master data | The stored record of each supplier: legal name, remittance bank details, tax ID, and terms. It is the single highest-value target for payment fraud. |
| Duplicate payment | Paying the same invoice twice, usually because it arrived through two channels or was keyed with a slightly different invoice number. See preventing duplicate payments. |
| Invoice fraud | Any scheme that induces a business to pay a fraudulent invoice or to send a legitimate payment to a criminal's bank account, including business email compromise. See preventing invoice fraud. |
| Payment run | The scheduled batch in which approved invoices that are due are paid together, usually weekly. See what is a payment run. |
| Term | Definition |
|---|---|
| Trade payables | Amounts owed to suppliers for inventory, goods, and services bought in the normal course of trade. The largest component of accounts payable. See trade payables. |
| Accrued expense | A cost the business has incurred but for which no invoice has arrived, recorded by an adjusting entry at period end. See accrued expenses vs accounts payable. |
| GRNI | Goods received not invoiced. The liability recorded when a delivery has been receipted but the supplier invoice has not yet arrived. It clears when the invoice is matched. |
| Accounts payable journal entry | The double entry that records a payable: debit the expense or asset, credit accounts payable. Payment reverses it: debit accounts payable, credit cash. See AP journal entry. |
| Accounts receivable | The mirror image of AP: money customers owe you. AP is a liability, AR is an asset. See accounts payable vs receivable. |
| Cutoff | The point at the end of a period where a cost is decided to belong to the period just closed or the one starting. Wrong cutoff moves expense between months. |
| Prepaid expense | A cost paid in advance of receiving the benefit, recorded as an asset and released to expense over time. The opposite of an accrual. |
| Aging report | A schedule of unpaid invoices grouped by how long they have been outstanding, typically current, 1 to 30, 31 to 60, 61 to 90, and 90 plus days. See AP aging report. |
| Records retention | How long invoices and supporting records must be kept. The IRS generally expects supporting documents to be retained for at least three years. See how long to keep invoices. |
| Term | Definition |
|---|---|
| Net 30 | Full payment is due 30 calendar days after the invoice date. The most common US B2B term. See net 30 payment terms. |
| Due on receipt | Payment is expected as soon as the invoice arrives, with no credit period. See due upon receipt. |
| 2/10 net 30 | A 2% discount if the invoice is paid within 10 days, otherwise the full balance at 30 days. See early payment discount. |
| EOM | End of month. Payment is due at the end of the month in which the invoice was issued. |
| ROG | Receipt of goods. The payment clock starts on delivery rather than on the invoice date. |
| COD | Cash on delivery. Payment changes hands when the goods arrive. |
| CIA / PIA | Cash in advance and payment in advance. The buyer pays before anything ships. |
| Dynamic discounting | A sliding early-payment discount where the size of the discount falls the later in the term the buyer pays. |
All of these, with worked due dates, sit on the invoice payment terms page.
| Metric | What it measures |
|---|---|
| Cost per invoice | Total fully loaded AP cost divided by invoices processed. The headline efficiency number. See cost to process an invoice. |
| Days payable outstanding (DPO) | The average number of days a business takes to pay its suppliers. Higher DPO holds cash longer, at the cost of vendor goodwill. See days payable outstanding. |
| Accounts payable turnover | How many times payables are paid off in a period. It is the inverse view of DPO. See AP turnover ratio. |
| First-time match rate | The share of invoices that pass matching with no human intervention on the first attempt. |
| Touchless rate | The share of invoices that go from arrival to payment approval with no human touch. Definitions vary by vendor, so ask what counts as a touch. See touchless invoice processing. |
| Invoice cycle time | Elapsed days from invoice receipt to approval or to payment. The metric vendors quote most and define least consistently. |
| Discount capture rate | The proportion of available early-payment discounts the business actually takes. |
| Exception rate | The share of invoices that fail matching or validation and require investigation. |
The full set, with formulas and target ranges, is on the accounts payable KPIs guide.
| Term | Definition |
|---|---|
| OCR | Optical character recognition. Software that converts the pixels of a scanned document into machine-readable text. It reads characters; it does not understand which number is the total. See how invoice OCR works. |
| IDP | Intelligent document processing. OCR combined with machine learning that classifies the document and identifies which value belongs in which field. |
| Invoice data extraction | Pulling structured fields (vendor, invoice number, dates, tax, totals, line items) out of an invoice document into data your systems can use. See what is invoice data extraction. |
| Line-item extraction | Capturing each row of the invoice table with its description, quantity, unit price, and amount, rather than only the header totals. See invoice line item extraction. |
| Template-based capture | Older extraction that needs a saved layout per supplier. It breaks when a vendor redesigns its invoice or a new supplier appears. |
| Straight-through processing (STP) | An invoice that is captured, matched, coded, and approved without a person intervening at any step. |
| Touchless invoice processing | The practical name for STP in AP. Realistic rates depend far more on PO discipline and vendor data quality than on the software chosen. |
| RPA | Robotic process automation. Scripted bots that click through existing screens. Useful for moving data between systems, poor at reading unstructured documents. |
| ERS | Evaluated receipt settlement. Paying from the purchase order and the goods receipt without waiting for a supplier invoice at all. |
| E-invoicing | Exchanging invoices as structured data between systems rather than as PDFs or paper, so no capture step is needed. |
| AP automation | The umbrella term for automating capture, coding, matching, approval routing, and payment. See what is accounts payable automation and the best AP automation software comparison. |
Trade payables are amounts owed to suppliers for goods and services bought in the ordinary course of business. Accounts payable is the broader balance sheet line, which also picks up non-trade obligations such as amounts owed for expense reimbursements or professional fees, depending on how the business classifies them. In most small and mid-sized US companies the two are effectively the same number.
The dividing line is the invoice. Accounts payable records amounts you owe because a supplier has billed you. Accrued expenses record amounts you owe because you consumed something in the period even though no invoice has arrived yet. When the invoice shows up, the accrual reverses and the amount becomes accounts payable.
AP stands for accounts payable: the short-term liability representing money owed to suppliers, and the name of the team that processes vendor invoices. AR, its counterpart, stands for accounts receivable, the money customers owe the business. AP sits on the liabilities side of the balance sheet and AR on the assets side.
If you want to see this vocabulary attached to an actual document, upload an invoice at the top of the page. The extractor labels the invoice number, invoice date, due date, payment terms, PO number, tax, subtotal, total, and every line item, which is most of this glossary in one screen. The mechanics are covered on our invoice data extraction software page and in the accounts payable process walkthrough.
AP stands for accounts payable, the short-term liability representing money a business owes its suppliers for goods and services already received. The abbreviation also names the department that receives, verifies, codes, approves, and pays vendor invoices. Its counterpart is AR, accounts receivable, the money customers owe the business.
GRNI stands for goods received not invoiced. It is the liability recorded when a delivery has been receipted into the system but the supplier invoice has not arrived yet. The GRNI balance clears when the invoice arrives and matches the receipt. A GRNI balance that never clears usually signals a missing invoice or a receipting error.
Two-way matching compares the invoice to the purchase order, checking that prices and quantities agree. Three-way matching adds the goods received note, so the business also confirms the goods physically arrived before paying. Three-way matching is the stronger control because it defends against paying for goods that were never delivered.
A credit memo is a document from a vendor that reduces the amount you owe, typically issued for a return, an overcharge, or damaged goods. It creates a credit balance on the vendor account which is applied against a future invoice. A debit memo does the reverse and increases the amount owed.
Touchless invoice processing means an invoice moves from arrival to payment approval without a person touching it, because capture, coding, and matching all succeed automatically. Vendors define the word differently, so ask exactly which steps count as a touch before comparing published touchless rates between platforms.
OCR converts the image of a document into readable text. Invoice data extraction goes further: it works out which piece of text is the vendor name, which is the invoice number, and which rows form the line-item table, then returns that as structured data. OCR reads characters, extraction understands the document.
A remittance advice is a note sent to a supplier alongside or after a payment, listing exactly which invoices the payment settles and any credits applied. Without it, suppliers post the money as unapplied cash and start chasing invoices you have already paid, which creates avoidable reconciliation work on both sides.
The standard cycle is: receive the invoice, capture its data, code it to the general ledger, match it against the purchase order and goods received note, route it for approval, schedule it into a payment run, pay it, and file it for records retention. Each of those steps has its own controls, metrics, and failure modes.
