Vendor Payment and Accounts Payable Workflows

Every vendor invoice passes through a four-step approval workflow. Step 1 — Receipt and Logging: invoices are received via a centralized email (AP@company.com) or portal, logged with vendor name, invoice number, amount, and date received. Step 2 — Three-Way Match: compare the invoice against three documents: the purchase order or scope of work (was this work authorized?), the delivery receipt or inspection report (was the work completed to standard?), and the vendor agreement (does the pricing match contracted rates?). Discrepancies are flagged and resolved before proceeding. Step 3 — Manager Approval: invoices above a threshold ($1,000) require manager approval; above $5,000 require owner approval. Step 4 — Payment Scheduling: approved invoices are scheduled for payment according to terms (net 7, net 15, or net 30). This workflow prevents paying for work that was not authorized, not completed, or not priced correctly.

Different payment methods offer different levels of control, speed, and cost. ACH Transfer: low cost ($0-$1 per transfer), moderate speed (1-3 business days), good documentation. Best for regular, recurring vendor payments. Wire Transfer: higher cost ($20-$50 per transfer), fast (same day), strong documentation. Best for large, time-sensitive payments (closings, land purchases). Check: low cost, slow (3-7 days for delivery and processing), requires manual handling. Best for vendors who do not accept electronic payments. Credit Card: highest cost (2-3% processing fee typically passed to payer), instant, and provides additional consumer protections and cash flow flexibility. Best for supplies and small vendor purchases. Never pay vendors in cash—it eliminates documentation, prevents dispute resolution, and creates tax reporting problems. Establish a policy that all payments above $500 require electronic transfer with documentation.

Lien waivers are legal documents in which contractors and suppliers waive their right to file a mechanic's lien against the property for work performed or materials supplied. Collecting lien waivers protects the property from claims by unpaid subcontractors or suppliers. The lien waiver workflow includes: collecting conditional lien waivers before releasing each draw payment (conditional waivers become effective only upon payment clearance), collecting unconditional lien waivers after payment clears, maintaining a lien waiver log tracking which waivers have been collected for each project, and collecting final unconditional lien waivers from all contractors and material suppliers before closing the project. Missing lien waivers create title clouds that can delay or prevent property disposition.