Accounts payable (AP) glossary

ininvoice glossary: 40 AP automation terms in English. Self-contained definitions: each term explains what it is, how it works and what it solves.

A

AEAT (Spanish Tax Agency)

Agencia Estatal de Administracion Tributaria. Spanish public body that collects taxes and manages tax compliance. Regulates electronic billing systems (Verifactu, SII, FacturaE) and receives transaction records from companies. Supplier invoices must meet AEAT formal requirements to be deductible.

Delivery note (Spanish: albaran)

Document evidencing that the goods or services ordered have been received. Includes what was delivered, in what quantity and on what date. Third document of three-way matching: without a delivery note, the invoice cannot be verified against what actually arrived. Also called goods receipt (GR).

AP automation (accounts payable automation)

Set of processes and technologies that automate the lifecycle of supplier invoices: reception, data extraction, validation, reconciliation and approval. Reduces processing time, eliminates manual errors and speeds up the close. Includes OCR, three-way matching, duplicate detection and exception routing.

ASN (Advanced Shipping Notice)

Advance shipment notice that the supplier transmits before the merchandise arrives. Contains what will be delivered, in what quantity and when. Allows preparing reception and speeding up the validation of the delivery note. In EDI environments, the ASN arrives in standard format (EDIFACT, X12) before the physical delivery note.

B

B2B e-invoice

Electronic invoice between companies (business-to-business). In Spain, the Crea y Crece Law requires companies with billing above 8M EUR to issue and receive structured electronic invoices (FacturaE or similar). SMEs must adapt progressively. A structured electronic invoice enables automatic processing without OCR.

C

COGS (Cost of Goods Sold)

Sum of all direct costs of producing or acquiring the goods sold. Includes raw materials, components and direct labor. Errors in supplier invoices (incorrect prices or inaccurate quantities) inflate COGS and distort the reported gross margin.

Three-way reconciliation

Process of verifying that a supplier invoice matches the purchase order and the delivery note, line by line. Unit prices and quantities are compared before taxes. If all lines are within the agreed tolerance, the invoice is reconciled. If not, an exception is generated for review. Prevents wrong payments and fraud.

D

DPO (Days Payable Outstanding)

Measures how many days a company takes to pay its suppliers from the invoice date. A high DPO can indicate that the company retains cash, but if it exceeds agreed terms, it generates surcharges and damages supplier relationships. Automated reconciliation reduces the time between reception and approval.

Hash duplicate

Duplicate detection method based on the digital fingerprint of the document. SHA-256 is applied to the normalized content of the PDF or image: if two documents produce the same hash, they are identical even if they have different file names. Detects resends of the same document without depending on the readability of the invoice number.

Number duplicate

Detection of duplicate invoices by comparing invoice number and supplier tax ID. If the same supplier sends two invoices with the same number, one is a duplicate. It is the most direct method, but insufficient alone: a supplier may reuse numbers or send the same invoice with a slightly different number.

DSO (Days Sales Outstanding)

Measures how many days a company takes to collect its sales. Although it is an AR (accounts receivable) metric, it impacts working capital alongside DPO. Reducing DPO without harming DSO is the balance that efficient accounts payable management seeks.

E

EDI (Electronic Data Interchange)

Standardized exchange of electronic data between systems of different companies. Lets purchase orders, delivery notes and invoices flow automatically between buyer and supplier ERPs without human intervention. The most common formats in Europe are EDIFACT and XML/UBL. Reduces re-keying errors and speeds up reconciliation.

EDIFACT

Electronic Data Interchange For Administration, Commerce and Transport. International EDI messaging standard for the exchange of commercial documents. Defines the format for orders (ORDERS), delivery notes (DESADV) and invoices (INVOIC). Widespread in European distribution, retail and supply chain.

Exception routing

Process of automatically routing an invoice with mismatches or issues to the person or department responsible for resolving it. Invoices without exceptions are approved without intervention. Only those with variances, duplicates or incomplete fields reach the team. Reduces manual work by concentrating it on cases that really require it.

F

Supplier invoice

Document that a supplier issues to claim payment for goods or services supplied. Must include number, date, tax data of issuer and receiver, line description, unit prices, quantities, taxable base, VAT rate and total. It is the entry document in the accounts payable reconciliation process.

FacturaE

Standard e-invoice format in Spain, XML-based and defined by the Spanish Ministry of Finance. Mandatory for billing the Spanish Public Administration. Enables automatic processing without OCR. The file carries an electronic signature and can be validated on the FACe platform. Compatible with the AEAT SII.

Fuzzy matching (approximate matching)

Technique to match documents even when their data does not match exactly. Finds the correct PO even when the reference has typos, the supplier name uses legal name instead of trade name, or date formats differ. Essential in real environments where invoice and PO data are rarely identical character by character.

G

GLN (Global Location Number)

13-digit GS1 location number that uniquely identifies a physical or legal location: company, warehouse, point of sale or department. Used in EDI to unambiguously identify the issuer and receiver of purchase orders, delivery notes and invoices. Prevents confusion between sites of the same company.

GTIN (Global Trade Item Number)

GS1 commercial product identifier. Groups EAN-8, EAN-13, UPC-A and ITF-14. Lets you identify exactly which product was ordered, received and billed. In invoice reconciliation, GTIN as the line reference removes the ambiguity of product names when the same item has different denominations in the supplier and buyer catalogs.

I

IDP (Intelligent Document Processing)

Combines OCR with language models (LLM) or ML to extract structured data from non-standardized documents: invoices, delivery notes, contracts. Goes beyond classic OCR: it understands context, classifies documents by type and normalizes fields even when the document design varies across suppliers.

Input VAT (Spanish: IVA soportado)

VAT included in the invoices a company receives from its suppliers. Deductible on the quarterly VAT return (Spanish Modelo 303) if the invoice meets AEAT formal requirements. Invoice reconciliation does not operate on VAT: variance is always calculated on pre-tax unit prices.

K

Accounts payable KPIs

Key indicators to measure the efficiency of the AP process. Most used: cost per processed invoice, invoice-to-pay cycle time, share of invoices processed without intervention (touchless rate), share of invoices with exception, percentage of detected duplicates and DPO. Allow comparing team performance before and after automating.

M

Master data

Reference data that does not change with every transaction: supplier, product, cost center, GL account. In AP automation, the quality of supplier master data (tax ID, name, bank account, payment terms) determines the accuracy of fuzzy matching and duplicate detection. Outdated vendor master generates false exceptions.

O

OCR (Optical Character Recognition)

Technology that converts images of text (scanned PDFs, photos of invoices) into machine-readable text. In AP automation, it extracts invoice number, date, supplier data, line detail, amounts and taxes. Accuracy on standard invoices is around 95-98%. Blurry or handwritten documents reduce this figure.

P

P2P (Procure-to-Pay)

Complete process from when a company identifies the need to buy until it pays the supplier's invoice. Includes: purchase request, approval, PO issuance, merchandise reception, invoice reconciliation and payment. AP automation covers the final phase of the P2P cycle: from invoice reception to payment approval.

Packing list

Document accompanying a shipment with detail of what has been packed: references, quantities, weights and dimensions of each parcel. Source of data to verify that what arrives matches the delivery note and the PO. In sectors with complex deliveries (distribution, manufacturing), the packing list precedes the delivery note and allows anticipating discrepancies.

Purchase order (PO)

Document the buyer company issues to formally authorize a purchase. Specifies what is requested, in what quantity and at what unit price. It is the main reference of three-way matching: the supplier's invoice must match what was authorized on the PO, not what the supplier decided to charge.

R

Withholding (Spanish: retencion IRPF)

Portion of the invoice amount that the payer withholds and remits directly to the Spanish tax authority on behalf of the supplier. Applies to self-employed professionals and some business activities. Appears as a percentage of the taxable base and reduces the net amount to be paid. Invoice reconciliation must exclude the withholding from the variance calculation.

GDPR (Spanish: RGPD)

General Data Protection Regulation (EU 2016/679). Regulates the processing of personal data in the European Union. In AP automation, it applies to personal data on invoices (self-employed, company representatives). Requires data to be hosted in the EU or in countries with equivalent protection level, and a signed DPA with software providers.

S

Risk score (invoice risk score)

Numeric score (usually 0-100) that an AP system assigns to each invoice to prioritize manual review. Factors: degree of match with the PO, magnitude of variances, supplier error history, duplicate signals, anomalies in tax data. The higher the score, the higher the probability the invoice requires intervention before paying.

SII (Immediate Supply of Information)

AEAT system that requires large companies (billing above 6M EUR) to electronically report each issued or received invoice within 4 days. Replaces Spanish forms 347 and 340. Each supplier invoice must be correctly recorded and reconciled almost in real time, which makes an automated AP process essential.

T

Three-way matching

Three-way matching is the process of crossing three documents before paying a supplier invoice: the purchase order, the delivery note and the invoice. Compared line by line, unit price and quantity. Without that cross-check, a company pays what the supplier bills, not what it ordered and received.

Tolerance (in invoice reconciliation)

Acceptable difference margin between invoice and PO before generating an exception. Set per line, in percentage or absolute amount. Example: 2% or 1.50 EUR per line in OR-mode (either dimension covers). If the variance of a line does not exceed tolerance, that line is considered reconciled. Only escalated if the variance exceeds both limits.

Touchless AP (accounts payable without manual intervention)

Touchless accounts payable is the process of managing supplier invoices end to end without human intervention. It arrives by email, the system extracts data with OCR, cross-checks it against the PO and delivery note, and only escalates to the team when there is a real mismatch. Companies with automated AP process nearly four times more invoices per employee (APQC Open Standards Benchmarking).

V

Variance (invoice mismatch)

Difference between what appears on the invoice and what is on the purchase order, calculated line by line. There are two types: price variance (billed unit price different from agreed PO price) and quantity variance (billed units different from those received). Calculated on pre-tax unit prices, never on header totals.

Vendor master

Centralized database with the reference data of each supplier: tax ID, legal name, address, bank account, payment terms, contact person. It is the source of truth for reconciliation: if the supplier tax ID on the invoice does not match the vendor master, an exception is generated. An outdated vendor master is the most frequent cause of false alarms in AP automation.

Verifactu

Spanish verifiable billing system regulated by the AEAT. Requires billing software to generate chained records (with hash) of each issued invoice, sendable to the AEAT for verification. The objective is to eliminate dual-use software (which allows modifying invoices after they are issued). Mandatory rollout is planned for 2027 (Royal Decree-Law 15/2025).

W

Working capital

Difference between current assets and current liabilities. In accounts payable management, optimizing working capital means paying suppliers at the latest possible moment without incurring penalties, to retain cash as long as possible. A higher DPO frees capital, but requires reconciliation to be fast so payments are not blocked by unreviewed invoices.

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