Accounts Payable Standard Operating Procedure

ACCOUNTS PAYABLE STANDARD OPERATING PROCEDURE

1. DOCUMENT PREAMBLE & RECITALS

THIS ACCOUNTS PAYABLE STANDARD OPERATING PROCEDURE (hereinafter the "Agreement" or "SOP") is entered into and made effective as of this _____ day of _________, 20 (the "Effective Date"), by and between:

[Company Name], a [State/Country of Incorporation] [Corporation / Limited Liability Company / Partnership], having its principal place of business at [Company Address] (hereinafter referred to as the "Company"), and

[Vendor/Supplier Legal Name], a [State/Country of Incorporation] [Corporation / Limited Liability Company / Partnership], having its principal place of business at [Vendor Address] (hereinafter referred to as the "Vendor").

RECITALS

WHEREAS, the Company and Vendor have entered into, or intend to enter into, one or more commercial transactions pursuant to which Vendor shall provide goods, services, or deliverables to the Company;

WHEREAS, the Parties desire to establish a binding, standardized, and auditable operating framework governing the submission, processing, verification, and disbursement of invoices to ensure absolute financial compliance, mitigate risks of fraud, and streamline accounting operations; and

WHEREAS, the Parties intend for this SOP to operate as a binding legal addendum and governing protocol superseding any conflicting informal invoicing practices, terms, or conditions;

NOW, THEREFORE, in consideration of the mutual covenants, promises, and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

---

2. OPERATIONAL DEFINITIONS

For the purposes of this Agreement, the following terms shall have the meanings ascribed below, and such definitions shall be strictly construed:

1. "Accounts Payable (AP)" means the internal department and associated technological systems of the Company responsible for processing, verifying, auditing, and executing disbursements for vendor liabilities.
2. "Authorized Purchase Order (PO)" means a formal, sequentially numbered procurement document issued by the Company's authorized purchasing agent, explicitly detailing the scope, pricing, quantities, and delivery terms of goods or services prior to their rendering.
3. "Business Day" means any day other than a Saturday, Sunday, or a statutory holiday observed by the banking institutions within the primary jurisdiction of the Company.
4. "Disputed Invoice" means any invoice submitted by Vendor that fails to match the pricing, terms, quantities, or receipt confirmations recorded in the corresponding Purchase Order or Receiving Report, or lacks mandatory documentation.
5. "Electronic Data Interchange (EDI)" or "Portal Submission" means the mandatory digital transmission channels designated by the Company for the secure ingestion of Vendor invoicing data.
6. "Invoice Receipt Date" means the official date upon which a compliant invoice is received into the Company's designated electronic invoice processing intake system.
7. "Net Payment Terms" means the agreed chronological period commencing strictly from the Invoice Receipt Date (provided the invoice is undisputed) to the date funds are successfully transferred to Vendor.
8. "Receiving Report" means an internal Company document generated by the logistics or project management team confirming the physical receipt, inspection, and acceptance of goods or satisfactory completion of services.
9. "Tax Identification Number (TIN)" means the valid Federal Employer Identification Number (FEIN) or equivalent tax registry identifier required for regulatory and tax reporting compliance.

---

3. SUBSTANTIVE TERMS & OBLIGATIONS

3.1 Mandatory Invoicing Prerequisites

Vendor shall not submit any invoice to the Company without an explicit, pre-existing, and unexpired Authorized Purchase Order. Any invoice submitted in the absence of a valid Purchase Order number shall be rejected automatically without penalty, interest, or liability to the Company.

3.2 Invoice Submission Protocols

All invoices must be submitted exclusively via the Company’s designated digital vendor portal located at [Insert Portal URL] or via electronic mail sent directly to [ap-invoicing@company.com]. Physical paper invoices sent via mail are strictly prohibited unless explicitly authorized in writing by the Company's Chief Financial Officer.

3.3 Strict Content Requirements for Invoices

Every invoice submitted by Vendor must contain the following data points to be deemed valid and complete:

1. Vendor's exact legal name, remittance address, contact information, and valid TIN.
2. The Company’s exact legal name and corresponding corporate entity identifier.
3. The unique Authorized Purchase Order number.
4. An itemized breakdown of goods, services, or milestones matching the line items of the Purchase Order.
5. Net pricing, applicable taxes itemized separately, freight charges (if pre-approved), and total gross sum due.
6. Banking remittance instructions (ACH/Wire routing numbers) matching the legal entity name of the Vendor.

3.4 Payment Terms and Schedules

Unless otherwise explicitly stated in a signed master services agreement or statement of work, standard payment terms shall be Net [30 / 45 / 60] days from the official Invoice Receipt Date. The Company reserves the right to apply early payment discounts if explicitly negotiated and documented on the Purchase Order.

3.5 Verification and Three-Way Matching Process

The Company shall execute a mandatory "Three-Way Match" verification protocol prior to scheduling any disbursement. This protocol requires exact reconciliation among:

1. The Authorized Purchase Order.
2. The Receiving Report or proof of service delivery signed by an authorized Company representative.
3. The Vendor’s submitted invoice.

3.6 Tax Compliance and Withholding

Vendor warrants that all tax information provided to the Company is accurate and current. The Company reserves the right to withhold any payments required by applicable law (including backup withholding under IRS or local jurisdictional regulations) until valid tax documentation (e.g., Form W-9 or W-8BEN) is formally filed with the Company's AP department.

---

4. DEFAULT, TERMINATION, AND REMEDIES

4.1 Events of Default

The occurrence of any of the following events shall constitute a material breach and "Event of Default" under this SOP:

1. Vendor’s submission of fraudulent, duplicate, or inflated invoices.
2. Persistent failure by Vendor to include mandatory PO numbers or correct billing metadata on greater than [5]% of submitted invoices within a rolling ninety (90) day period.
3. Vendor’s engagement in fraudulent activities, bribery, or non-compliance with applicable anti-corruption laws affecting billing practices.
4. Failure by either Party to observe or perform any material covenant, obligation, or operational term detailed herein.

4.2 Notice and Cure Period

In the event of any default under Section 4.1, the non-defaulting Party shall provide written notice specifying the exact nature of the default. The defaulting Party shall have exactly thirty (30) business days from the formal receipt of such notice to cure the identified default to the reasonable satisfaction of the non-defaulting Party.

4.3 Remedies Upon Failure to Cure

If an Event of Default is not cured within the stipulated thirty (30) business day cure period, the non-defaulting Party may, at its sole discretion and without prejudice to any other legal or equitable rights, exercise any of the following remedies:

1. Immediately suspend all pending invoice processing and disbursement cycles due to Vendor until the breach is fully resolved.
2. Set off any financial losses, overpayments, or damages incurred by the Company against any outstanding funds owed to Vendor.
3. Terminate the underlying commercial relationship and all associated purchase orders for cause with immediate effect.
4. Pursue any and all legal and equitable remedies available under the governing jurisdiction.

---

5. BOILERPLATE LEGAL PROVISIONS

5.1 Severability

If any provision, clause, or section of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable, and the remaining provisions shall remain in full force and effect.

5.2 Entire Agreement

This Agreement, together with any referenced Purchase Orders and underlying Master Services Agreements, constitutes the entire understanding between the Parties concerning the subject matter hereof, superseding all prior oral or written negotiations, representations, or standard operating procedures.

5.3 Force Majeure

Neither Party shall be liable for any failure or delay in performance under this Agreement (excluding payment obligations for goods/services already rendered and accepted) if such failure arises from acts of God, war, terrorism, pandemics, labor strikes, utility failures, or governmental restrictions beyond the reasonable control of the affected Party ("Force Majeure Event"). The affected Party shall provide prompt written notice and use commercially reasonable efforts to resume performance.

5.4 Governing Law

This Agreement, and all claims or causes of action arising out of or relating to it, shall be governed by, construed, and enforced in accordance with the substantive laws of the State of [Jurisdiction], without regard to its conflict of laws principles.

5.5 Dispute Resolution

Any dispute, controversy, or claim arising out of or relating to this SOP, including its formation, breach, termination, or validity, shall be resolved through mandatory, binding arbitration administered by the [American Arbitration Association (AAA)] in accordance with its commercial arbitration rules. The place of arbitration shall be [City, State], and the proceedings shall be conducted in the English language before a single neutral arbitrator. Judgment on the award rendered by the arbitrator may be entered in any court having competent jurisdiction.

---

6. FORMAL EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties hereto have caused this Accounts Payable Standard Operating Procedure to be executed by their respective duly authorized officers as of the Effective Date first written above.

FOR: [Company Name]

Signature: __________________________________________________

Printed Name: _______________________________________________

Title: ______________________________________________________

Date: _______________________________________________________

FOR: [Vendor/Supplier Legal Name]

Signature: __________________________________________________

Printed Name: _______________________________________________

Title: ______________________________________________________

Date: _______________________________________________________