Standard Operating Procedure for Accounts Payable

STANDARD OPERATING PROCEDURE FOR ACCOUNTS PAYABLE

This Standard Operating Procedure for Accounts Payable (this “Agreement”) is entered into as of [Effective Date] (the “Effective Date”) by and between [Company Name], a [State/Country] [Entity Type] with its principal place of business at [Address] (“Company”), and [Service Provider Name], a [State/Country] [Entity Type] with its principal place of business at [Address] (“Provider”).

1. DOCUMENT PREAMBLE & RECITALS

WHEREAS, Company desires to engage Provider to manage and execute its accounts payable functions; and WHEREAS, Provider represents that it possesses the requisite expertise, technical infrastructure, and personnel to perform such services in accordance with commercially reasonable standards and applicable financial regulations; NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Parties agree as follows:

2. OPERATIONAL DEFINITIONS

1. “Authorized Personnel” means individuals explicitly designated in writing by Company to approve disbursement of funds.
2. “Disbursement” means the act of settling an Approved Invoice through wire transfer, ACH, or check.
3. “Invoice” means a formal request for payment submitted by a Vendor for goods or services rendered.
4. “Material Breach” means any failure to comply with Section 3, or any unauthorized disclosure of confidential financial data.
5. “Vendor” means any third-party entity providing goods or services to the Company under a separate procurement contract.
6. “Working Day” means any day, excluding weekends and public holidays, upon which banks are open for business in [Jurisdiction].

3. SUBSTANTIVE TERMS & OBLIGATIONS

1. Intake and Verification: Provider shall receive all Invoices and perform a three-way match against the Company’s purchase orders and receiving documentation.
2. Approval Workflow: No Disbursement shall be executed without the prior digital or written sign-off from Authorized Personnel.
3. Performance Metrics: Provider shall maintain an accuracy rate of 99.5% in data entry. Failure to meet this metric for two consecutive months constitutes a failure of performance.
4. Reporting: Provider shall submit a monthly Accounts Payable Aging Report to the Company’s Chief Financial Officer no later than the [Day] of the following month.
5. Representations: Provider represents that it maintains an information security program consistent with ISO/IEC 27001 standards to protect Company’s financial data.

4. DEFAULT, TERMINATION, AND REMEDIES

1. Breach: In the event of a breach of this Agreement, the non-breaching party shall provide written notice detailing the nature of the default.
2. Cure Period: The breaching party shall have thirty (30) business days from the receipt of notice to cure such breach.
3. Termination for Cause: If the breach remains uncured after the 30-business-day period, the non-breaching party may terminate this Agreement immediately upon written notice.
4. Remedies: In the event of unauthorized disbursement due to Provider’s negligence, Provider shall be liable for the full amount of such loss, up to a maximum liability cap of [Dollar Amount], unless such loss resulted from gross negligence or willful misconduct.

5. BOILERPLATE LEGAL PROVISIONS

1. Severability: If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.
2. Entire Agreement: This document constitutes the entire agreement between the Parties and supersedes all prior discussions or understandings.
3. Force Majeure: Neither party shall be liable for failure to perform due to causes beyond its reasonable control, including acts of God, war, or government regulation, provided the affected party gives prompt notice to the other.
4. Governing Law: This Agreement shall be governed by and construed in accordance with the laws of [Jurisdiction], without regard to its conflict of law principles.
5. Dispute Resolution: Any controversy arising out of this Agreement shall be settled by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, with the seat of arbitration being [City, Jurisdiction].

6. FORMAL EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives.

COMPANY

Signature: ___________________________

Name: _______________________________

Title: ________________________________

Date: ________________________________

PROVIDER

Signature: ___________________________

Name: _______________________________

Title: ________________________________

Date: ________________________________