What is a payment run in accounts payable and how is it structured?
A payment run (or payment batch) is the automated process of generating and executing a batch of supplier payments on a scheduled payment date. The AP system selects all approved invoices due for payment on or before the target date, groups them by supplier and payment method, generates payment instructions, and sends them to the bank. Payment runs typically occur on set schedules (weekly, bi-weekly, or monthly) to optimize cash flow and processing efficiency.
What is the typical process for executing a payment run?
Payment run process: (1) Selection: AP system selects all approved invoices with due date on or before the payment run date (and within defined cash flow constraints); (2) Payment proposal: the system generates a proposed payment list for controller review; (3) Review and exceptions: controller reviews for unusual amounts, new vendors, or bank detail changes; (4) Approval: payment run is approved by finance controller or CFO above a threshold; (5) Payment file generation: system creates a SEPA pain.001 (EU), BACS (UK), ACH (US), or other bank file; (6) Bank submission: file transmitted to bank via secure channel (SFTP, host-to-host, open banking API); (7) Confirmation: bank confirms payment execution; AP marks invoices as paid.
Frequently Asked Questions
- What is SEPA credit transfer and how does it relate to AP payment runs?
- SEPA Credit Transfer (SCT) is the EU standard for electronic euro credit transfers within the Single Euro Payments Area (36 countries). SEPA payments use the pain.001 XML format for payment initiation and the pain.002 format for bank confirmation. All EU AP systems must generate SEPA-compliant pain.001 files for euro payments to EU suppliers. SEPA Instant Credit Transfer (SCT Inst) enables near-instant payment (within 10 seconds), which is increasingly used for urgent supplier payments and supply chain finance.
- How does duplicate invoice detection affect payment runs?
- Payment runs should include a final duplicate check immediately before execution to prevent double payment of invoices processed between the previous duplicate check and the payment run. This is a last-line defense against invoices that passed initial duplicate detection but were re-submitted after initial posting. Some AP systems hold payment files for a short window before transmission to allow final review of bank detail changes or unusually large payments flagged by exception rules.