Accounts Payable in Germany: From Incoming Invoice to Payment

What does accounts payable do?

Accounts payable records every invoice from your suppliers and makes sure it is booked correctly and paid on time. It is the counterpart to accounts receivable, which tracks what customers owe you. Done well, it protects you from duplicate payments, late fees and missed early-payment discounts. It also delivers the numbers you need for a reliable cash forecast.

Jump to: Process · Supplier data · What the law says · Worked example: discount · Common mistakes · Setting it up in a scale-up

The process in six steps

1. Capture the invoice: Each invoice is assigned to the right supplier (creditor). Invoice number, date, net amount, VAT and due date are recorded.
2. Check the invoice: Do quantity, price and service match the purchase order and delivery note? Are all mandatory details present? Matching purchase order, goods receipt and invoice is often called a three-way match.
3. Code it: You decide which account, cost center and tax code the invoice is booked to. The liability is posted to the supplier account.
4. Approve it: A second person approves the payment. Who captures, checks and approves should be clearly defined and, where possible, not be the same person.
5. Pay it: Payments run in batches on fixed dates, or individually when an early-payment discount is at stake. Due date and discount deadline come from the invoice.
6. File it: The invoice is archived in a traceable, unalterable way so it can be found during an audit.

Between the steps sits the list of open items. It shows what falls due when and feeds the payments side of your 13-week cash flow forecast.

The foundation: clean supplier data

Before the first invoice arrives you need well-kept master data. This includes name and address, a creditor number, bank details, payment terms and the VAT ID. Keep this data in exactly one place and define who may change it. New suppliers ideally go through a short onboarding step: who ordered, is there a contract or purchase order, do the details match? A clean master file prevents the same supplier from being created twice and its invoices from running under two numbers.

What the law says

This article is not legal or tax advice. Still, you should know these rules for Germany:

• E-invoicing: Since 1 January 2025, domestic suppliers may send you invoices in the structured e-invoice format without your consent. Your mailbox and software must therefore be able to read them. Transition periods apply to issuing invoices: paper invoices remain allowed for supplies until the end of 2026, and until the end of 2027 for businesses with prior-year turnover of up to 800,000 euros. More in E-invoicing in Germany: rules and deadlines.
• Retention: Accounting vouchers and received invoices must be kept for eight years. Other documents, such as commercial letters, for six years.
• Timely booking: The GoBD, the tax authorities' rules on proper bookkeeping, regard recording non-cash transactions within ten days as unproblematic.
• Default: If you do not pay an invoice within 30 days after it falls due and is received, you are in default at the latest by then. A payment term of more than 60 days is only effective if expressly agreed and not grossly unfair.
• Input VAT: Only a proper invoice entitles you to deduct input VAT. The requirements are explained in Input VAT deduction in Germany.

Worked example: is the discount worth it?

Fictitious, simplified example: A supplier invoices you 10,000 euros net plus 19 percent VAT, so 11,900 euros. Terms: 30 days net, or 2 percent early-payment discount if you pay within 10 days.

• Discount in euros: 2% of 11,900 euros = 238 euros. You transfer 11,662 euros.
• Tax: The discount also reduces VAT. Of the 238 euros, 200 euros relate to the net amount and 38 euros to tax. You have to correct your input VAT deduction by 38 euros.
• Effective annual rate: 2 ÷ (100 − 2) × 360 ÷ (30 − 10) ≈ 36.7% per year.

The idea: if you pay 20 days earlier, you "earn" 2 percent. Annualised, that is far more than an overdraft usually costs. If the value is above your financing costs, taking the discount usually pays off, even if you had to borrow short term to do it. With tight liquidity this is not automatic: you must first check whether you can spare the 11,662 euros earlier.

Run this calculation for every invoice with a discount. A simple grid helps: discount in euros, last payment day, cash need on that day, decision. That turns a gut feeling into a traceable rule your team can apply, and you document why you took or deliberately skipped a discount.

Common mistakes and limits

1. Duplicate payment: The same invoice is captured or paid twice, for example as a PDF by email and later on paper. Check invoice number and amount before every posting.
2. Missed discount: When invoices sit in an inbox, the discount deadline runs out before anyone sees them.
3. Late payment: Late fees and friction with key suppliers are avoidable if you sort due dates weekly.
4. Changed bank details: If a supplier changes account details, have it confirmed through a second channel, for example a call-back to a known number.
5. Unclear responsibilities: If nobody knows who approves, invoices pile up. Put approval limits and substitutes in writing.
6. Profit is not cash: Paid invoices hit your bank account at a different time than they hit earnings. Why this matters is shown in EBITDA up, cash down.

How to set up accounts payable in a scale-up

1. Define one invoice entry point, for example a central mailbox, and route all invoices there.
2. Set approval limits: up to which amount is one person enough, and from when do you need two?
3. Plan fixed payment dates, for example weekly, and pull discount invoices forward.
4. Track a few metrics: share of duplicate payments, time from receipt to approval, and the age of open payables.
5. Use the list of open items as input for your cash forecast. Short-term liabilities are also the denominator of the liquidity ratios.
6. Compare your own payment behaviour with that of your customers. The customer side is covered in Accounts receivable software: how to choose, and the combined effect on your capital in Cutting working capital.

If you lack internal capacity, we support you with accounting, reporting and planning. See Interim accounting and FP&A. How to spot bottlenecks early is covered in Liquidity squeeze: early warning signs.

Frequently asked questions

What is the difference between creditors and debtors?

Creditors are your suppliers, to whom you owe money. Debtors are your customers, who owe money to you. Accounts payable handles incoming invoices and outgoing payments, accounts receivable handles outgoing invoices and incoming payments.

How long do you have to keep incoming invoices?

Received invoices and accounting vouchers must be kept for eight years. Other documents such as commercial letters must be kept for six years. For invoices, the period starts at the end of the calendar year in which they were issued.

When are you in default on a payment?

At the latest 30 days after the invoice falls due and is received. No reminder is needed for default after 30 days. Earlier default can follow from the contract or the payment term.

Is an early-payment discount always worth it?

Usually yes, when the annualised rate is above your financing costs. In this article's fictitious example it is about 36.7 percent. With tight liquidity, first check whether you can spare the cash earlier.

Sources

Legal references: Section 286 BGB, Section 271a BGB, Section 147 AO, Section 14 UStG, Section 14b UStG, Section 17 UStG and Section 27(38) UStG (all German, no official English text linked). Timely recording under margin no. 47 of the GoBD (BMF letter of 28 Nov 2019, last amended by BMF letter of 14 July 2025). Process steps based on sevDesk: Kreditorenbuchhaltung (German) and Perk: Kreditorenbuchhaltungsprozess (German). Discount formula per Tacto: Skonto-Kalkulation (German). The worked example was created by nugrow and contains no customer or benchmark data. As of October 2026.