A buyer described his accounts payable after closing in one word: disorder. Bills were paid sporadically, and nobody could say with confidence which ones were his and which were the seller's. He moved payables onto an automation tool, which helped. The order of the work matters, though, because software applied to an unclear process just automates the confusion.
Step one: list every open bill
Pull every unpaid bill, from the accounting system, from email inboxes and from the paper on desks. Record the vendor, the amount, the date and what it was for.
Then mark each bill as before or after the closing date. Bills for goods or services received before closing are generally the seller's, even if you pay them. That list feeds the working capital true-up, so do it once and carefully.
Step two: check the vendor list
Go through every vendor with a payment in the last year. Merge duplicates, remove the inactive ones, and confirm contact details and tax IDs. Collect a Form W-9 from any vendor who may need a 1099.
Step three: verify bank details
This is the control that matters most. Fraudsters target businesses during ownership changes, because staff expect unusual requests. A common attempt is an email, apparently from a known supplier, saying their bank details have changed.
Before paying to any new or changed bank account, call the vendor on a phone number you already had, not one in the email, and confirm. Make this a written rule with no exceptions, including for the owner.
Step four: approval rules and a payment rhythm
Decide who can approve a bill, up to what amount, and who can release a payment. Separate the person who enters bills from the person who pays them where you can.
Then pay on a fixed rhythm, such as a weekly payment run. A rhythm makes cash predictable, gives approvals a deadline and stops the habit of paying whoever calls loudest.
Step five: tell vendors about the change
Write to key suppliers about the change of ownership, with the right contacts for orders, invoices and payments. If the company's bank account changed at closing, tell them where payments to them will now come from so your payments are not mistaken for fraud on their side.
Use the moment to review terms. A new owner is a natural reason to renegotiate payment terms or pricing with the larger suppliers.
Step six: automate accounts payable
Once the list is clean, the controls are written and the rhythm is working, automation pays off. Bill capture, approval routing and payment tools save time and keep an audit trail. Spend cards that capture the job or customer on each purchase also feed job costing directly.
What fixing payables will not fix
It will not fix cash. If the business cannot pay its bills on time, a tidier process shows that more clearly. That needs a cash forecast and decisions about timing.
It will not settle disputes with the seller over who owes what either. Those belong in the true-up and, if needed, the dispute process in the purchase agreement.
Frequently asked questions
What should a new owner do with accounts payable after buying a business?
List every open bill and mark which belong to the period before closing, clean the vendor list, verify vendor bank details, set approval rules and a regular payment run, tell key suppliers about the change of ownership, and then automate.
Who pays bills from before the closing date?
Generally the seller, for goods and services received before closing, though the purchase agreement decides. These bills are usually settled through the post-closing working capital true-up.
How can a business prevent vendor payment fraud?
Verify any new or changed vendor bank details by phone on a number already on file, never one provided in the request, and make it a rule that applies to everyone, including the owner.
When should accounts payable be automated after an acquisition?
After the open bills are listed, the vendor list is clean, and approval rules and a payment rhythm are in place. Automating an unclear process makes it faster, not clearer.
Where CFOLogic fits
We take over payables from closing day: the open-bill list split by period, vendor cleanup and bank-detail verification, approval rules and a weekly payment run, then automation once the process holds. The seller-period bills go straight into the true-up.