An accounts payable filing system is decided by one question that people rarely ask explicitly: filed by what? Filed by date, which is what happens by default, documents can be found by whoever remembers when they were filed. Filed by supplier and invoice number, they can be found by anyone with the question a supplier is actually asking, which is always about a specific invoice rather than about a month. That single decision determines whether the filing system serves the business or its author. This page is that decision, what follows from it, and the retention question that sits underneath any filing system, digital or paper.
File by supplier and invoice, not by date
The question that arrives is always about an invoice: a supplier chasing payment, an auditor sampling, a manager querying a cost. Filing structured around the question makes retrieval seconds; filing structured around the filing makes it minutes and only for one person.
Keep the document with the record
The invoice image belongs to the invoice, which belongs to the supplier. Separating them, so the record is in the ledger and the image in a folder tree, creates two systems and a convention to remember.
Decide retention rather than accumulating
How long records must be kept is a policy question for your jurisdiction and your advisers; the IRS publishes guidance on retention periods as one input and the National Archives publishes the general discipline. Write it down, apply it and record that you did, rather than keeping everything forever by default.
Questions people ask about accounts payable filing system
Does this apply to digital filing?
Especially to digital filing, where dated folders are the default and are the least useful structure available. The medium changed; the question of what things are filed by did not.
What about paper we still receive?
Scan on arrival and file the scan against the record. Whether the paper can then be destroyed depends on your jurisdiction and the completeness of the scan, and it is a question for your own advisers.
How long should we keep supplier invoices?
A retention policy question rather than one with a universal answer. What matters is that you decided it and can show what you decided.