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Accounts payable terms

New to accounts payable? A few terms you should know

November 16, 2023

While the Great Resignation appears to have hit its peak in 2022 and voluntary quit rates are dropping, employee turnover remains high. That can lead to a lot of responsibility reshuffling, career changes, and new hires in payments (and any other industry, for that matter). Are you new to accounts payable or the business payments industry? If so, we’ve compiled a list of 13 definitions you should know. 


Payment acceptance refers to the percentage of payment attempts that are successfully processed. A payment acceptance rate is the percentage success rate, which is also referred to as a payment authorization rate.


ACH stands for Automated Clearing House and is described by the U.S. Treasury Department as “the primary system that agencies use for electronic funds transfer (EFT).” ACH allows businesses and consumers to pay bills automatically by providing an account number and bank routing number. 

Card issuer

A card issuer is an institution that issues cards and provides credit limits. Card issuers manage card features such as terms of use, benefits, and more. 


A chargeback is described in this Forbes article as “an action taken by a bank to reverse electronic payments.” Chargebacks can occur due to fraud, disputed purchases, or unauthorized transactions and result in funds being returned to the cardholder’s account. 


DPO stands for days payable outstanding, and is a key KPI for any accounts payable team. DPO is the “average number of days it takes a company to pay back its accounts payable,” according to the Corporate Finance Institute. High and low DPOs can mean different things, so they shouldn’t be necessarily viewed as one being good and one being bad. 


ERP stands for enterprise resource planning and typically refers to the software used to manage business processes, such as inventory, sales, marketing, finance, and human resources. ERPs often integrate accounts payable with other systems into a single system.

Merchant accounts

Merchants are any person or company who is selling products or services. A merchant account is an account established by the merchant to accept payment for these products or services. These payments can often be accepted in a variety of forms, such as credit cards, debit cards, cash, and wire transfers. 


PCI DSS stands for Payment Card Industry Data Security Standard, which is set by card networks to ensure the safety and security of a cardholder and suppliers’ sensitive information.

Watch the video below to learn more about PCI DSS. 


Payment processors are the companies or technology that facilitate the transfer of funds from a cardholder’s bank account to the merchant’s bank account.


Reconciliation is the process of verifying financial transactions to align expected payments with actual ones. Two examples of how accounts payable teams do this are ensuring: 

  • The balance in books/records equals the amount on bank statements.
  • An accounts payable balance aligns with a balance schedule. 


Settlement is the process with which processors facilitate the transfer of funds between the merchant’s bank and the cardholder’s bank to complete a transaction. 


Tokenization replaces original card data with a unique, generated placeholder, or “token.” Tokenization helps to reduce fraud because the tokens on their own have no value to someone trying to commit fraud. 

Watch the video below to learn more about tokenization.

Virtual cards

A virtual card is an electronic card number that can be used at merchants instead of using a plastic card. They help to increase payment security, simplify supplier payments, and increase efficiency in accounts payable. 

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The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax and investment advisers. 

WEX receives compensation from some of the merchants identified in its blog posts. By linking to these products, WEX is not endorsing these products or the content of the merchants’ websites. WEX also can’t ensure that merchants won’t change the content on the websites linked in this blog post.

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