The major problem faced in payables processing is avoiding overpayments — especially paying the same invoice multiple times.
After many years of dealing with other companies' payables processing, I can assure you that most companies are atrocious at this — regardless of size. For example, when I was manufacturing, whenever a company would send in a Purchase Order, we'd return a Sales Order confirming their order and scheduled delivery. Then when we'd ship the order, we'd send them an Invoice. And later, if they hadn't paid within terms, we'd send them a Statement reminding them of their open invoices.
It is unbelievable how many companies paid not only against the Invoice — but against the Sales Order and against the Statement — they'd triple pay on one order! And the invoiced amounts were not insignificant — seldom less than $1,000. And all would occasionally do it — even very large companies like the Big 3, Armco Steel, Hewlett Packard, Bell Labs, etc.
We had a policy that, whenever we received an overpayment, we would notify the company and ask how they wanted to handle it. But once and only once — it's hard enough dunning companies for underpayments — it's unreasonable to expect to have to dun for overpayments. Even more unbelievable, less than 10% ever responded to these notices — happily the small companies were much more likely than the large.
As you'll see when we get into Receivables, the Bad Debt account is the account into which you expense uncollectible amounts. I never had a year in which my Bad Debt account did not show "revenue"!
Note: In fairness to large companies, their poor performance is not simply a matter of ineptitude. Large companies purposefully try to balance the costs of overpaying against the administrative costs of trying to avoid doing so. They do periodic sample audits to see how much they're overpaying — and so long as their overpayments remain only a few percent of their total payments, they consider that "good enough". (Of course, my experience leaves me questioning just how good their sample audits really are.)
Anyway, you may think you're not overpaying — but, if you're paying more than a very few bills, the odds are overwhelming that you are. I'm sure I have. There's no way to totally avoid the problem — the best you can do is try to minimize it, with consistent procedures, similar to those outlined below.
Each day, take the vendor invoices received that day and prepare them as source documents. This may involve attaching other sheets — like the packing slip (or other receiving record) evidencing actual receipt of the goods being invoiced. (Not only do you not want to double-pay, you don't want to pay for things you didn't receive!)
Additional attachments could include a copy of the catalog page from which the goods were ordered... or a copy of your Purchase Order... whatever you'd like to see when you later refer to the invoice. The processing may also involve annotating the invoice with the transaction to be recorded, checking it against recent payments to the vendor to verify that it hasn't been paid, etc.
If you — the (sole) owner — are doing this yourself, you may decide no other "approval to pay" is needed. However, if someone else is doing it, the source documents should come to you for approval — and they should come to you with sufficient data that you can knowledgeably approve them.
After approval-to-pay, the financial transactions they represent should be recorded in your Purchase Journal (paper) or Payables Ledger (computer), and filed in a week-to-be-paid folder (e.g., labeled Purchase Disbursements Journal, week-number).
At the end of each week, you pull the current week-to-be-paid folder, write/print, sign and mail the checks. Again, if this is being done by someone other than the owner, the owner should sign the checks. The week-to-be-paid folder then — automatically — becomes the historical week-paid folder, containing the complete backup for all Payables checks written that week. Passing suggestion — before writing the checks against this folder, consider re-arranging the folder to put the source documents in vendor-number order. This makes it easier to later find the source document by either check-number or vendor-number.