Accounts Payable Simulation

The Accounts Payable Simulation plunges you into the high-stakes world of corporate cash flow management. Experience the real-time pressure of optimizing payables to strengthen vendor relationships and maintain financial stability.

Accounts Payable Simulation Overview

In today's competitive environment, Accounts Payable (AP) is no longer a back-office clerical function but a critical strategic component of corporate treasury and working capital management. This simulation provides a dynamic, hands-on environment where participants manage the complete AP cycle for a simulated company.

Participants will be faced with a constant stream of incoming invoices, each with varying amounts, terms, and vendors. Their decisions on when to pay each invoice will directly impact the company's cash position, its relationships with key suppliers, and its overall profitability. The simulation replicates the real-world trade-offs between holding onto cash longer and the benefits of paying early to capture discounts or avoid penalties.

Although ideal for undergraduate and graduate finance courses, executive training, and corporate finance skill workshops, the simulation is modular and scalable, allowing instructors to vary complexity.

Accounts Payable Simulation Concepts

Participants work through realistic scenarios, which can be customized to emphasize or exclude specific topics depending on the learning goals. This modular structure allows the simulation to be tailored to any type of session. Key concepts include:

Working Capital Management
Cash Flow Forecasting and Analysis
Invoice Processing Cycle
Payment Terms
Early Payment Discounts
Vendor Relationship Management
Days Payable Outstanding
AP Aging Schedule
Liquidity vs. Solvency
Strategic Payment Scheduling

Gameflow

What Participants Do

In the simulation, participants will:

Process a high volume of incoming invoices from multiple vendors.
Analyze payment terms and early payment discount opportunities.
Strategically schedule payments to optimize company cash flow.
Manage a limited cash reserve and forecast short-term cash needs.
Navigate scenarios involving key vendor relationships and potential supply chain disruptions.
Analyze performance through a detailed AP Aging Report and Cash Flow Statement.
Compete with peers to achieve the highest financial health score for your simulated company.

Learning Objectives

By the end of the simulation, participants will be able to:

Analyze the impact of accounts payable on a company's working capital and liquidity.
Evaluate invoice payment terms to strategically capture early payment discounts.
Manage the critical trade-off between maintaining cash reserves and meeting financial obligations.
Forecast short-term cash flow requirements based on the AP aging schedule.
Calculate and interpret key metrics like Days Payable Outstanding.
Develop a strategic payment schedule that optimizes for both financial efficiency and vendor satisfaction.

How the Accounts Payable Simulation Works

This simulation can be run individually or in teams in academic or corporate contexts. Each cycle represents a stage of getting through a pressing financial situation.

1. Introduction Participants are assigned the role of AP Manager at a growing mid-sized company.

2. Invoicing Phase Each round, a new set of invoices arrives in their digital queue. Each invoice has a vendor, amount, due date, and potential discount terms.

3. Decision-Making Participants must decide which invoices to pay immediately and which to schedule for later, based on your available cash, discount opportunities, and strategic priorities.

4. Simulation Engine The platform processes decisions. Paying early may capture discounts (improving profitability) but depletes cash. Paying late preserves cash but may harm vendor relationships or incur late fees.

5. Results and Feedback After each round, participants receive a comprehensive dashboard including a Cash Flow Statement, AP Aging Report, and a Vendor Health Scorecard. Your overall company financial health score is updated.

Frequently Asked Questions

Who is the target audience for this simulation? This simulation is ideal for business students, finance and accounting professionals, early-career professionals in corporate treasury, and anyone seeking to understand the strategic importance of working capital management.
What makes this simulation different from an AP textbook chapter? Unlike passive reading, our simulation is learning by doing. You experience the consequences of your decisions in real-time, dealing with the pressure of multiple invoices and limited cash, which builds practical, unforgettable skills.
Do I need prior accounting experience? A basic understanding of accounting principles is helpful, but not required. The simulation includes introductory materials that explain core concepts like payment terms and cash flow, making it accessible to motivated learners.
How long does it take to complete the simulation? A typical simulation cycle can be completed in 60-90 minutes. However, to fully explore all scenarios and master the concepts, we recommend budgeting 2-3 hours.
Is this simulation relevant for investment banking or hedge fund careers? Absolutely. Understanding how working capital management, including accounts payable, impacts free cash flow is fundamental to financial modeling, valuation, and analyzing company performance—all core skills in investment banking and asset management.
Can the simulation be customized for our corporate training program? Yes, we offer extensive customization options, including tailoring vendor names, invoice volumes, and financial scenarios to match your company's specific industry and challenges.
What technical requirements are needed to run the simulation? The simulation is web-based and runs directly in your web browser (Chrome, Firefox, Safari). A stable internet connection is the only requirement.

Assessment

Assessment of participant performance can be tailored according to the host institution’s objectives (business school, corporate training, assessment centre). Typical assessment criteria include:

A composite score based on profitability, cash reserves, and vendor relationships.
The percentage of available early payment discounts participants successfully captured.
Effectively at which participants are managing the company's payment cycle compared to industry benchmarks.
The health of participants’ supplier relationships based on your payment history.
Assessment of individual contribution within the team to ensure collaborative engagement.