net present value

Net present value, or NPV, is a method of valuing capital projects that uses a predetermined interest rate to determine the present value of an investment's net cash inflows and outflows

Net Present Value (NPV) measures the profitability of an investment by discounting expected future cash inflows and outflows to their present value.

- Used in the purchase-to-pay cycle to validate invoices, approvals, and supporting documents.
- Used to strengthen internal controls over purchasing and supplier payments.

- Example: Before payment, the AP team applies **net present value** to confirm the invoice matches the approved purchase documentation.

- Why it matters: Prevents incorrect/duplicate payments, reduces fraud risk, and improves accuracy of payables and expenses.