Financial Glossary
Accounts Payable (AP)
What is Accounts Payable?
Accounts Payable (AP) refers to the money a business owes to suppliers for goods or services received on credit. It is recorded as a liability on the balance sheet and must be paid within a specific timeframe to maintain good vendor relationships and cash flow.
How Do Businesses Manage Accounts Receivable?
- Issuing invoices with clear payment terms.
- Following up with customers on overdue payments.
- Using accounting software to track outstanding balances.
Accounts Receivable vs. Accounts Payable – What’s the Difference?
| Feature | Accounts Receivable | Accounts Payable |
|---|---|---|
| Definition | Money owed to the business | Money owed by the business |
| Financial Impact | Increases cash flow when collected | Decreases cash flow when paid |
| Balance Sheet | Listed as an asset | Listed as a liability |
📌 Related: Accounts Payable (AP) | Cash Flow Management
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