Accounts Payable (AP)

Accounting

Money a business owes to its suppliers or vendors for goods or services received.

Detailed Explanation

Accounts payable represents the short-term debt obligations a company has to its creditors or suppliers. When a business receives goods or services with payment terms (not immediate payment), it creates an AP entry. Managing AP effectively involves tracking due dates, taking advantage of early payment discounts, and avoiding late payment penalties. AP appears as a current liability on the balance sheet and is a key component of working capital management.

Examples

  • A company's AP includes invoices from suppliers due within 30 days
  • The AP team processes and schedules vendor payments

Related Terms

Invoice Accounts Receivable (AR) Purchase Order (PO) Payment Terms

Ready to Create Your Professional Invoice?

Put your invoice knowledge into practice with our free invoice generator

Create Invoice Now
Back to GlossaryBack to Home