Accounts Payable

Accounts payable, often simply referred to as payables, is any debt that hasn’t been paid yet and must be paid within a certain time frame to avoid default. Account payables are short-term debts. They are important to keep track off, since a lapse in attention can easily lead to missed due dates. Such missed dates would result in not only penalties but also possibly lower credit ratings, and even a rift in supplier/service provider relations.

In accounting, account payables appear as entries that fall under the heading current liabilities. Once payment has been made, the entry is taken out of the liability account and reflects a negative cash flow in the books.

The opposite of accounts payable is accounts receivable, which simply means that you will have money coming in soon from a client’s outstanding debt. Of course once payment is received this reflects a positive cash flow in the books.

Accounts payables are used in accounting software for both big businesses and personal finance. Family expenditures like electric and credit card bills should be entered as account payables since they fall under short-term debts that need to be paid.

For companies, keeping track of accounts payables is especially important since a simple mistake can lead to overpayment, missed payments, and even open the company up for fraud. This is why it is always important to keep supporting documents such as invoices and receipts.

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