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Accounts Payable

Money the business owes to suppliers, vendors, or service providers for goods or services received but not yet paid for.

Accounts payable (AP) represents money the business owes others. When a food distributor delivers $2,000 in ingredients on Net 30 terms, the business has $2,000 in accounts payable until payment is made. AP appears as a current liability on the balance sheet — it is an obligation the business has incurred but not yet settled.

AP is the mirror image of accounts receivable: one business’s payable is another’s receivable. Managing AP means tracking due dates, paying on time to maintain supplier relationships (and credit terms), and not paying early unless a discount justifies it. Late payment risks late fees, loss of credit terms, and damaged supply chain relationships.

The relationship between AR and AP determines a business’s cash conversion cycle — how long cash is tied up between paying suppliers and collecting from customers. A business that pays suppliers in 15 days but collects from customers in 45 days has a 30-day gap that must be funded from working capital.

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@misc{emsenn2026-accounts-payable,
  author    = {emsenn},
  title     = {Accounts Payable},
  year      = {2026},
  note      = {Money the business owes to suppliers, vendors, or service providers for goods or services received but not yet paid for.},
  url       = {https://emsenn.net/library/business/terms/accounts-payable/},
  publisher = {emsenn.net},
  license   = {CC BY-SA 4.0}
}