Definition

Noun: 1. A current liability account representing the total amount of money a company owes to its suppliers or creditors for goods or services purchased on credit. This is a standard accounting term for short-term debts that must be paid within a specific period, such as 30, 60, or 90 days.

Usage and Examples

• As a subject: "Accounts payable is a critical component of working capital management."
• As an object: "The accountant is reconciling the accounts payable."
• With prepositions: "The invoice was recorded in accounts payable." / "The company has $50,000 in accounts payable."

Advanced Usage

• "Accounts payable aging report": A detailed report that categorizes unpaid supplier invoices by their due dates, helping a company manage its cash flow and payment priorities.
• "Accounts payable department": The specific division within a company's finance team responsible for processing invoices and making payments to vendors.
• "Accounts payable turnover ratio": A financial metric that shows how quickly a company pays off its suppliers during a period. A higher ratio generally indicates more efficient payment practices.

Variants and Related Words

• Payable (Adjective): Describing an amount that is due to be paid. (e.g., "The invoice is payable within 30 days.")
• Trade payable: A more specific term often used interchangeably with accounts payable, referring specifically to money owed for goods or services related to the company's core trading operations.
• Accounts receivable (Noun): The opposite account; it represents money owed a company by its customers for goods or services sold on credit.

Synonyms

• Trade creditors (UK/commonwealth usage)
• Sundry creditors
• Bills payable (though this can sometimes refer specifically to formal written promises to pay)

Key Distinctions

• Accounts Payable vs. Notes Payable: Accounts payable are typically informal, short-term obligations arising from regular purchases. Notes payable are formal, written debt agreements (like promissory notes) that often have longer terms and involve interest payments.
• Accounts Payable vs. Accrued Expenses: Both are liabilities. Accounts payable are for billed expenses (an invoice has been received). Accrued expenses are for incurred but not yet billed expenses (e.g., wages earned by employees but not yet paid).

Noun

1. a debtor's accounts of money he owes; normally arise from the purchase of products or services