Accounts payable explained

Accounts payable are bills due to suppliers for inventory items already purchased.

To compete for your business, many suppliers will extend you credit and flexibility to pay for purchases 30 more days after you receive them.  You can use this interest-free credit to help fund your operations.  Most suppliers will offer their customers easy credit – find out how to apply.

Many suppliers offer a discount for early payment. Budgeting your cash flow can help you know when to take advantage of these discounts.

Sealey Power Products Warehouse
Sealey Power Products Warehouse by toolstop, on Flickr

Accounts payable are the inverse of accounts receivable.  Your accounts payable is, on the books of your supplier, an accounts receivable.

About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

2 Responses to “Accounts payable explained”

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  1. Accounting Made Easy by the Accountinator « Homepreneurs's Blog - April 2, 2012

    […] school or college?  A few terms here and there and the difference between accounts receivable and accounts payable.  If a few accounting classes were taken, one might understand the difference between a balance […]

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