Accounts Payable
Accounts payable is money your business owes to suppliers.
Accounts payable (AP) is the total of all unpaid supplier invoices — a liability on the balance sheet. Good AP management means paying on time to protect supplier relationships and capture early payment discounts, while using the full credit period to preserve cash. The AP process typically involves matching invoices to purchase orders and receipts before payment.
Example
The company's accounts payable ledger shows $31,000 owed to five suppliers this month.
Related terms
Frequently asked questions
What is the three-way match in accounts payable?
It is the check that the purchase order, the goods receipt, and the supplier invoice all agree before payment is released. It catches over-billing, duplicate invoices, and deliveries that never arrived.
Should I pay suppliers early or on the due date?
Pay early only to earn a discount that beats your cost of cash; otherwise pay on the due date. Paying late damages supplier relationships and can trigger late fees.
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