Accounts Payable
Accounts Payable

See Also:
Account Reconciliation
Accounts Payable Turnover
Cost Volume Profit Definition
Accounts Receivable
Accounts Receivable Turnover
Unearned Revenue

Accounts Payable Definition

The accounts payable definition is a current liability account on the balance sheet. The account represents the company’s short-term financial obligations to creditors and suppliers – goods and services the company has already received but not yet paid for. It is considered a short-term liabilities account because the payables are due within one year or one operating cycle.

Accounts Payable (A/P) Characteristics

Money in accounts payable is essentially an interest-free loan from suppliers. Often, suppliers offer a discount for early payment. When deciding whether or not to pay early in order to get the discount, it is necessary to compare the value of the discount to the company’s borrowing costs.
If the benefit of the discount exceeds the cost of borrowing, then the company is better off making the early payment. But if the benefit of the discount is less than the cost of borrowing, then the company is better off waiting until the payable is due.
For more tips on how to improve cash flow, click here to access our 25 Ways to Improve Cash Flow whitepaper.

accounts payable, Accounts Payable Definition
[box]Strategic CFO Lab Member Extra
Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.

Click here to access your Execution Plan. Not a Lab Member?
Click here to learn more about SCFO Labs[/box]

accounts payable, Accounts Payable Definition


The Dreaded “F” Word

See Also: What is Factoring Receivables Accounting for Factored Receivables Journal Entries for Factored Receivables Can Factoring Be Better Than a Bank Loan? History of Factoring How Factoring Can Make or Save Money Factoring is Not for My Company The What, When, and Where About Factoring Working Capital Factoring: The Dreaded “F” Word The dreaded

Read More »

Strategy for Managing Cash

Does your company have a strategy for managing cash?  Many companies have established procedures for purchasing materials, collecting customer payments, and paying vendors. But often people either do not communicate these procedures or simply don’t follow them consistently. Even when everyone is aware of and follows the established protocol, your system may be flawed. Before we show an example, you need to know how to manage cash flow.  Know How to Manage

Read More »

Daily Cash Flow Forecast

See Also: Cash Flow Statement Steps to Track Money In and Out of a Company How to Create Cash Flow Projections Thirteen Week Cash Flow Report Daily Cash Flow Forecast Use the Daily Cash  Flow Report to report on the daily cash balance and to help manage cash on a weekly basis. This tool is especially useful

Read More »


Financial Leadership Workshop

MARCH 28TH-31ST 2022


Financial Leadership Workshop


August 7-10th, 2023

WIKI CFO® - Browse hundreds of articles