Skip to content
InvoiceJet
Start free

What is accounts payable?

By Tim White · Glossary · Last updated

Accounts payable (AP) is the money your business owes suppliers for goods and services you've received but haven't paid for yet. The term also covers the work: capturing supplier invoices, checking them, getting them approved and paying them on time. In a small business that's usually one person.

The AP process

Every bill goes through the same five steps, whether you handle 20 a month or 2,000:

  • Capture the invoice when it arrives, by email, mail or vendor portal
  • Record vendor, invoice number, amount, due date and line items
  • Check it: right amount, goods received, not already paid
  • Get approval from whoever owns the spend
  • Pay by the due date and record the payment

Where the time and money go

Capture and checking take most of the hours. At 4 minutes to key each invoice, 200 invoices a month is more than 13 hours before anyone has approved anything. The money leaks elsewhere: a 1,800-dollar invoice paid twice, a 90-dollar late fee on a bill that sat in someone's inbox.

InvoiceJet covers capture, recording and much of the checking. It reads each invoice in about 30 seconds, flags exact duplicates, tracks due dates and can email an invoice to an approver. You still decide what gets paid and when.

Common questions

What's the difference between accounts payable and accounts receivable?

Accounts payable is what you owe suppliers. Accounts receivable is what customers owe you.

Is accounts payable a debit or a credit?

AP is a liability, so it normally carries a credit balance. Recording a bill credits AP. Paying it debits AP.

Where does accounts payable appear on the balance sheet?

Under current liabilities, since supplier bills are normally due within a year.

Sources

Keep reading

Try it on your own invoices

10 invoices a month free, no card. Every field comes back with a confidence level and the text it was read from.

Start free