Accounts Payable

Odds are, your company owes payments to multiple vendors at once. Your accounts payable or payables are those invoices you need to pay soon to avoid default.

None of us want to lend money to someone who won’t pay it back, and vendors will think twice about extending goods and services to you on credit once you’ve failed to pay your bills on time. So, staying on top of your accounts payable is critical for cultivating good relationships with your vendors as well as managing your business’s cash flow.

You record payables on your balance sheet as a current liability. That figure rises the more you buy goods and services on credit instead of paying with cash. It decreases when you pay off invoices faster than you buy more on credit.