Harness Money

What is accounts payable?

Accounts payable is a term used in accounting to describe the money a company owes to its suppliers and vendors for goods or services received on credit. It represents a company’s short-term liabilities and is recorded as a current liability on the balance sheet. When a company purchases goods or services on credit, it receives an invoice from the supplier with the amount due and a payment deadline. The company then adds this amount to its accounts payable, reflecting the amount it owes to the supplier. Once the payment is made, the accounts payable balance decreases. Managing accounts payable is crucial for businesses to maintain good relationships with suppliers and ensure timely payment of obligations.