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Accounts Payable

Accounts Payable (A/P) represents money your business owes to suppliers and vendors. Proper A/P management maintains good vendor relationships while optimizing cash flow.

What is Accounts Payable?​

A/P is created when you:

  • Purchase goods or services on credit
  • Receive vendor invoices with payment terms
  • Have obligations to pay suppliers

It's a liability because it represents money you owe.

A/P Management Process​

1. Receive and Review Invoices​

  • Verify accuracy against purchase orders
  • Confirm goods/services were received
  • Check pricing and calculations
  • Approve for payment

2. Record in System​

  • Enter invoice details
  • Assign to proper accounts
  • Note due date and terms
  • Attach invoice copy

3. Schedule Payments​

  • Prioritize by due date
  • Consider cash flow
  • Take early payment discounts when beneficial
  • Avoid late payment penalties

4. Make Payments​

  • Pay on or before due date
  • Use appropriate payment method
  • Obtain confirmation
  • Update records

5. Reconcile Vendor Statements​

  • Match to your records monthly
  • Resolve discrepancies
  • Ensure all invoices recorded
  • Maintain good relationships

Best Practices​

  1. Organize invoices systematically
  2. Track due dates carefully
  3. Take advantage of discounts (2/10 Net 30)
  4. Maintain vendor relationships
  5. Reconcile regularly
  6. Avoid duplicate payments

Next Steps​

Learn about inventory tracking if your business sells products.