AP

Accounts Payable

The money a company owes to its suppliers or vendors for goods or services purchased on credit. In other words, when a company buys something but doesn’t pay for it immediately, the amount owed is recorded under Accounts Payable on the company’s balance sheet. The Accounts Payable department in a company is responsible for processing invoices from suppliers, verifying their accuracy, and ensuring timely payments. This involves tasks such as:

• Receiving and recording invoices
• Matching invoices with purchase orders and delivery receipts
• Obtaining approvals for payments
• Processing payments to suppliers
• Maintaining accurate records of payments and outstanding balances

Effective management of Accounts Payable is crucial for maintaining good relationships with suppliers, ensuring an uninterrupted supply of goods and services, and optimizing cash flow. Delayed or inaccurate payments can lead to supply chain disruptions and damage a company’s reputation.

In modern businesses, Accounts Payable processes are often automated using specialized software to improve efficiency, reduce errors, and provide better visibility into cash flow and financial obligations.

• Abbreviation: AP