In business accounting, accounts payable describes money owed to suppliers for goods or services already received.
A payable arises when a business buys on credit instead of paying immediately. The supplier issues an invoice, and the buyer records a short-term liability until the invoice is settled. Common examples include unpaid bills for inventory, office supplies, utilities, transportation, and professional services.
Accounts payable is usually listed as a current liability on the balance sheet when payment is expected within the company’s normal operating cycle or within the applicable short-term period. Managing it involves checking invoices, approving purchases, observing payment terms, and avoiding late fees while preserving cash.
Accounts payable is frequently confused with accounts receivable. Payables are amounts the business owes to other organizations; receivables are amounts customers owe the business. A payable is also different from long-term debt, which commonly involves formal financing arrangements extending beyond ordinary supplier credit.