Accounts Payable
Accounts payable (AP) represents money a company owes to its suppliers and vendors for goods or services received but not yet paid for. It is recorded as a current liability on the balance sheet.
Key Details
- AP includes invoices from suppliers, utility bills, and other short-term obligations due within one year
- Three-way matching (PO, receipt, invoice) is a key AP control to prevent overpayment and fraud
- AP automation reduces processing costs, accelerates approvals, and improves vendor relationships
- AP turnover ratio measures how quickly a company pays its suppliers, affecting cash flow management