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Accounting Terms
Accounts Payable
Definition
Money a business owes to its suppliers and vendors for goods or services received.
Overview
Accounts payable (AP) represents your outstanding bills—money you owe to others. Managing AP affects your cash flow and vendor relationships.
Example
A business has $10,000 in accounts payable for office supplies, software subscriptions, and contractor fees.
Best Practices
Track all payables, pay on time to maintain good relationships, and take advantage of early payment discounts.
Common Mistakes to Avoid
Missing payment deadlines
Not tracking all payables
Damaging vendor relationships
Frequently Asked Questions
Should I pay invoices early?
If early payment discounts are offered, calculate if the savings outweigh the cash flow impact.