Accounts Payable (AP)
Also known as: AP
Accounts payable (AP) is the money an organisation owes its suppliers for goods and services received but not yet paid for, and the team that manages those payments.
AP sits at the end of the procure-to-pay cycle. The AP function receives supplier invoices, matches them against orders and receipts, obtains approval, and schedules payment within agreed terms. As a balance-sheet item, accounts payable represents short-term liabilities to suppliers.
Well-run AP protects cash flow and supplier relationships: it avoids late-payment penalties, captures early-payment discounts where worthwhile, and manages days payable outstanding to balance working capital against goodwill. Automation of matching and approvals is the biggest lever for AP efficiency.
Frequently asked questions
- What is accounts payable?
- Accounts payable is the money owed to suppliers for goods and services received but not yet paid, and the function responsible for processing and paying those invoices.
- What is the difference between accounts payable and accounts receivable?
- Accounts payable is money your organisation owes to suppliers. Accounts receivable is money customers owe to your organisation.
Related terms
Invoice
An invoice is a document a supplier issues to a buyer requesting payment for goods or services delivered, listing what is owed and the terms.
Read definitionDays Payable Outstanding (DPO)
Days payable outstanding (DPO) is the average number of days a company takes to pay its suppliers after receiving an invoice.
Read definitionCredit Terms
Credit terms are the conditions under which a supplier allows a buyer to pay for goods after delivery, rather than upfront — for example, payment within 30 days.
Read definitionExplore related across the knowledge graph
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