What Are Accounts Payable (AP)
Accounts payable (also known as AP) is an accounting concept that refers to any entry in the debtor party, such as the purchase of goods from a supplier on credit to a creditor party. In other words, they are all the commercial debts that your company contracts with your suppliers due to its economic activity.
The paradigmatic example of accounts payable are all those credits granted by a supplier, and that implies deferring the payment of a purchase invoice, either for the purchase of a good or the contracting of a service. Accounting, they are part of current liabilities, if these debts have a maturity period of fewer than 12 months.
How are accounts payable different from accounts receivable?
The accounts payable and accounts receivable are two sides of the same coin. Thus, while the former refers to all those commercial credits that a company grants to your business, and that implies postponing the payment of invoices, in the case of accounts receivable, they are the credits that you grant to your customers for the products you sell or services you provide.
At the accounting level, each one of them is accounted for in a different item. Accounts payable are part of liabilities, accounts receivable, on the other hand, are included in current assets.