Accounts payable is a phrase referring to the debts owed by a company, typically in exchange for goods or services and due within a short period of time. Business practices are simplified by the use of accounts payable – a company essentially has an open line of credit with a vendor which is paid within a specified time period. This avoids frequent invoicing by assembling all transactions into a single account to be settled regularly.
A more general accounts payable definition refers to the short-term debts of a company as well as to the department that manages those debts.
What does accounts payable mean for a business’s accounting department? It means any money the company owes is to be recorded as a liability until it is paid. Companies often find success utilising accounts payable software to ensure proper management of this important item of business and to avoid potential default with creditors.