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Also known as: AP, payables, trade payables

Accounts Payable

ConceptualFinanceOperations

Definition

Accounts Payable: Accounts Payable (AP) is money a company owes to suppliers and vendors for goods or services received but not yet paid. AP appears as a liability on the balance sheet. Managing AP strategically—paying on time to maintain relationships while optimizing cash flow—is essential for financial health.

Example Usage

“We automated AP processing, reducing payment errors and capturing early-payment discounts worth $30K annually.”

Common Misconceptions

Delay payments as long as possible. Late payments damage supplier relationships and can incur penalties.
AP is just bill paying. Strategic AP manages cash timing while maintaining relationships and capturing discounts.
AP automation is only for large companies. Even small startups benefit from streamlined, error-free AP processes.

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