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What is Accounts Payable?

Accounts payable software for small business screenshot

PBS™ Accounts Payable Software

Hello again,

This post is for small to mid-sized companies who may be vetting an accounts payable system.

The following is sourced from Wikipedia.  We hope you find it useful:

Definition

“Accounts payable (AP) is money owed by a business to its suppliers shown as a liability on a company’s balance sheet.

An accounts payable is recorded in the Account Payable sub-ledger at the time an invoice is vouched for payment.

Vouchered, or vouched, means that an invoice is approved for payment and has been recorded in the General Ledger or AP subledger as an outstanding, or open, liability because it has not been paid.

AP is a form of credit that suppliers offer to their customers by allowing them to pay for a product or service after it has already been received.

Invoicing

Suppliers offer various payment terms for an invoice. Payment terms may include the offer of a cash discount for paying an invoice within a defined number of days.

Accountants or bookkeepers usually use accounting software to track the flow of money into this liability account when they receive invoices and out of it when they make payments.

Commonly, a supplier will ship a product, issue an invoice, and collect payment later.

This is a cash conversion cycle, or a period of time during which the supplier has already paid for raw materials but hasn’t been paid in return by the final customer.”

Passport Software

With 35 years of business and accounting experience, Passport Software provides comprehensive yet easy to use accounts payable software for small businesses and medium sized companies.

The accounts payable module is part of Passport Software’s accounting software solution.

Call 800-969-7900 – Or Contact Us.  We are here to help.


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