Glossary · Purchases and payables
Accounts payable (A/P)
Accounts payable is the money a business owes its suppliers for goods or services it has received but not yet paid for. It is a current liability on the balance sheet. It goes up when you enter a vendor bill and down when you pay the bill or apply a vendor credit.
Glossary / Accounts payable · Also called payables, trade payables
How it works
When a supplier delivers and sends a bill with terms, you have an obligation before any cash leaves the bank. Recording the bill in accounts payable puts the expense in the right month and keeps a list of what is due and when.
Managing payables well means paying on time without paying early for no reason. Some suppliers offer a discount for early payment, such as 2% off if paid within 10 days (often written 2/10 net 30). Paying a bill without entering it first, straight from the bank, skips A/P entirely; that is fine for one-off purchases, but bills with terms belong in A/P so the aging report is complete.
Worked example: A bill with an early-payment discount
A bakery receives $1,500 of flour on June 2 with terms 2/10 net 30. It enters the bill: debit cost of goods sold or inventory, credit accounts payable, $1,500.
Paying by June 12 earns a 2% discount of $30, so the bakery pays $1,470. A/P for that supplier drops by the full $1,500: $1,470 from the bank and $30 recorded as a discount. Waiting until July 2 would cost the full $1,500.
In AcboBooks
Bills post to the Accounts Payable account. Pay Bills lists every open bill across all vendors, filtered by due date, applies vendor credits and early-payment discounts from the bill's terms, and posts one payment per vendor. The A/P Aging report shows whom you owe by how overdue.
Related terms
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Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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