What is accounts payable?

Accounts payable (AP) is a financial document that shows how much money an organization owes to its suppliers for the goods and services that were delivered on credit. In accounting terminology, accounts payable could be considered the current liability against an organization’s balance sheet.

Being a critical downstream component of the procure-to-pay process, accounts payable are usually expected to be paid off within a stipulated time period mentioned in the invoice. The key elements of accounts payable are: the amount of money owed, credit terms (Net 30, Net 90, etc), and its relationship with invoices.

More often than not, accounts payable also refers to the team responsible for making outgoing payments to meet these short-term obligations. This team is responsible for receiving and processing supplier invoices, performing three-way matching to verify invoice accuracy, obtaining necessary internal approvals for payment processing, and scheduling payments.