Accounts payable risk assessment is the process of analyzing a company’s accounts payable to determine if they are at risk of financial loss due to bad debts. The goal is to figure out where and why money is owed, who owes it, and if it is likely to be paid. This process can help businesses to identify potential risks and take measures to avoid them, such as by offering more flexible payment plans or by getting more documentation up front before beginning an order with a new customer.

In general, accounts payable includes invoices that are owed by the business’ customers. However, it can also include those that are owed by its suppliers (if the orders were placed on account) or bills for services provided by independent contractors. Accounts payable usually exists in tandem with accounts receivable, which reflects the amounts that customers owe the business. Invoices from these two types of accounts make up a company’s receivables.