Accounts Payable and Accounts Receivable are two important terms in the business world—but understanding the difference between them is key.

Accounts Payable refers to the money a business owes to someone else, be it an individual or another company. This could be for goods or services purchased from that person or company, taxes owed to the government, or any other debt.

In contrast, Accounts Receivable is the money that is owed to the business by its customers. This could include payments for goods or services that the business has provided, rent, interest income, or unpaid invoices.

Keeping track of both Accounts Payable and Accounts Receivable is essential for any business to stay afloat. Knowing when and how much money is coming in and going out of your bank account helps you make informed decisions about your budget, inventory and more!