Ap Accounts Payable Definition

‘Accounts payable’ (AP) refers to the money a company owes to suppliers and creditors for goods or services received. Accounts payable is recorded as a liability on a company’s balance sheet.

A company’s accounts payable are typically due within 30 days of receiving goods or services. However, some suppliers may offer terms of 2%, 10%, or even 20% net 30, meaning that the bill is due in 30 days but the company can receive a discount if it pays within a shorter period of time, such as 2% off if paid within 10 days.

If a company does not have enough cash on hand to pay its accounts payable, it may need to take out a loan or issue new equity to raise the necessary funds. Alternatively, the company might be able to negotiate longer payment terms with its suppliers.