Payable Definition
A payable is a financial obligation that a company has to pay in the near future. The amount that is owed is typically due within 30 days. Payables can be either short-term or long-term obligations. Short-term payables are typically due within one year, while long-term payables have a maturity date that is greater than one year.
Payables can arise from a variety of transactions, such as the purchase of goods or services on credit, the accrual of expenses, or the issuance of bonds. When a company purchases goods or services on credit, it means that the supplier allows the company to delay payment for a period of time. The company will then record a payable on its balance sheet for the amount owed to the supplier.
Expense accruals occur when a company incurs an expense but does not immediately pay for it. For example, if a company pays its employees every two weeks but incurs payroll taxes every week, it will record a payable for the taxes every week until it pays them at the end of the month. Bonds payable are recorded when a company issues bonds to raise capital. The bondholders are effectively lending money to the company, and the bonds represent the debt that the company owes to them.
Payables can have a significant impact on a company’s cash flow because they represent amounts that will need to be paid in the future using current resources. As such, companies typically try to manage their
