accounts payable
Definition
Accounts payable is the total amount of money your business currently owes to suppliers, vendors, or service providers for goods and services you have already received but not yet paid for. Think of it as your business's outstanding tab, where you have taken delivery of something and agreed to pay the bill within a set period, typically 30 to 90 days.
Example
If your restaurant received a $2,000 food delivery from a supplier on credit and the invoice is due in 30 days, that $2,000 sits in your accounts payable until you write the check.
Watch Out
Letting accounts payable pile up or go past due can damage your relationships with suppliers and hurt your business credit score, making it harder to get favorable payment terms in the future.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.