Accounts Payable

What is accounts payable?

Accounts payable (often abbreviated as AP) represents the bills your business needs to pay. When you receive materials from a supplier or services from a vendor on credit—meaning you'll pay later rather than immediately—that amount becomes part of your accounts payable.

For contractors and small business owners, managing accounts payable means keeping track of what you owe, when it's due, and ensuring you pay on time to maintain good relationships with suppliers and avoid late fees.

Accounts payable examples

Common accounts payable for small businesses include:

• Supplier invoices — Materials or inventory purchased on credit
• Utility bills — Electric, water, internet, and phone services
• Rent — Office or workspace lease payments
• Subcontractor fees — Payments owed to subcontractors for completed work
• Professional services — Accountant, lawyer, or consultant fees

Accounts payable vs. accounts receivable

Accounts payable is money you owe to others. Accounts receivable is money others owe to you. Together, these two numbers give you a clear picture of your short-term cash obligations and expected incoming funds.