Accounts payable is an account within the general ledger, which keeps track of the money that needs to be paid to the company’s suppliers, vendors, or creditors. It is also referred to as a short-term debt owed to the company’s creditors. It should be paid as quickly as possible to avoid running past the due date.
Accounts payable is shown as a liability on the company’s balance sheet. Paying off these within the agreed period will improve the cash flow of the company. Accountants or bookkeepers enter the amount of the received invoices in the account payable sub-ledger. Soon after the company clears the invoice, the accountant enters the credit.