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What is Accounts Payable?

Definition: An account that consists of money that a person or company owes to suppliers, but has not yet paid

Accounts payable is a form of debt. When an invoice is received you would add it to this file, and it would be removed once the payment has been made.

International Standards: International Accounts Payable Professionals

It is an association of about 5,000 members from the UK, U.S, Canada and others that have established a new definition of accounts payable:

Accounts payable is a strategic, value-added accounting function that performs the primary non-payroll disbursement functions in an organization. As such, the AP operation plays a critical role in the financial cycle of the organization.

AP enables an organization to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the entire payables process.

In addition to the traditional AP activities whereby liabilities to third-party entities (suppliers, vendors, taxing authorities, etc.) are recognized and paid based on the credit policies agreed to between the company and its suppliers.

Today's AP departments have taken on much wider roles including fraud prevention, cost reduction, workflow system solutions, cash-flow management, internal controls and vendor (supply chain) financing.

http://en.wikipedia.org/wiki/Accounts_payable

 

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