What is
Accounts payable?
Accounts payable (AP) refers to the short-term obligations a business owes to its suppliers or vendors for goods and services received on credit. These liabilities are recorded as current liabilities on the balance sheet and must typically be settled within agreed payment terms, such as 30, 60, or 90 days.
Key takeaways
Short-term liability
AP represents unpaid bills or invoices for goods and services received.
Critical for cash flow
Proper AP management ensures liquidity while maintaining vendor relationships.
Process-driven
The AP cycle involves invoice receipt, verification, approval, and payment.
Automation benefits
Streamlining AP with technology reduces errors and enhances efficiency.
Why accounts payable matters?
Accounts payable (AP) is more than just a line item on balance sheet; It’s a vital part of managing a company’s cashflow. Paying vendors on time keeps sup[ply chains running smoothly and strengthens trust. On the other hand delaying payments strategically can help business maximised cash reserve without incurring penalties.
Invoice receipt
Vendors send invoices after delivering goods or services.
Matching and verification
Invoices are cross-checked with purchase orders and delivery receipts to ensure accuracy.
Approval workflow
Authorized personnel review and approve invoices for payment.
Payment execution
Payments are processed via checks, bank transfers, or automated systems
Accounts payable are categorized as current liabilities on the balance sheet. Changes in AP levels directly affect cash flow:
An increase in AP indicates differed payments, improving short-term cash flow.
A decreased means liabilities are being settled, reducing cash reserves.
Why automation matters in?
Modern businesses increasingly rely on accounts payable automation software to streamline processes. Automation reduces manual errors, accelerates invoice processing times, and provides real-time insights into outstanding obligations.
Real-world examples
Case study: Blue Star India’s accounts payable transformation
Blue Star Limited, one of India’s leading air conditioning and commercial refrigeration companies, faced inefficiencies in its accounts payable process due to manual handling of invoices. The company implemented Datamatics' TruBot solution to automate its AP operations. As a result:
Invoice processing time improved by 33%.
Errors caused by manual data entry were significantly reduced.
Employees could focus on strategic tasks instead of administrative work.
Disclaimer: The information provided in this business glossary is for educational purposes only and should not be considered as financial advice. Always consult with qualified financial professionals before making investment decisions.
Get paid globally. Keep more of it.
No FX markups. No GST. Funds in 1 day.
What is
Accounts payable?
Accounts payable (AP) refers to the short-term obligations a business owes to its suppliers or vendors for goods and services received on credit. These liabilities are recorded as current liabilities on the balance sheet and must typically be settled within agreed payment terms, such as 30, 60, or 90 days.
Key takeaways
Short-term liability
AP represents unpaid bills or invoices for goods and services received.
Critical for cash flow
Proper AP management ensures liquidity while maintaining vendor relationships.
Process-driven
The AP cycle involves invoice receipt, verification, approval, and payment.
Automation benefits
Streamlining AP with technology reduces errors and enhances efficiency.
Why accounts payable matters?
Accounts payable (AP) is more than just a line item on balance sheet; It’s a vital part of managing a company’s cashflow. Paying vendors on time keeps sup[ply chains running smoothly and strengthens trust. On the other hand delaying payments strategically can help business maximised cash reserve without incurring penalties.
Invoice receipt
Vendors send invoices after delivering goods or services.
Matching and verification
Invoices are cross-checked with purchase orders and delivery receipts to ensure accuracy.
Approval workflow
Authorized personnel review and approve invoices for payment.
Payment execution
Payments are processed via checks, bank transfers, or automated systems
Accounts payable are categorized as current liabilities on the balance sheet. Changes in AP levels directly affect cash flow:
An increase in AP indicates differed payments, improving short-term cash flow.
A decreased means liabilities are being settled, reducing cash reserves.
Why automation matters in?
Modern businesses increasingly rely on accounts payable automation software to streamline processes. Automation reduces manual errors, accelerates invoice processing times, and provides real-time insights into outstanding obligations.
Real-world examples
Case study: Blue Star India’s accounts payable transformation
Blue Star Limited, one of India’s leading air conditioning and commercial refrigeration companies, faced inefficiencies in its accounts payable process due to manual handling of invoices. The company implemented Datamatics' TruBot solution to automate its AP operations. As a result:
Invoice processing time improved by 33%.
Errors caused by manual data entry were significantly reduced.
Employees could focus on strategic tasks instead of administrative work.
Disclaimer: The information provided in this business glossary is for educational purposes only and should not be considered as financial advice. Always consult with qualified financial professionals before making investment decisions.
Get paid globally. Keep more of it.
No FX markups. No GST. Funds in 1 day.