Accounts Payable: What Does It Mean?

Accounts payable (AP) refers to the money a business owes to its vendors, suppliers, or contractors for goods and services already received but not yet paid for. It represents a short-term liability on the balance sheet, essentially bills that are due. For self-employed individuals and small business owners, managing accounts payable means tracking outstanding invoices from contractors, software subscriptions, suppliers, and service providers to ensure payments are made on time.

Timely payment protects vendor relationships and can preserve early-payment discounts. Poor accounts payable management, such as missing due dates or losing track of obligations, can damage credit with suppliers and create cash flow problems.