Accounts Payable for Non-Accountants
October 9, 2019
Accounts payable is a term that we must understand in order to be effective procurement professionals, and that all executive team members must understand in order to successfully run a business. In simple terms, accounts payable is a record of what the company owes in terms of payments owed to others, such as suppliers and service providers. Accounts payable has a credit line that matches the balance owed, similar to a credit card. Money is spent under the agreement that the money will be paid back in full. This means that the total accounts payable liabilities should equal total amount of credit and the accounts payable and the balance sheets should be the same.
Accounts Payable Must-HavesUnless you’re an accountant, you likely aren’t familiar with the most commonly used accounts payable terms. Fortunately for you, we have listed and defined them below.
- Vendor Name: The person or company to whom you owe money.
- Account Number: The company’s billing account.
- Invoice Number: Identifying number associated with the prepared invoice – very important.
- Expense Type: Category of expense (i.e. technology, office supply, marketing, etc.)
- Invoice Receipt Date: The date that you received the goods/service.
- Payment Deadline: The last day to pay before late consequences may occur.
- Status: Statement regarding whether the invoice has been paid, is pending, is late, or is in the process of being reviewed.