Payable
A payable (or "accounts payable") is money your business owes to vendors, suppliers, or service providers for goods or services you've received but haven't paid for yet. Payables are short-term liabilities — they're debts you're expected to settle within a set period, usually 30 to 90 days.
Payable Definition
A payable (or "accounts payable") is money your business owes to vendors, suppliers, or service providers for goods or services you've received but haven't paid for yet. Payables are short-term liabilities — they're debts you're expected to settle within a set period, usually 30 to 90 days.
Payable in Practice — Example
A restaurant orders $3,000 worth of ingredients from a food distributor on net-30 terms. The food arrives on March 5th, but payment isn't due until April 4th. From March 5th until the bill is paid, that $3,000 sits in accounts payable. It's a liability on the balance sheet — the restaurant received value and now owes money for it.
Why Payable Matters for Your Books
Payables represent real obligations. If you're using accrual accounting (which most businesses should), you record the expense when you receive the goods or services — not when you pay the bill. This gives you a more accurate picture of what you owe at any given time.
Managing payables well directly impacts your cash flow. Paying too early ties up cash you could use elsewhere; paying too late damages vendor relationships and can trigger late fees. Smart payable management means knowing exactly when each bill is due and planning cash around it.
Payables also matter for financial reporting. The accounts payable balance on your balance sheet tells lenders and investors how much you owe in the short term. A rapidly growing payable balance could signal cash flow problems — or it could mean the business is scaling. Context matters.
How Payable Shows Up in QuickBooks
In QuickBooks Online, payables are tracked through Bills. When you enter a bill (Expenses → Bills), QBO creates an accounts payable entry. Pay bills through the Pay Bills feature, and the payable clears. Run the Accounts Payable Aging report to see what's outstanding and what's overdue. The Balance Sheet shows your total A/P balance under Current Liabilities.
Common Mistakes
FAQ
Q: What's the difference between a payable and an expense? A: An expense is the cost you incurred. A payable is the unpaid portion of that expense. Once you pay the bill, the payable goes away but the expense remains on your P&L.
Q: Are payables the same as accounts payable? A: Yes — "payables" and "accounts payable" (A/P) are used interchangeably. They both refer to money owed to vendors for goods or services received.
Related Terms
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Related Terms
An owner's draw is money a business owner takes out of the business for personal use. It's not a salary or wage — it's a withdrawal from the owner's equity in the company.
Inventory is the stock of goods a business holds for sale to customers or for use in producing goods for sale. It includes raw materials, work-in-progress, and finished goods. Inventory is classified as a current asset on the Balance Sheet because it's expected to be sold or used within one year.
Accrued revenue is income your business has earned by delivering goods or services but hasn't invoiced or collected yet. It's the revenue equivalent of accrued expenses — the work is done, the money is owed, but no bill has gone out. Accrued revenue appears as a current asset on your balance sheet.
The original purchase price of an asset plus any additional costs (improvements, fees). Used to calculate capital gains or losses when the asset is sold.
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