Accounts Payable

In finance, the term accounts payable denotes unpaid invoices billed to a company or other entity which have not yet reached their payment due date. Accounts receivable are not categorized as debt because the date by which payment must be settled has not yet transpired.

If an entity is unable to meet its accounts payable obligations by their due dates, its creditors may file debt collection claims against it. However, they may agree to convert the invoices to loans instead. These loans are known as notes payable. Unlike accounts payable, notes payable may generate debit interest charges as defined in the agreement between an entity and its creditors.

When estimating the value of a company in which you are interested in investing, it is helpful to know the companies accounts payable and notes payable – as both of these are liabilities which detract from the company’s value. The reporting requirements stipulated by government agency’s or stock exchanges typically require public companies to publish their accounts payable and accounts payable.

See also: Accounts receivable