Accounts payable - What are accounts payable?
An amount owed to a supplier or bank when goods or services are purchased on credit
Keep track of the money your company owes. Your accounts payable are automatically updated with a full service accounting system like Debitoor.
Recording Accounts Payable in the books
In the double-entry bookkeeping system, the amount of accounts payable is increased on the credit side and a debit is registered in another account. When payment is made to the creditor, cash is increased and accounts payable is decreased. When recording the transaction, cash is credited and accounts payable are debited.
It is important to keep thorough records of accounts payable and ensure that payments are made on time. Suppliers and banks will be more likely to provide goods or services on credit if your business has a history of payments that indicate financial reliability.
Accounts Payable in Debitoor
Using traditional accounting software or Excel, the values in accounts receivable and accounts payable must be entered and balanced manually. However, with an automated accounting system such as Debitoor, these amounts are automatically adjusted and balanced when payment is made.
Jane’s Company purchases £800 of supplies. The supplier provides an invoice that must be paid within 30 days. When Jane’s Company places the order, she increases her inventory by £800 and increases the accounts payable by £800. After 30 days, once the supplier has been paid, Jane’s Company decreases its cash amount by £800 and decreases its accounts payable by £800.
Today, with Debitoor, the back-and-forth of accounts balancing is no longer necessary. A liability such as an account payable is recorded when an invoice is received from a supplier. The amount is reconciled when a payment is made, and the expense is automatically matched in the uploaded bank statement, thanks to automatic bank reconciliation!