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Business Planning

Accounts Payable vs Accounts Receivable

Many business owners don’t understand the difference between accounts payable and accounts receivable, but these are key terms related to your company’s finances. Despite their importance, accounts payable vs. receivable still becomes a source of accounting confusion for some. 

Although both accounts receivable and accounts payable are items on your balance sheet that are crucial for business operations, it’s essential to differentiate between accounts receivable vs. payable. You must know which of these accounts is for assets and which deals with liabilities, or your business could end up in debt and overextended.

In this post, we’ll answer the question, ‘what are accounts payable and accounts receivable?’, discuss accounts payable vs. accounts receivable, and explain the importance of receivables and payables.