Accounts Payable Vs. Accounts Receivables: What’s The Difference?

Accounts payable and accounts receivable are essential accounting terms that reflect how money moves in and out of a business. Accounts payable is the amount a company needs to pay suppliers for purchases made on credit, representing outgoing obligations. Accounts receivable is the money owed to the business by customers who have bought goods or services on credit, representing incoming funds. Keeping a balance between the two is crucial for cash flow management. Proper tracking ensures bills are paid on time, revenue is collected efficiently, and the business remains financially stable and operational.

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