What are the Different Types of Accounts Payable

24/03/2025 Financial & Legal Services

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1. Trade payables: The most prevalent form of accounts payable, trade payables represent the amounts owed to suppliers for goods and services bought on credit. Such payables are typically short-term liabilities. As businesses grow, especially in bustling markets like India, efficiently managing trade payables becomes paramount. Numerous specialized AP services are now available to guide businesses through this process.
2. Accrued Expenses: Accrued expenses are the costs that a company recognizes even before it receives an invoice. Examples include utilities, wages, and rent. For instance, an employee’s salary that is recognized in March but paid in April would fall under this category. Accrued expenses can sometimes complicate the accounting process , and a robust system is essential to track them accurately.
3. Deferred Payment Contracts: These payables arise from agreements where a company decides to pay for goods or services at a future date, surpassing standard credit terms. Such contracts can be a boon for businesses keen on meticulous cash flow management. It’s a strategic move, allowing firms to leverage funds in areas they need most before settling their dues.
4. Bills Payable: When a company issues a formal promise, a promissory note, to pay specific amounts to suppliers or lenders, it is termed a bill payable. This document ensures a timely payment on a predetermined date or upon demand.

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