Accounting
Accounts Payable (AP)
Money your business owes to vendors and suppliers for goods or services already received.
Definition
AP is a liability on the balance sheet. Strong AP discipline — timing payments to preserve cash without damaging vendor relationships, capturing early-pay discounts where they make sense — is one of the quieter ways well-run businesses outperform.
When It Matters
Always. AP timing directly drives operating cash flow.
Common Questions
Are early-payment discounts always worth taking?
Usually — a 2% / 10 net 30 discount works out to an effective annualized return north of 35%. Almost always worth it if cash is available.