Accounts receivable is money owed to a company by customers, while accounts payable is money the company owes to suppliers.
Accounts receivable (AR) and accounts payable (AP) are opposite sides of a company’s financial transactions. Accounts receivable is money that customers owe to the company for goods or services delivered, representing an asset. Accounts payable is money the company owes to its suppliers for goods or services received, representing a liability. In short, AR is money coming in, while AP is money going out. Proper management of both helps maintain healthy cash flow, accurate records, and strong business relationships.
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