Accounts payable and accounts receivable show a company’s cash flow. They measure revenues and expenditures to optimize profits and track the company’s financial health.
Accounts payable records document money owed to a business. In contrast, accounts receivable records document money owed to the company. Understanding the differences between these accounts and how to calculate and manage them helps maintain accurate financial records.
What Are Accounts Payable and Accounts Receivable Jobs
Accounts payable are records of money owed to another company. This money is considered a current liability because it is due within a short time, typically 30 days after the invoice date.
Tracking accounts payable serves multiple purposes:
- Maintains records of how much money is owed.
- Determines whether any payments are overdue.
- Creates an accurate record of the company’s finances.
- It shows how much money is available for purchases.
- It helps investors decide whether to invest in the company.
Accounts receivable are records of payments that are owed to the company. This money is considered a current asset because it is due within a short time, typically 30 days after the invoice date.
Tracking accounts receivable serves multiple purposes:
- Shows how much income is expected within a short time.
- Clarifies which customers owe money.
- Determines whether an invoice is underpaid, overpaid, or overdue.
Differences Between Accounts Payable and Accounts Receivable
Accounts payable records track money the company owes. In contrast, accounts receivable records track how much money is owed to the company.
When receiving an invoice, the purchase date, product or service, business name, and other relevant information are entered into the financial records as accounts payable. If there is a receipt with an estimate of how much would be spent, the amount and date are checked to ensure they are consistent with the invoice. Then, the payment is made, and the accounts payable records are updated.
Conversely, after a product or service is provided, an invoice is sent, and the date, business name, amount owed, and other relevant information are recorded as accounts receivable. When payment is received, it is entered as a credit for the accounts receivable record.
Accounts payable records show payment commitments that are future cash outflows. In contrast, accounts receivable records show payment commitments that are future cash inflows.
Placement on a balance sheet
Accounts payable are listed as a liability on a balance sheet because money is leaving the company. Conversely, accounts receivable are listed as an asset on a balance sheet because money is coming into the company.
Ready to Find an Accounts Payable or Accounts Receivable Job?
Job Store Staffing can match you with accounts payable or accounts receivable jobs in Colorado. One example is an Accounts Receivable role in Aurora. You also can visit our job board for other opportunities that fit your skills, goals, and interests.