Accounts Payable and Accounts Receivable

Devine Dictionary

Today in the Devine Dictionary we are going to review accounts payable and accounts receivable. While this may seem like an obvious one to some, it is easy to confuse them if you do not have an accounting background. So, let’s dive in.

Both terms are important to understand because they have to deal with the money coming in and going out of your business. An easy way to remember these terms is to look at the second word of each. When you think of accounts payable look at the word payable. When your business receives bills, you need to pay them. So, your accounts payable is the money that you owe to vendors or contractors that you work with. Whether they are in the process of being paid or outstanding.

Now let’s look at the accounts receivable the same way. When you send an invoice to a customer for a service or a product you are looking to receive money from them. So, your accounts receivable is the money that is owed to you by your clients or customers for goods or service your business provides.

While these words seem simple, it is important to keep in mind the meanings so as you look at reports and business’ financials you have a proper understanding of what you are seeing. We hope that this helped you. Remember, at Devine we are able to provide services to you to process your accounts payable and your accounts receivable. Contact us today to learn more, 281-545-4000.

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Jennifer Devine

I'm an experienced finance professional with more than 20 years of experience. I've held several Controller positions throughout my career, most notably with an internationally respected commercial real estate investment, management, and brokerage firm. In this role, I was responsible for all aspects of accounting across the company's many operational divisions - including internet services, real estate development, property management, and brokerage services. As our company operated in multiple countries and currencies, it was essential to me that all financial reports were accurate and compliant.