A/P & A/R Monitoring in Bookkeeping

What is Accounts Payable (A/P) & Accounts Receivable (A/R)? A major function of every business, that's what! 

Accounts Payable refers to a sum of money you OWE to another business for goods/services received. Accounts Receivable refers to a sum of money OWED to you from a customer or business for goods/services provided.

A/P & A/R maintenance is crucial to understanding the status of your business finances.

Managing your A/P is critical for making sure your business does not have to deal with collections, creditors and loss of trust from vendors due to missed or delayed payments, overdue bills, extra costs from late fees etc. 

In accounting A/R is considered an asset to your business as it tells you how much money you will be making or how much you have at your disposal. A/R is also important if you are considering borrowing money, as it shows your business has successfully made sales and can establish confidence in lenders.