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Accounts payable (AP) represents the money a business owes to its suppliers or vendors for goods or services bought on credit. It is a liability for the company until the debt is paid off.

When a company purchases goods or services on credit, it does not pay cash immediately. Instead, the vendor bills them, creating an accounts payable for the company. AP is recorded on the company's balance sheet under current liabilities and needs to be managed efficiently. Timely and accurate AP management is crucial for maintaining strong vendor relationships, optimizing cash flow, and improving a company's creditworthiness.