Accounts Receivable vs Accounts Payable

Accounts Receivable (AR) represents money owed to your business — typically from customers who have received goods or services but have not yet paid their invoice.

Accounts Payable (AP) is the opposite: money your business owes to others, usually vendors or suppliers who have billed you but have not yet been paid.

Keeping these organized separately matters for cash flow planning. An AR aging report shows which customers are overdue, so you know who to follow up with. An AP aging report shows which bills are coming due, so you can plan outgoing payments and avoid late fees.

A healthy business keeps an eye on both — collecting receivables promptly while managing payables strategically, without letting either pile up unnoticed.