Accounts Payable is money owned by a business to its suppliers. It is a liability that expected to be paid by the business within 12 months.
From a cash flow point of view, if a companys accounts payable increase, it means that the companys cash level is higher by the same amount. This is because accounts payable are eventually paid in the cash. The slower accounts payable are paid, the longer the company has use of the cash. Therefore, accounts payable contribute positively to cash flow.
A companys accounts payable are reflected on its suppliers balance sheet as Accounts Receivable.
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