PAYABLES Meaning and
Definition
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Payables refer to the amount of money a company owes to its creditors or suppliers for goods or services that have been purchased but not yet paid for. Also known as accounts payable, payables represent the current liabilities that a company must settle within a given period. It is recorded as a liability on the balance sheet and is typically classified as a short-term liability.
Companies often purchase goods or services on credit, meaning they receive the products or services but do not immediately make the payment. The vendor or supplier provides an invoice to the company, specifying the amount due along with the payment terms. Until the payment is made, the amount owed is considered a payable.
Managing payables is an integral part of a company's financial operations. Efficient payables management involves accurately recording and tracking payables, ensuring payments are made within the agreed-upon terms to avoid penalties, and negotiating favorable credit terms with vendors.
The accounts payable department is responsible for handling payables, including receiving invoices, verifying their accuracy, processing payments, and maintaining records. Companies may also employ various technologies and software systems to automate and streamline the payables process, improving efficiency, accuracy, and cash flow management.
Effectively managing payables is crucial for maintaining healthy financial relationships with creditors, ensuring the continuous supply of goods and services, and maintaining a solid credit profile.
Common Misspellings for PAYABLES
Etymology of PAYABLES
The word "payables" is derived from the verb "pay", which dates back to the 13th century and originated from the Old French word "paiier". "Paiier" itself came from the Latin word "pacare", meaning "to please or pacify". Over time, the word "pay" evolved to refer to the act of giving money to someone in exchange for goods, services, or debts. The term "payables" is formed by adding the suffix "-ables" to "pay", indicating that it pertains to things that are owed or payable.
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