Accounts Receivable vs. Accounts Payable: A Simple Guide for Small Business Owners

Accounts receivable (AR) represents amounts customers owe your business for credit sales and is generally classified as a current asset. Accounts payable (AP) represents amounts your business owes suppliers for credit purchases and is generally classified as a current liability.

For example, a credit sale of 5,000 creates a customer receivable, while a credit purchase of 3,000 creates a supplier payable. Monitor due dates, aging balances, collections, and payments to protect cash flow. Try Cash Cloud for free to explore customer, supplier, invoicing, and accounting tools.