Account Payables - What is it?

In basic terms, account payables refer to an account that contains money that a person or business owes another person or business. Although the task is complicated in businesses, the meaning can be understood by associating it with the individual. For the average person, account payables refer to any bills they receive during the month, such as the phone and electric bills. It literally is the paper bill they receive reminding them they owe money for a product or service they received. You can take the same notion and apply it to the business world. The reason it becomes more difficult is because there is a higher volume of invoices that have to be tracked for record keeping. Because this amount can get extremely high, many companies use software, along with their regular bookkeeping employees. In addition to using software, some companies outsource this task to a professional organization. These usually are used when it is not possible to hire an in-house employee to take on the task. Many counterfeit companies send advertisements that resemble bills to companies. In small print it will say that it isn't a bill, but many people miss this and send the company a check. Another reason account payables often is done with software and personnel is to avoid missing or duplicating invoices. This can cause a huge mistake in a company's budget. One of the most common ways this mistake happens is because of duplicate invoices. An invoice could get lost or misplaced so another is sent as a replacement. The replacement is paid, but in the meantime, the original is found by someone else and gets paid.