AP/AR Lingo

There is a lot of jargon in the accounting business; here are some short definitions of key terms and situations you should keep an eye on in running your business and choosing your AP/AR tools

Accounts Payable (AP)
Accounts payable represents money owed by the business to suppliers who provided it with goods or services on credit. Usually the amounts are due within the current accounting period, generally not longer than one year.

Accounts payable ledger
The accounts payable ledger is a detailed listing of amounts owed by a business to its suppliers.

Accounts payable turnover ratio
This ratio is calculated as the total amount purchased from suppliers in a period (generally a year), divided by the average total amount of accounts payable outstanding during that period. If the ratio decreases over time, it indicates your business is taking longer to pay your suppliers.