What is accounts payable?
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Definition
Accounts payable is the money a business owes to its suppliers for goods or services it has received but not yet paid for. Each unpaid supplier bill sits in accounts payable until it is paid, credited or otherwise settled, and the total is shown as a current liability on the balance sheet.
When a supplier's bill arrives, it is recorded as an expense or a purchase and the amount is added to accounts payable. When the bill is paid, the payment clears it. Bookkeeping software can usually list unpaid bills by how long they have been outstanding, in a report often called aged payables.
Keeping accounts payable up to date shows what the business owes and when each amount is due, so it can plan its cash flow and pay suppliers on time.
In Australia
business.gov.au lists end-of-year records, including a list of creditors (the people and businesses you owe money to), among the records a business needs to keep. The financial year in Australia runs from 1 July to 30 June, so an accounts payable list at 30 June gives you that list for the year.
The ATO says most business records must be kept for 5 years from when they were prepared or obtained, or from when the transactions they relate to were completed, whichever is later. That includes the supplier bills behind accounts payable.
Worked example
| Supplier bill | Due date | Amount (AUD) |
|---|---|---|
| Office supplies | 14 Jul 2026 | 450.00 |
| Cleaning service | 21 Jul 2026 | 320.00 |
| Equipment hire | 31 Jul 2026 | 1,180.00 |
| Total accounts payable | 1,950.00 |
Illustrative example only: these rows show the method and are not sourced data.
Common mistakes
- Entering the same supplier bill twice, once from an emailed copy and once from a paper copy.
- Paying a bill without matching the payment to the bill already entered, so the bill still shows as unpaid.
Related terms
Sources
- Record keeping
business.gov.au, Australian Government. Current at 15 October 2026, released 7 November 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Key financial terms
business.gov.au, Australian Government. Current at 15 October 2026, released 9 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Overview of record-keeping rules for business
Australian Taxation Office. Current at 18 June 2026 (QC60718), released 18 June 2026. Checked 15 October 2026.
© Australian Taxation Office for the Commonwealth of Australia Licence: ATO website copyright notice (copy, adapt and distribute, without implying ATO endorsement).