what is the difference between accounts receivable and accounts payable

Understanding the difference between accounts receivable (AR) and accounts payable (AP) is essential for managing your business's finances. Accounts payable refers to the money your business owes to suppliers and creditors for goods or services received on credit, representing a liability on your balance sheet. In contrast, accounts receivable is the money owed to your business by customers for products or services provided, representing an asset. Learn how managing AP and AR efficiently helps improve cash flow, maintain financial health, and ensure accurate financial reporting for your business.