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What’s the Difference between Accounts Receivable and Accounts Payable?

I always have to take a moment when I call another company about an invoice I’ve received from them. I call the general line and they ask me which department I want, and I have to think, is it the accounts receivable or payable that I need to speak to?

The difference between the two departments depends on your point of view.

Accounts Receivable are payments that you have yet to receive. It is money owed to you. A receivable is created any time you create an invoice.

Accounts Payable are the amounts that you owe other people. Basically, the bills you haven’t paid.

(Both of these accounts live on your balance sheet and they go up and down as people pay you and you, in turn, pay your bills.)

So when I have a bill in my hand that I have to pay, it is my payable. But when I need to speak to the company that issued it, it is their receivable, because they will receive the money.

My receivable is someone else’s payable. And my payable is someone else’s receivable.

Once again, it’s all about me 🙂

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