Accounts receivable tracks amounts customers owe the business; accounts payable tracks amounts the business owes suppliers. They describe different obligations and are not the same as the current bank balance. Reviewing both helps explain which recorded sales remain uncollected and which recorded bills remain unpaid.
Get help with your monthly booksPractical records guidance · Updated October 16, 2026 · Fictional examples
A customer receipt normally reduces the related receivable; paying a supplier normally reduces the related payable. Recording either payment as another standalone sale or expense can duplicate activity already captured by the invoice or bill.
Old balances can reflect genuine unpaid obligations, misallocated payments, missing credits or duplicates. Ask what each item represents before writing it off. Aged reports are starting points for review, not instructions to send collection notices or pay every listed amount.
Illustrative example · Fictional data
Illustrative accrual example: a $2,000 earned customer invoice has $500 collected, leaving $1,500 receivable. A $700 incurred supplier bill has $200 paid, leaving $500 payable. Those open balances explain obligations; they do not by themselves calculate profit or available cash.
Yes. Keep the activities and balances appropriately documented; do not offset them automatically without an agreed basis.
Not by default. Recording and reviewing payables is different from authorizing or executing payments.
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