Accounts Receivable and Accounts Payable: Whats the Difference?

The store has agreed to sell you these items on credit, with the bill due within 30 days of the invoice date. Notice that we have an account accounts receivable vs payable called sales discounts and allowances. This account is a contra account that goes against sales revenue on the income statement.

1. This lowers the risk of late payments or defaults and helps you make sure customers are creditworthy.
2. On the other hand, accounts receivable represents the amount of money that your company is due to receive from customers for products or services provided.
3. Poor management of accounts receivable can lead to a buildup of bad debts, adversely affecting the company’s profit margins, financial creditability, and overall financial health.
4. They let you automate invoicing and alert you when customers are late on their payments.
5. Accounts receivable refers to money customers owe your business so it is considered an asset.

Impact on Cash Flow

Accounts Receivable vs. Accounts Payable

Accounts Payable vs. Accounts Receivable: What’s the Difference?