The short answer: accounts receivable is money customers owe you; accounts payable is money you owe suppliers. Receivable is an asset (incoming cash), payable is a liability (outgoing cash). Managing the gap between them is the heart of cash flow.
Accounts receivable (money owed to you)
When you sell on credit — “pay me next week” — that unpaid amount is a receivable. It’s money you’ve earned but not yet collected. Too much sitting in receivables means you’ve made sales but can’t spend the cash, because it’s still in your customers’ pockets.
Accounts payable (money you owe)
When a supplier lets you buy now and pay later, that’s a payable. It’s a normal, useful tool — supplier credit funds your stock — but it must be tracked so you pay on time, keep good relationships, and never lose track of what you owe.
Why the balance matters
Cash flow lives in the timing gap. If customers pay you in 30 days but you must pay suppliers in 15, you have to fund that gap. A hypothetical: 200,000 tied up in receivables while 150,000 in payables is due next week can leave a profitable business short of cash. Watching both sides prevents nasty surprises.
How to manage both well
- Track every due, both ways — know exactly who owes you and whom you owe.
- Set clear terms and follow up on overdue customer balances promptly.
- Use supplier credit deliberately, not accidentally.
- Watch the aging — the older a receivable, the less likely it’s paid.
See both at a glance
RushFlow tracks customer dues (receivables) and supplier dues (payables) with aging, so you always know your real cash position — not just your bank balance. See the live demo, or read managing customer dues and credit sales.