January 30, 2010 
This entry was posted on Saturday, January 30th, 2010 at 9:22 pm and is filed under Accounting, Accounts Payable. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Most businesses operate on credit. You get credit from your suppliers so you can operate your business or expand your operations. In turn you give credit or discount to your big customers. To keep track of your credit, you make a list. This list is called accounts payable and accounts receivable.
Accounts payable is the money you owe your suppliers. Accounts receivable is the money due you. Learning how to manage both lists is critical to business success. Get too much credit and you get buried in debt. Get none or too little and you’re not maximizing your potential. Also, extending too much credit can lead to your downfall. Some businesses will give very lenient terms to close the sale. If they don’t manage it properly, they’ll encounter cash flow problems.