Accounts Reconciliation Blog

If you are company that has a low accounts payable in your books of account, it means you are meeting payments to your clients and suppliers a lot faster. Accounts payables are considered liabilities of every company. And accounts payable turnover is the duration of how a liability is being paid. Return of Investment (ROI) are measured when all obligations of the company are paid off.

In an accounting period, an accounts payable turnover measures the company’s efficiency of paying bills. This is measured using the average duration an item remains in accounts payable, equal to total purchases, divided by average accounts payable. A change over time in the accounts payable turnover means your company is paying off its suppliers either faster or slower than you were previously doing.