Accounts payable (AP) is the money a business owes its suppliers for goods or services received but not yet paid for. It is a current liability, shown as trade payables, and cleared when the vendor is paid. Tracked loosely, one small supplier’s bill slips past 45 days, and the expense deduction moves to next year.
In OneFinOps, every bill is matched and coded as it arrives, and each small vendor’s bill shows the days left on its statutory clock.
Key takeaways
- AP is what you owe suppliers. Accounts receivable is what customers owe you.
- In India one AP entry usually records input GST and deducts TDS together.
- Paying micro and small suppliers after 45 days costs interest and defers deduction.
Is accounts payable an asset or a liability?
Accounts payable is a current liability: cash the business will pay out, normally within the operating cycle or twelve months. It covers raw materials, rent, professional fees, contractor bills and freight. Salaries, TDS, GST and loan instalments payable are liabilities too, but not trade payables.
Indian companies show it as trade payables under Schedule III of the Companies Act, 2013. Since the 2021 amendment, the notes must split dues to micro and small enterprises from other creditors and give an ageing schedule.
Accounts payable vs accounts receivable
Every credit sale is AR for the seller and AP for the buyer (more on AR).
| Point | Accounts payable (AP) | Accounts receivable (AR) |
|---|---|---|
| Meaning | Money you owe suppliers | Money customers owe you |
| Balance sheet | Current liability (trade payables) | Current asset (trade receivables) |
| Normal balance | Credit | Debit |
| Key metric | Days payable outstanding (DPO) | Days sales outstanding (DSO) |
| India tax touchpoint | Deduct TDS, claim GST input tax credit | Collect GST, receive net of TDS |
Accounts payable journal entry with GST and TDS
A Pune company books a Pune consultant’s invoice of ₹1,00,000 plus 18% GST (CGST 9%, SGST 9%) on 5 September 2026. TDS at 10% applies under section 393 of the Income-tax Act, 2025, worked on the fee excluding GST. It debits fees ₹1,00,000, input CGST ₹9,000 and input SGST ₹9,000, and credits the consultant ₹1,08,000 and TDS payable ₹10,000.
TDS is deducted at credit or payment, whichever is earlier, so it is due on the booking date and goes to the government by 7 October 2026. See input tax credit for the GST conditions.
How OneFinOps handles accounts payable
The Payables Agent reads every incoming bill, matches it to the order and the receipt, and codes it to vendor, cost centre and tax treatment. TDS is determined by section and threshold at the point of credit, and registered small vendors carry days outstanding against the statutory window on each bill.
What moves money stays with people: a change to vendor bank details goes to the controller, and the payment run is released by the person who holds the mandate.
Accounting software that only records the entry leaves the tax timing and the MSME clock to be checked by hand. To see what a missed MSME date costs, try the MSME interest calculator.
See how the Payables Agent works
