Accounts payable is the money your business owes to suppliers and vendors for goods or services received but not yet paid for.
Accounts payable (AP) is a current liability on your balance sheet. When a supplier delivers goods on 30-day terms, you record the amount owed as a payable and settle it later. Managing AP well, paying on time but not early, is a core part of cash flow management.
For GST/HST-registered businesses, the tax charged by your suppliers sits inside these payables and is recoverable as an input tax credit, so accurate AP records directly affect what you claim back from the CRA. Poorly tracked payables are a common source of both missed credits and overstated liabilities.
You receive $3,000 of inventory plus $390 HST on net-30 terms. Your accounts payable increases by $3,390. When you file your HST return, the $390 is claimed as an input tax credit even before you have paid the supplier, provided you have the invoice.
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