Accounts payable

Accounts payable are the unpaid supplier bills a business carries on any given day. BDC defines them as the money a company owes its suppliers for goods and services that have been provided and for which the supplier has submitted an invoice, and says they appear under short-term liabilities on the balance sheet. In a sale, ask how the purchase agreement treats the balance on the closing date.

What a buyer can review

BDC’s due diligence guide lists accounts receivable and accounts payable aging among the financial records a buyer and accountant should be given. An aging report groups unpaid bills by how long they have been outstanding.

What to ask

• What is unpaid at the closing date, and how old each bill is
• Whether any invoices are disputed
• Whether the agreement counts payables in the price adjustment, and who pays them

See working capital in a business sale and the matching entry on accounts receivable.