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How to Differentiate Account Receivable and Account Payable of a Company

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Account-PayableAccount receivable and account payable are the two crucial aspects of your business that you have to manage effectively in order to maximise the ROI.
 

What is Account Receivable and Account Payable?

Lets’ get to know these terms in detail:

  • The account payables are the amounts your company owes after purchasing goods and services on credit from a vendor.
  • On the other hand, accounts receivable are amounts your company has rights to get or collect as it has sold goods or services to the customers on credit.

A sale of a company is a purchase for another company, and thus, account payable of a company is account receivable for another company. Essentially, on the balance sheet of a company:

  • Accounts receivable are recorded as assets and;
  • Accounts payable are recorded as liabilities

The accounting services providers employ experts who use this information to tell you about the financial health of your company. Depending on the circumstances, they will advise you to:

  • Cut down on your expenses
  • Streamline your cash flow
  • Go for expanding your business activity, etc

The table presented below provides an insight into both account payable and account receivable concept in Singapore accounting.

Account Receivable Account Payable
Brief Definition An amount that the others owe to a company An amount that the company owes to others
Short Forms A/R A/P
Recorded as Asset Liability
Effects on Business Account Receivable increases the profit level (cash) of business Account Payable decreases the profit level of business
Transaction Type Selling goods or services on credit Purchasing goods or services on credit

 

Appoint Accounts Payable & Accounts Receivable Services Singapore

Should a small business hire account payable and account receivable services? When you hire a provider of professional accounting services in Singapore, their experts prepare account payable and account receivable reports for you.

If your accounts receivable amount has increased without the increase in sale, it means, your customers are not being fair to you. They are not paying their dues as per the schedule. In such a situation, the accountants advise you to send them reminders and collect the payments as early as possible to rectify the situation.

In Singapore accounting and elsewhere, both account receivable and account payable reports are valuable as the diagnostic instruments. Keeping in view the rising demand among the businesses, AccountingService.com.sg has introduced a specialised service for its clients.

The firm has an expert professional team with extensive knowledge of Singapore accounting standards and regulations of ACRA. It has enabled the firm to set a milestone in the industry.

If you are looking for accounting services for your small business in Singapore, call us on 65-6536 0036, or email us on info@accountingservice.com.sg for answers.