What is Accounts Payable?

Accounts payable (AP) is the opposite of accounts receivable. While AR is money owed to you, accounts payable is money you owe to others — your suppliers, subcontractors, software subscriptions, and other business expenses.

Common accounts payable items for freelancers:

• Subcontractor fees
• Software subscriptions (design tools, hosting, accounting software)
• Office supplies or equipment
• Professional services (accountant, solicitor)
• Advertising or marketing costs

Managing accounts payable well means:

• Paying on time: Maintain good relationships with suppliers and avoid late fees
• Tracking due dates: Know when bills are due to avoid surprises
• Matching invoices: Verify that supplier invoices match what was agreed (especially if you issued a purchase order)
• Keeping records: Store all supplier invoices and receipts for tax purposes

In accounting, accounts payable is a liability — it represents money you owe. Balancing your accounts payable against your accounts receivable gives you a picture of your short-term financial health.

For freelancers, AP is usually simpler than for large businesses because you typically have fewer suppliers. However, it is still important to track. Business expenses reduce your taxable profit, so keeping accurate AP records directly reduces your tax bill.

OwnedWork helps you keep track of both money coming in (AR) and going out (AP), giving you a clear picture of your cash flow at any time.