Understanding Differences Between Accounts Receivable and Accounts Payable

ARAP

 

Most seasoned business owners are familiar with terms like accounts payable and accounts receivable. Even when you are familiar with the terms, it can still be easy to get the two mixed up. When you are working with a factoring company, the differences between AR and AP can be significant. One is viewed as an asset while the other is a liability.

An Asset

Accounts receivable are an asset that is used to establish the total value of your company. It is such an important part of your business that you can actually sue your customers to make sure they pay for the goods and services you provided.

A Liability

Accounts payable, on the other hand, are a liability for your business. This is the money that you owe to others, such as your vendors, your landlord and your utility providers. This is money that, if you do not pay, you can be sued over to make sure you pay what you owe. You need a steady flow of cash coming into your business in order to meet your accounts payable obligations.

Receivables Can Help You Maintain Cash Flow

If you run into cash flow problems, accounts receivable can help you generate quick cash. Universal Funding is a factor company that will buy your unpaid invoices off of you to help you get quick cash. You can then take care of your accounts payable or any other business obligations that you have. Unlike a loan, you do not have to stress about paying interest or paying us back. We pay you for the invoice and we collect the invoice amount from your customer. That’s basically all there is to it.

Contact Us

There is a huge difference between your accounts payable and your accounts receivable. To learn more about what Universal Funding can do for you, fill out our online rate form or contact us today.

Leave a Reply