Accounts payable (AP) represents the money your business owes to suppliers and vendors for goods or services received but not yet paid for. It is a current liability on your balance sheet.
Accounts payable is one of the most important line items in your bookkeeping. Every time you receive a bill from a supplier, that amount becomes an accounts payable entry until you make the payment. Managing AP effectively means knowing exactly what you owe, to whom, and when each payment is due. Poor AP management leads to late payment fees, damaged supplier relationships and inaccurate cash flow forecasting. In Xero, accounts payable is tracked through the Bills module, where you record supplier invoices and schedule payments. SortBooks shows which bank payments match your supplier bills, so you can reconcile them in Xero in a click and keep your AP balance up to date. Effective AP management also involves taking advantage of early payment discounts when cash flow allows, and maintaining a payment schedule that preserves good supplier relationships while optimising your working capital position.
SortBooks helps with the bookkeeping behind accounts payable by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing accounts payable by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
Accounts receivable (AR) is the money owed to your business by customers who have purchased goods or services on credit. It is a current asset on your balance sheet.
Current liabilities are debts and obligations your business must pay within 12 months. They include accounts payable, short-term loans, accrued expenses and tax payable.
Cash flow is the movement of money in and out of your business. Positive cash flow means more money coming in than going out. It is often considered more important than profit for business survival.
Working capital is the difference between current assets and current liabilities. It measures the short-term financial health and operational efficiency of your business.
A purchase order (PO) is a formal document sent to a supplier authorising a purchase. It specifies the items, quantities, agreed prices and delivery terms.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.