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 automates AP tracking by matching supplier invoices to purchase orders and bank payments, ensuring your AP balance is always accurate and 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 automates the bookkeeping processes related to accounts payable by connecting to your Xero account and using AI to categorise transactions, reconcile bank feeds and generate accurate reports. Instead of manually managing accounts payable, SortBooks handles it automatically with 97%+ accuracy - saving you hours every week and ensuring your books are always up to date and compliant.
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.
SortBooks handles all the complexity automatically. Just connect Xero and let AI manage your books.