Glossary
What is Accounts payable?
Accounts payable is the money a business owes suppliers for goods or services already received but not yet paid for. It is a liability until the bill is cleared, and managing it well means using supplier credit terms without missing due dates.
Accounts payable is the running total of supplier bills you have accepted but not yet settled. For most shops it is the cheapest credit available, as long as the due dates are kept.
How it works in practice
A payable starts when a supplier bill is recorded, not when the goods are ordered. Take an illustrative example. A hardware shop in Butwal receives cement and fittings worth Rs 1,85,000 including VAT, on 30 days’ credit. The bill is entered on arrival, so payables rise by Rs 1,85,000. Two weeks later the shop pays Rs 1,00,000 and the balance falls to Rs 85,000. A damaged carton worth Rs 6,500 goes back against a debit note, and the balance falls to Rs 78,500, which is what is due on day 30.
What you ordered, what arrived and what you were billed are often three different figures. Check the bill against the goods received note before you accept it. That way you do not end up owing for goods that never came.
In Nepal
A purchase bill does two jobs. It records the debt, and if the supplier is VAT registered and issued a proper tax invoice, it supports your input VAT claim for the month. A bill left in a drawer until payment day is often claimed in the wrong period or not claimed at all.
Some payments, such as rent and certain service fees, also carry tax deducted at source under the Income Tax Act 2058. The tax is deducted from the payment first, so you hand the supplier less than the bill total. Confirm which of your payments are affected with the IRD or your accountant.
Common mistakes
- Recording a bill only when it is paid, so what you owe looks smaller than it is.
- Editing the original bill for a return instead of raising a debit note against it.
- Paying without the supplier’s own invoice reference, which makes a disputed balance hard to settle months later.
- Paying every supplier at once in a good week, rather than paying to due dates.
In Kuver Books, accounts payable is generated from approved purchase bills, supplier payments and debit notes, and the accounts payable help page shows how to read it by supplier and due date.
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