Accounts payable (AP) is the money a business owes to its suppliers for goods and services received but not yet paid for. In accounting terms it is a current liability on the balance sheet. Managing AP well means processing invoices accurately, approving them promptly and paying on time. In Microsoft Dynamics 365 Business Central, accounts payable is fully integrated with purchasing, stock and the general ledger.
How accounts payable works in Business Central
When a supplier invoice arrives, it is posted against the relevant purchase order and goods receipt through three-way matching. The invoice is recorded in the vendor ledger and as a credit to the AP control account in the GL. Business Central's payment journal then suggests invoices due based on supplier terms, generates a payment run and posts payments automatically against open entries.
Accounts payable in practice
- An AP team processes 400 supplier invoices per month using three-way matching, cutting processing time from five minutes to under one minute per invoice.
- A finance director uses the aged creditors report to manage cash flow, prioritising key supplier payments while extending terms where appropriate.
- A business configures early payment discount terms so invoices qualifying for a 2% discount on payment within 10 days are automatically flagged.
- A purchasing manager uses the vendor ledger to identify a supplier double-billing error before payment is made.
How Advantage configures accounts payable in Business Central
Advantage configures payment terms, approval workflows, payment run schedules and vendor posting groups during implementation. For clients processing high volumes of paper or PDF invoices, we integrate Business Central with document capture solutions to enable touchless invoice processing.
Find out how Business Central transforms finance operations →
Frequently asked questions
What is the difference between accounts payable and accounts receivable?
Accounts payable is money your business owes to suppliers. Accounts receivable is money owed to your business by customers. Both are sub-ledgers in Business Central feeding the balance sheet as current liabilities and current assets respectively.
What is an aged creditors report?
An aged creditors report shows the total owed to each supplier, broken down by how long each invoice has been outstanding: current, 1 to 30 days, 31 to 60 days and so on. Business Central generates this in real time.
Can Business Central automate supplier payment runs?
Yes. Business Central's payment journal suggests invoices due based on payment terms, generates a BACS payment run and posts payments automatically. This reduces the time spent on supplier payment processing considerably.
