What is the Difference Between Accounts Payable and Accounts Receivable?

If you want to start a career in accounting, it is important that you learn the difference between accounts payable and accounts receivable.

When you start your career, you do not necessarily start off being an accountant. You may have to gain experience in different areas while you earn a degree to become a staff accountant that is in charge of assistants and junior professionals. Before you begin to study for your accounting degree, it can be very helpful to learn about some of the different activities that take place in the accounting department. This will help you decide which titles you would like to pursue as you are getting your foot in the door.

What is Accounts Payable?

Accounts Payable is the accounting term used to describe the amount a company still owes because it purchased items on credit. The accounts could be for products through vendors, packing materials through suppliers, or even for services from technicians. Since all companies must keep their books, it is important that the company hires an Accounts Payable clerk.

What Does an Accounts Payable Clerk Do?

This clerk will be in charge of updating the accounting ledger to log when there is a payable and a purchase to keep track of company finances. In addition to updating the ledger, it is the AP clerk’s role to complete payments, process invoices, verify the invoices and reconcile them when the director advised them to. They will charge expenses to the corresponding accounts and help to analyze reports and cost centers. Since a company’s credit history plays an important role in securing more capital down the line, the AP clerk has very serious responsibilities.

What Are Accounts Receivables?

Accounts Receivables are the amount of money that the company has yet to collect from customers because they have sold products or services on credit. If you take a step back, you will see that accounts payable are liabilities and receivables are assets. When a company sells a product, they will put a sale and a receivable on their ledger.

In some cases, it can take months or years to have a sale fully paid. The money earned counts in the year the sale was made even if there is a balance that carries on to the next year.

What Does an Account Receivable Clerk Do?

The main difference between AP and AR clerk duties is who the professional deals with. While an Accounts Receivable clerk works in the accounting department alongside the AP clerk, they are in charge of the exact opposite. Instead of verifying and reconciling invoices, the AR clerk will prepare invoices and record transactions. They are also in charge of producing balance sheets and making deposits when customers make payments.

Demand for workers within the vast discipline of accounting is on the decline. This is why you should start to see which subsets of the field have a growing demand so that you can tailor your education to attain the skills that you need to be an asset in the job search market. Companies will always need accounts receivable and accounts payable clerks, and this creates some job security that is not present in other fields. Review the difference between accounts payable and accounts receivable and decide which best suits you.

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