Current Accounts Receivable and Accounts Payable

Overview

The Current Accounts Receivable and Accounts Payable metric displays the current money owed to your business as well as the amount your business owes creditors. This key accounting metric can help business owners, bookkeepers, and accountants track the amount of income waiting to be collected and the expenses that have not yet been paid. This metric allows businesses to calculate the average debtor and creditor days, which will show how long it takes on average for debtors to pay a business and how long a business takes to pay its creditors.

Key terms

• Accounts Receivable: Money owed to a company by its debtors
• Accounts Payable: Money owed by a company to its creditors
• Debtor Days: How long it takes companies to collect money
• Creditor Days: How long it takes a company to pay its creditors

Success indicators

• Keeping a consistent amount of accounts receivable and accounts payable each month
• Keeping low debtor and creditor day averages

Monitoring Financial KPIs on a Dashboard

Once you have established benchmarks and targets for your Current Accounts Receivable and Accounts Payable, you’ll want to establish processes for monitoring this and other Financial KPIs. Dashboards can be critical in this regard. Read more