Payables for Dummies

Payables is a word that refers to the amounts of money that a person or a company owes to others. It's like when you borrow some money from a friend and promise to pay it back later. You would then have "payables" to that friend. It can also be used to describe the money that a company owes to its suppliers, employees, or even to the government for taxes. So, payables are like the bills or debts that you have to eventually settle.

Let me give you an example to help you understand this concept better. Imagine you have a lemonade stand, and you need to buy lemons, sugar, and cups to make your delicious lemonade. You go to the grocery store and pick up all the supplies, but you don't have enough money in your pocket to pay for them. So, the grocery store owner lets you take the supplies with a promise that you will pay the money back later. In this case, the money you owe to the grocery store owner is called your payables. Similarly, if you have employees helping you run your lemonade stand and you promise to pay them later for their hard work, that amount of money becomes your payables as well.

Now, payables can also have different terms or timeframes for payment. Some payables may need to be paid back within a very short period of time, like a week, while others may give you more time, like a few months. It all depends on the agreement or contract that you have with the person or company you owe money to. Payables can also include any interest or fees that might be added if you don't pay the money back on time. It's important to keep track of your payables and make sure to pay them on time to avoid any additional charges or problems.

To sum it up, payables are the debts or amounts of money that you owe to others, whether it's your friend, suppliers, or even the government. It's like the bills or IOUs that you have and need to pay back within a specific timeframe. So, whenever you see or hear the word "payables," just think of it as the money that you owe and need to eventually give back.