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Jun 10, 2019 07:48:37

Finance part 5 - Receivable and Payable

by @hiro | 224 words | 16🔥 | 170💌

Hiro

Current day streak: 16🔥
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Now this is the last part for my weekly theme 'Finance.' I am talking about Receivable and Payable. They are two basic terms for finance world but used in a daily life if you are not doing a business.

Receivable

Account Receivable (AR) means we have the rights to receive the cash 'Recive-able'. While we usually pay cash for grocery or meals there right after we reiceve products or services, companies usually do not pay cash immediately and pay a few months later depending on the contract.

If I would find an analogy in our daily life, let's say one of my friend pay for our dinner $30 for each altogether and tell us it would be fine to pay this amount next week. In this case, he has the right to receive $30 next week as account receivable in a sense.

Payable

On the other hand, Account Payable (AP) is the opposite concept. In the above example, from my standpoint, I do not pay when I am supposed to pay and actually pay the cost next week. I am able to suspend or let him wait for a week.

In a business world, a company also do not pay immediately the cost for some parts or products which they need for their own business and pay a few months later.

Reference

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