Bills payable show specific types of indebtedness. The concept is used in the areas of finance and accounting. The term can be defined in three ways:
- Bills payable can be the funds that a bank borrows from other banks. These are typically due in the very short term and are used to provide liquidity to the receiving bank.
- Bills payable can be short-term notes issued by a business that are due on demand or by a specific date. The duration of these forms of indebtedness tend to be quite short.
- Bills payable can be the same as accounts payable, which are usually comprised of invoices from suppliers that are received and recorded by a business within the current liabilities section of the balance sheet. These liabilities may be recorded as accrued liabilities, if a liability is present as of the end of a reporting period, but no invoice from a supplier has yet been received.
Bills payable is an older term, and is more commonly found in the English system of accounting than the American system.
Depending upon usage, bills payable is also known as accounts payable, trade payables, and notes payable.