Businesses rely on their accounting departments to operate. Trained accounting professionals keep the lights on and paychecks in the mail. Like any specialized field, accounting comes with its own jargon terms, like GAAP (Generally Accepted Accounting Principles), PCGA (the Spanish equivalent to GAAP), accounts payable (AR) and accounts receivable (AR). Today we’re going to focus on those last two terms.
Managing accounts payable and accounts receivable is a large part of the work done by an accounting department. These functions help businesses manage cash flow, track outstanding obligations, and maintain healthy financial relationships with clients and vendors.
If you’re exploring the idea of a career in accounting, it’s important to understand these concepts. Let’s break it down.
Accounts Payable vs. Accounts Receivable
Accounts payable (AP) refers to the money a business owes to its suppliers or vendors. For retail stores, that means the payments owed for products on the shelves and any B2B services used during operations. AP are short-term liabilities on the company’s balance sheet, or debt typically due within a few months. Managing AP effectively means ensuring bills are paid on time to avoid late fees, maintain the company’s good credit, and ensure strong relationships with suppliers. Some vendors may offer discounts for early payment, particularly those with longer remittance windows. Managing the cost/benefit and ensuring maximum value for a business is all part of managing AP.
Accounts receivable (AR), on the other hand, shows money owed to the business by customers who purchased goods or services on credit. Properly managing AR helps companies maintain steady cash flow, reduce bad debt, and support business growth. In a retail environment, AR might include layaway accounts, while a B2B company might be the vendor awaiting payment from various clients. Either way, AR tracks the money coming into your business for customers who didn’t pay cash on delivery.
Accounting professionals working in these areas are responsible for tasks like invoicing, payment tracking, reconciliations, and financial reporting.
What Accountants Do in Business
More broadly speaking, accounting jobs play a pivotal role in helping businesses stay financially organized and compliant with tax laws and regulations. While tasks may vary by role or industry, most accountants are involved in:
- Tracking income and expenses
- Preparing financial statements
- Managing payroll and budgets
- Analyzing financial performance
- Ensuring tax compliance
Launching a Career in Accounting With ICT
At Interactive College of Technology (ICT), students can enroll in the Accounting and Professional Business Applications program, which prepares them for real-world roles in both accounts payable and receivable. This program teaches concepts like GAAP/PCGA and accounts payable and receivable and includes hands-on training with industry-standard tools. Students learn how to prepare financial documents, maintain ledgers, and more.
Whether you’re starting out or shifting careers, accounting offers long-term stability and diverse job opportunities across nearly every industry. Mastering the fundamentals of accounts payable and receivable is an excellent place to begin.
Start your journey today—enroll in the accounting and professional business applications program at ICT.