What it means
The term has two common uses. In the accounts, it is the total owed to suppliers at a point in time. In a company, it also names the process and the team that record, approve and pay supplier invoices. Its nearest neighbour is accounts receivable, which is the opposite flow: money customers owe the business. Payable is cash going out, and receivable is cash coming in.
Why it matters when you buy software
Accounts payable features often differ by plan tier, so a buyer should check what each tier includes. Useful items to compare are invoice capture, approval workflows, bill scheduling, payment methods and the number of users who can approve bills. A tool that records bills well but lacks approval steps may suit a sole trader but not a team where several people sign off spending.
How it works in practice
A supplier sends an invoice, and the business records it as a bill. Someone checks it against the order and approves it. The business then pays it by the due date, and the bill moves from owed to paid. Accounting software keeps a running list of open bills, so the owed total is always visible.
See also: Accounts receivable, Accrual basis and the glossary index.