Accounts Payable
Also known as: AP · bills payable · outstanding expenses
Definition
Accounts payable (AP) is money you owe to others — suppliers, contractors, software subscriptions — for goods or services you've received but haven't paid for yet.
Detailed Explanation
For freelancers, AP typically includes: software subscriptions (Adobe CC, Figma, hosting), contractor payments (a subcontractor you hired for a project), equipment purchases on payment plans, and unpaid supplier invoices. Tracking AP helps you understand your true financial position — your profit isn't just income minus paid expenses, it's income minus ALL obligations including unpaid ones. Good bookkeeping separates AP from already-paid expenses so you know what's still outstanding.
Freelancer Example
A freelance videographer pays monthly subscriptions for Adobe Creative Cloud ($54.99), Dropbox ($11.99), and Vimeo ($20). These recurring AP items are tracked and categorized as Tools & Software expenses. They also receive an invoice from a subcontractor for $600 — recorded as AP until the payment is made.