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In: Finance

Differentiate between accounts receivable and accounts payable and describe the impact both have on the financial...

Differentiate between accounts receivable and accounts payable and describe the impact both have on the financial management of IT teams or organizations.

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Expert Solution

Accounts receivables and accounts payables are opposite in nature. Accounts receivables are part of current assets of a company and represent the amount of money that is owed to a company. This amount is usually owed by customers. On the other hand accounts payables is a part of current liabilities and is the money that a company owes to its vendors.

Both accounts receivable and accounts payable have a significant impact on financial management of IT teams or organizations. This is because accounts receivable and accounts payable are part of the working capital of an organization. An IT team or the entire organization have to focus on aspects like arranging short term financing, negotiating favorable credit terms, controlling movement of cash, administering accounts receivable, and monitoring investment in inventories. Thus accounts receivable and accounts payable have a significant impact on financial management of IT teams or organizations as they are used in the day to day trading operations. Be it the IT team or the organization the accounts receivable and payables serves as an indicator of short-term financial position and helps in determining the overall efficiency level.


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