Payables and receivables both correlate with your company's cash flow. Receivables shows money due to you from buyers, and payables indicates what you owe to creditors. The most important commonality between them is that both types are laid out on your company's balance sheet The stronger your cash flow, the more stable your financial position. How a transaction is recorded in the General Ledger (GL) depends upon the nature of the transaction.
Accounts Payable (AP) is recorded in the AP sub-ledger when an invoice is approved for transactions where the company must pay money to vendors for the purchase services or goods. On the other hand, Accounts Receivable (AR) records any money that a company is owed because of the sale of their goods or services.On a balance sheet, businesses want to see a higher A/R and a lower A/P. A/R is considered an asset on the balance sheet; A/P is considered a liability.