Payable vs. Expense — What's the Difference?
By Tayyaba Rehman & Maham Liaqat — Updated on May 19, 2024
Payable refers to amounts owed by a company for goods or services received but not yet paid for, while Expense is the cost incurred by a company to generate revenue.
Difference Between Payable and Expense
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Key Differences
Payable is a liability on a company's balance sheet, representing amounts due to suppliers or creditors for goods and services received. These are short-term obligations that must be settled, typically within a year. Expenses, on the other hand, appear on the income statement and reflect the costs incurred during a period to earn revenues. These costs reduce the net income of a company.
Payable accounts are part of the accounts payable category, which includes bills, invoices, and other obligations. These are considered current liabilities and are vital for managing a company's short-term financial health. Expenses encompass a broader range of costs, including operating expenses, cost of goods sold, and other overheads.
Payable entries are recorded when an invoice is received but not yet paid, signifying an obligation to pay in the future. Expenses are recognized when they are incurred, regardless of when the payment is made, following the accrual accounting principle.
Managing payables effectively ensures that a company maintains good relationships with suppliers and avoids late fees, whereas managing expenses is crucial for profitability and budgeting. Both play different but essential roles in financial management.
Comparison Chart
Definition
Amounts owed for goods/services received
Costs incurred to generate revenue
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Financial Statement
Balance Sheet
Income Statement
Category
Liability
Expense
Timing
When invoice is received
When cost is incurred
Role
Managing short-term obligations
Managing profitability and budgeting
Compare with Definitions
Payable
Amounts owed for goods or services received but not yet paid.
The company recorded $10,000 in payables for its recent office supplies purchase.
Expense
Includes operating expenses, cost of goods sold, and other overheads.
The expense of raw materials was higher this month.
Payable
A liability on the balance sheet indicating short-term obligations.
Accounts payable increased by 15% this quarter.
Expense
Recognized when incurred, not necessarily when paid.
Rent expense is recorded monthly even if paid quarterly.
Payable
Obligations that need to be settled within a year.
The payable is due within 30 days of the invoice date.
Expense
Appears on the income statement reducing net income.
Operating expenses must be managed to improve profitability.
Payable
Crucial for maintaining supplier relationships and credit rating.
Timely payment of payables helps maintain good supplier relations.
Expense
Costs incurred to generate revenue.
Advertising expenses for the month totaled $5,000.
Payable
Requiring payment on a certain date; due.
Expense
Expenditure is an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense.
Payable
Requiring payment to a particular person or entity.
Expense
The cost incurred in or required for something
Conference rooms were equipped at great expense
Book into the best hotel you can find and hang the expense
Payable
Capable of producing profit
A payable business venture.
Expense
Offset (an item of expenditure) as an expense against taxable income
Up to $17,500 in capital expenditures can be expensed in the year they were incurred
Payable
A debt that is owed to a creditor
Tried to balance inventory, payables, and receivables.
Expense
Something spent to attain a goal or accomplish a purpose
An expense of time and energy on the project.
Payable
Due to be paid.
Is value-added tax payable on planning application fees?
Expense
A loss for the sake of something gained; a sacrifice
Achieved speed at the expense of accuracy.
Payable
Able to be paid.
Expense
An expenditure of money; a cost
An improvement that was well worth the expense.
A trip with all expenses paid.
Payable
Of a mine etc.: capable of yielding profit; profitable.
Expense
Charges incurred by an employee in the performance of work
Was reimbursed for her travel expenses.
Payable
(in the plural) Debts owed by a business; liabilities.
Expense
(Informal) Money allotted for payment of such charges.
Payable
A thing that may be paid.
Expense
Something requiring the expenditure of money
Redecorating the house will be a considerable expense.
Payable
That may, can, or should be paid; suitable to be paid; justly due.
Thanks are a tribute payable by the poorest.
Expense
(Archaic) The act of expending.
Payable
That may be discharged or settled by delivery of value.
Expense
To charge with expenses.
Payable
Subject to or requiring payment especially as specified;
A collectible bill
A note payable on demand
A check payable to John Doe
Expense
To write off as an expense.
Payable
An entry made when an invoice is received but not paid.
Upon receiving the invoice, the amount was added to payables.
Expense
A spending or consuming, often a disbursement of funds.
She went to great expense to ensure her children would get the best education.
Buying the car was a big expense, but will be worth it in the long run.
We had a training weekend in New York, at the expense of our company.
Expense
The elimination or consumption of something, sometimes with the notion of loss or damage to the thing eliminated.
Jones reached the final at the expense of Smith, who couldn't beat him.
Expense
(obsolete) Loss.
Expense
(transitive) To charge a cost against an expense account; to bill something to the company for which one works.
It should be acceptable to expense a business lunch with a client.
Expense
A spending or consuming; disbursement; expenditure.
Husband nature's riches from expense.
Expense
That which is expended, laid out, or consumed; cost; outlay; charge; - sometimes with the notion of loss or damage to those on whom the expense falls; as, the expenses of war; an expense of time.
Courting popularity at his party's expense.
Expense
Loss.
And moan the expense of many a vanished sight.
Expense
Amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures)
Expense
A detriment or sacrifice;
At the expense of
Expense
Money spent to perform work and usually reimbursed by an employer;
He kept a careful record of his expenses at the meeting
Expense
Essential for budgeting and financial planning.
Keeping track of expenses helps in accurate budgeting.
Common Curiosities
What is a payable?
Payable refers to amounts a company owes for goods or services received but not yet paid.
When is a payable recorded?
A payable is recorded when an invoice is received but not yet paid.
When is an expense recorded?
An expense is recorded when the cost is incurred, following accrual accounting principles.
How do expenses impact a company's finances?
Expenses reduce net income and affect profitability.
Can a payable also be an expense?
Yes, payables often arise from expenses incurred but not yet paid.
How does payable differ from accounts receivable?
Payable represents amounts owed by the company, while accounts receivable represent amounts owed to the company.
Where do expenses appear in financial statements?
Expenses appear on the income statement.
What is an expense?
An expense is a cost incurred by a company to generate revenue.
Where do payables appear in financial statements?
Payables appear as liabilities on the balance sheet.
Why is managing expenses important?
Managing expenses is essential for budgeting and ensuring profitability.
Why is managing payables important?
Managing payables is crucial for maintaining supplier relationships and avoiding late fees.
How does tracking expenses benefit a company?
Tracking expenses helps in budgeting, financial planning, and improving profitability.
How do payables impact a company's finances?
Payables represent short-term obligations and impact cash flow management.
Are payables short-term or long-term liabilities?
Payables are typically short-term liabilities, due within a year.
Are all expenses immediately paid?
Not necessarily; expenses are recorded when incurred, not when paid.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
Co-written by
Maham Liaqat
