Overdue Accounts Payable
An invoice that has past the due date is called an overdue invoice, it is over the due date.
This overdue bill will remain on the accounts payable list until it is paid.
If the list of overdue invoices keeps increasing because the business does not have enough funds to pay, the owner/manager needs to investigate why there is not enough funds and rectify the issue as soon as possible.
A huge debt can kill a business.
A dissatisfied supplier/vendor might pass the overdue invoice to a debt collection agency.
The debt collection agency will charge fees which have to be paid by the business, not the supplier, so in the end the business will end up paying way more than the original invoice amount.
The fees are coded to ‘collection fees’ expense on the chart of accounts.
Accounts payable are a liability to a business. The dictionary defines this as a legal responsibility, or in simple terms a burden and a problem!