Accounts Payable

Money the association owes to vendors, contractors, and service providers for goods and services received but not yet paid for. Accounts payable appear as a current liability on the balance sheet and represent the association's short-term financial obligations. Common payables include management company fees, landscaping contracts, insurance premiums, utility bills, legal fees, and invoices from maintenance contractors. The board or its authorized agents should review and approve all invoices before payment, verifying that the goods or services were actually received, the amounts match the contract terms, and the expenditure was properly authorized. A well-managed accounts payable process includes segregation of duties — the person who approves invoices should not be the same person who signs checks or initiates electronic payments. Most associations aim to pay vendors within 30 days to maintain good relationships and avoid late charges that waste association funds. Chronically overdue payables can lead to service interruptions (such as a landscaper walking off the job), mechanic's liens filed against common areas by unpaid contractors, and damage to the association's credit reputation. The board should review an accounts payable summary at each meeting to monitor cash outflows against the budget. Proper internal controls over accounts payable are a key component of the board's fiduciary duty and are frequently examined during financial audits.