Supplier debt is the amount you owe to one or more suppliers for goods or services you have purchased.
Sometimes you don’t receive an invoice for what you purchase right away. Perhaps your supplier invoices for goods you order once a quarter. Other times, the invoice comes right away but has a payment deadline ranging from 14 days to 3 months. This varies depending on the purchase, supplier, and the industry you are in.
When is what you owe the supplier considered debt?
Regardless of how you and the supplier solve the payment, it is considered debt when you receive an invoice and do not pay immediately. This means that the term supplier debt is a general term for unpaid amounts to the supplier.
If you have received goods or services without paying immediately, you are therefore in debt to the supplier. Having supplier debt may sound scary. But the truth is that most businesses will have it, and most will also get rid of it very quickly.
Supplier debt is considered short-term debt in the balance sheet as it is usually paid within a year.