Are accounts payable secured by collateral?

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Valdez 0 Comments

Do you know if accounts payable are secured by some kind of collateral? How are creditors treated in case a company becomes insolvent? I would imagine that they come before the investors, right?

1 Answer

score 0 · Answer 1 · 2012-12-02T20:19:37+00:00

Accounts payable include amounts owed for purchases made but unpaid at the year end. Most of the times, companies do not offer collateral for such transactions so no they are not secured by collateral. A transaction can be however tailored to the needs of the two parties so it can be secured by collateral. It’s just the common practice that they are not.