In bookkeeping, a bill is an invoice seen from the buyer's side: a document a business receives from a vendor or supplier stating what it owes for goods delivered or services performed. The seller calls the document an invoice; the customer, recording it as a debt, often calls it a bill.
How bills are recorded and paid
When a bill arrives, the accounts payable team checks it against the purchase order and the receiving report, so that the business pays only for what it ordered and received. Once approved, the bill is entered with a debit to the relevant asset or expense account and a credit to accounts payable. A $1,200 bill for office supplies, for example, debits Supplies Expense and credits Accounts Payable for $1,200.
When the bill is paid, Accounts Payable is debited and Cash is credited. Many accounting packages have a separate "bills" module for exactly this workflow, tracking due dates, early-payment discounts and approval status.
The word has other financial meanings. A bill payable is a formal written promise to pay, closer to a note than to an ordinary invoice. In money markets, a bill can be a short-term government debt security such as a Treasury bill, and in everyday speech it can also mean a banknote. In accounting contexts, though, an unqualified "bill" almost always means a vendor invoice awaiting payment.