Bills Payable

AAA

DEFINITION of 'Bills Payable'

Similar to accounts payable, this term is used to describe a bank's indebtedness to other banks, principally a Federal Reserve Bank, that is backed by collateral consisting of the bank's promissory note and a pledge of government securities. In other words, bills payable is the money a bank borrows, mainly on a short-term basis, and owes to other banks.


INVESTOPEDIA EXPLAINS 'Bills Payable'

The main thing a bank needs to operate is liquidity, which means that banks need to have a lot of available cash. Banks borrow money from other banks in order to maintain ample liquidity levels.

RELATED TERMS
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to ...
  2. Bank

    A financial institution licensed as a receiver of deposits. There ...
  3. Credit

    1. A contractual agreement in which a borrower receives something ...
  4. Liquidity

    1. The degree to which an asset or security can be bought or ...
  5. Treasury Direct

    The online market where investors can purchase federal government ...
  6. Overnight Rate

    The interest rate at which a depository institution lends immediately ...
Related Articles
  1. Are Your Bank Deposits Insured?
    Savings

    Are Your Bank Deposits Insured?

  2. The Best Way To Borrow
    Retirement

    The Best Way To Borrow

  3. Demystification Of Bank Accounts
    Options & Futures

    Demystification Of Bank Accounts

  4. Who Backs Up The FDIC?
    Options & Futures

    Who Backs Up The FDIC?

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center