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. Credit

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

    1. The degree to which an asset or security can be bought or ...
  3. Accounts Payable - AP

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

    A financial institution licensed as a receiver of deposits. There ...
  5. Wall Street Journal Prime Rate

    An interest rate that large banks in the United States charge ...
  6. Treasury Direct

    The online market where investors can purchase federal government ...
Related Articles
  1. Savings

    Are Your Bank Deposits Insured?

    Learn how the FDIC is helping to keep your money in your pockets.
  2. Retirement

    The Best Way To Borrow

    There are many avenues from which to drum up funding. Find out the pros and cons of each.
  3. Options & Futures

    Demystification Of Bank Accounts

    Find out which type of account suits your specific needs.
  4. Options & Futures

    Who Backs Up The FDIC?

    The FDIC insures depositors against loss, but what happens if it runs out of money?
  5. Economics

    What is the difference between fiscal policy and monetary policy?

    Utilizing founding principles of macroeconomics through both fiscal and monetary policy can have drastic effects on a country's economic state.
  6. Investing

    Reassessing Your Approach To Bond Investing

    Rethinking your fixed-income portfolio may not resonate in quite the same way as dropping 10 pounds or finally giving up that smoking habit.
  7. Bonds & Fixed Income

    How are treasury bill interest rates determined?

    Find out why interest rates for U.S. Treasury bills are determined at auction and how so-called "competitive" bidders impact returns on these debt securities.
  8. Bonds & Fixed Income

    How do treasury bill prices affect other investments?

    Find out how the price and yield of Treasury bills can impact the level of risk investors are willing to accept in their securities.
  9. Bonds & Fixed Income

    How does quantitative easing in the U.S. affect the bond market?

    See why it is very difficult to evaluate the impact of the Federal Reserve's quantitative easing, or QE, program on bond prices and yields.
  10. Economics

    What impact does quantitative easing have on consumers in the U.S.?

    Dig deeper into the Federal Reserve's quantitative easing policies and what potential impacts they may have on American consumers.

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center