A note payable is a written promise to pay a specific amount of money to a lender at a future date. This financial obligation typically arises when a business borrows money or purchases goods on credit. The terms of the note, including the interest rate and repayment schedule, are clearly outlined in the agreement. Businesses often use notes payable to manage cash flow and finance operations. They are recorded as liabilities on the balance sheet, reflecting the company's obligation to repay the borrowed amount. Proper management of notes payable is essential for maintaining good financial health and creditworthiness.