Buying things on account is similar to saying, "put it on my tab." Eventually, however, you have to pay the tab. In our example, the transaction requires careful accounting. Once Company XYZ places its order and/or receives the parts, it will increase its inventory account by $1 million, decrease its cash by $100,000, and increase its accounts payable by $900,000. When 60 days has passed and Company XYZ pays the invoice, it will reduce cash by $900,000 and reduce its accounts payable by $900,000.
Technically, any kind of installment loan (such as your mortgage or car loan) is akin to putting something on account. In the business world, putting things on account usually creates accounts payable (or A/P). A/P is a liability, and as such, it appears on the balance sheet.
In turn, when accounts payable go down, this is considered a use of cash on the company's cash flow statement, and as such, it reduces the company's working capital (defined as current assets minus current liabilities). When accounts payable goes up, this is considered a source of cash on the company's cash flow statement because the company is "stretching out" the time it takes to pay its invoices and thus not using cash as quickly.