Current Liabilities

This article explains how Current Liabilities work in Model Reef.

You will learn:

Which balances are treated as Current Liabilities.
How these balances are created from variable timing and delays.
How Current Liabilities affect working capital and cash.

What are Current Liabilities in Model Reef

Current Liabilities typically include:

Accounts Payable (AP)
- Amounts owed to suppliers and staff when costs are accrued but not yet paid.
Tax Payable
- Accrued tax expense awaiting payment.
Interest Payable
- Accrued interest expense not yet paid in cash.

Other short term obligations may be represented if you create additional Liability type variables with short term categories.

How Accounts Payable is generated

Accounts Payable comes from COGS, Opex and Staff variables with payment delays.

Rules:

Costs are accrued in the P&L when they are incurred.
If payment is delayed beyond the accrual period, the unpaid amount becomes part of AP.
When cash is paid to suppliers or staff, AP decreases and cash decreases.

Staff-related payables share the same AP bucket in the Balance Sheet but can be distinguished by category when you drill down.

Tax and Interest Payable

Tax Payable builds up when Tax Expense is accrued and is reduced when tax is paid according to the tax payment schedule.
Interest Payable builds up when interest expense is accrued and is reduced when interest is actually paid in cash.

These balances represent timing differences between the P&L and cash for tax and interest outflows.