> For the complete documentation index, see [llms.txt](https://help.modelreef.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.modelreef.io/help/financial-outputs-and-valuation/current-liabilities.md).

# 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.

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### 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.
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### 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.
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### 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.
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### Current Liabilities and working capital

Current Liabilities, particularly AP, are a key part of **working capital**.

* An increase in AP means cash payments lag costs, which temporarily supports cash.
* A decrease in AP means the business is catching up on payments, which uses cash.

In the Cash Waterfall, movements in Current Liabilities are captured within the **Change in net working capital** line, alongside movements in Current Assets such as Accounts Receivable.
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### Current Liabilities in scenarios and branches

In scenarios you can:

* Change payment terms to model faster or slower payments.
* Adjust cost levels and timing to test pressure on AP and working capital.

Across branches you can:

* See which divisions rely most on supplier credit.
* Analyse working capital strategies by geography, entity or business line.
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## Related articles

* [Royalty & Fee Revenue Model](/use-cases/franchise-networks-franchisors-and-franchisees/royalty-and-fee-revenue-model.md)
* [Build a Multi Entity Group Model](/how-tos/core-modelling/build-a-multi-entity-group-model.md)
* [Divisional Structures](/help/building-your-model/divisional-structures.md)
* [Creating Scenarios](/syntax/scenario-syntax/creating-scenarios.md)