Liabilities Statement Template (Current vs Long-Term, IFRS 16)

Every business owner in Saudi Arabia opens the balance sheet at month-end looking for one specific page: a list of everything the company owes to others. That page is the liabilities statement, and it is the compass that tells you whether your company stands on solid ground or walks a tightrope over a cliff. An amount due to a supplier, a bank installment falling due within 30 days, an unpaid employee salary, the 15% VAT collected from customers that must be remitted to the Zakat, Tax and Customs Authority (ZATCA), last month’s GOSI contribution, a long-term lease obligation under IFRS 16: each of these is a liability that differs in nature, maturity, and impact on liquidity.

The problem is that many small and medium businesses in Riyadh, Jeddah, and Dammam reduce their liabilities statement to a supplier list, missing critical components such as accumulated End-of-Service Benefit (EOSB) for employees, capitalized lease obligations under international standards, or Deferred Tax Liabilities arising from differences between accounting and tax treatment. The direct result: an incomplete statement of financial position, misleading liquidity ratios, an incorrect zakat return, and sometimes a rejected bank financing application because the bank concludes the company does not actually know what it owes.

This page gives you a complete liabilities statement template, designed for the Saudi accounting reality and the International Financial Reporting Standards (IFRS) adopted by the Saudi Organization for Chartered and Professional Accountants. The template separates Current Liabilities from Long-Term Liabilities, lists every component under its correct accounting label, and ties each value to its effect on liquidity ratios and on the zakat base. Ready to download in Excel and Google Sheets, and ready to run directly inside Qoyod so it is generated automatically from daily journal entries without manual re-entry.

What is a liabilities statement and how it differs from the balance sheet

A liabilities statement is a detailed financial report that lists every amount the company owes to external parties on a specific date, arranged by maturity and by the nature of the obligation. It is not a simple list of creditor names, but an accounting classification that separates short-term Current Liabilities from Long-Term Liabilities and, within each, displays the sub-components at their current values under accepted accounting principles.

The balance sheet, formally called the statement of financial position, presents three elements: assets, liabilities, and equity, on a single summary page. The liabilities statement takes the second section of the balance sheet and expands it into granular detail. Instead of a single line saying “Total Liabilities: SAR 5.8 million” you get 15 to 25 lines that explain where this amount came from, when it falls due, and what its nature is.

The purpose of preparing a standalone liabilities statement

• Liquidity management: knowing precisely what is due within the next 30 days, what can be deferred, and which amounts require cash to be set aside.
• Negotiating with banks: the bank requires a detailed liabilities statement before any new loan to assess the company’s ability to repay and its leverage ratio.
• Zakat return: ZATCA allows certain liabilities to be deducted from the zakat base, and this cannot be claimed without a documented statement.
• Company valuation on sale or merger: any investor or buyer examines liabilities before assets because they are the responsibility being inherited.
• Compliance with international standards: IFRS requires the separation of current and long-term liabilities in every statement of financial position.

The difference between the statement, the schedule, and the balance sheet

“Financial statements” is an umbrella term that covers the income statement, the statement of financial position, the cash flow statement, and the statement of changes in equity. The balance sheet is synonymous with the statement of financial position. The liabilities statement is a detailed supporting report, usually attached as an appendix to the main statement or extracted on demand for analysis, financing, and tax filings.

Distinguishing Current Liabilities from Long-Term Liabilities

The separation between the two is a strict accounting rule, not a cosmetic ordering. A current liability is one that must be settled within 12 months of the statement of financial position date, or within the company’s normal operating cycle, whichever is longer. A long-term liability is one that falls due after 12 months. The separation directly affects the current ratio, the bank’s reading of company risk, and the assessment of the zakat base.

The current portion of Long-Term Liabilities

An important rule that accountants often get wrong: if you have a 5-year bank loan with an annual installment of SAR 200,000, then the first-year installment (SAR 200,000) is classified as a current liability, and the remainder (SAR 800,000) as a long-term liability. This separation, called in accounting “the current portion of long-term debt,” materially changes the current ratio and gives a truer reading of the company’s ability to meet its short-term obligations.

The normal operating cycle as an exception

If the company’s operating cycle is longer than 12 months, such as for large contractors or heavy industries, the operating cycle is used instead of the time rule. An 18-month construction project may classify subcontractor payables as Current Liabilities even if they exceed a year, because they are part of the project cycle itself.

Components of Current Liabilities

Current Liabilities are the daily pressure on liquidity. Every item requires careful tracking because late settlement leads to penalties, to supplier shutoffs, or to issues with government authorities.

Suppliers and trade creditors

This item represents amounts due to suppliers of goods and services who granted the company payment terms of 30, 60, or 90 days. The balance must match supplier account statements, and every difference between the statement and the company’s record deserves immediate review. In the Saudi market, suppliers tend to offer an early-payment discount of 2% to 4% for payment within 10 days, and this opportunity should appear in the template so its economics can be calculated.

Cheques payable

Cheques issued by the company that have not yet been cashed. They are treated as an outstanding liability, and the bank balance must remain sufficient to cover them to avoid the risk of a bounced cheque. The template separates this item from others because its legal nature is distinct under the Saudi Commercial Papers Law.

Accrued salaries and wages

• Base salary for the current month: accrued at month-end and becomes a liability until transferred via the Mudad payroll platform.
• Allowances and commissions: housing allowance, transport, and sales commissions calculated on a periodic accrual basis.
• Accumulated leave: the monetary balance of annual leave not yet taken by employees is a real liability.
• Declared annual bonuses: if approved by management before the end of the fiscal year, they are recorded as an accrued liability.

VAT payable

The 15% VAT collected from customers (output VAT) minus the VAT paid to suppliers (input VAT) represents an amount payable to ZATCA. The difference is the net VAT due. Filing is monthly for companies with annual revenue above SAR 40 million, and quarterly for those below. Late remittance immediately triggers a 5% penalty added to the liability.

GOSI contributions payable

The General Organization for Social Insurance (GOSI) requires a monthly employer contribution of 9% of a Saudi employee’s salary (plus 9% deducted from the employee, totaling 18%), and 2% for non-Saudi employees. The liability is recorded at the end of each month and settled before the 15th of the following month via the GOSI portal.

Declared but unpaid dividends

If the general assembly or the board of directors declares a dividend distribution to shareholders or partners, the declared amount immediately becomes a liability until paid. Many family-owned companies in Saudi Arabia overlook this item, so it does not appear in the statement of financial position as a standalone line, an error that disrupts the zakat return.

Components of Long-Term Liabilities

Long-Term Liabilities represent the company’s financing structure, and they are what separates a self-funded company from one that relies on financial leverage. Each item carries the story of a past investment or hiring decision.

Long-term bank loans

Bank loans with a maturity exceeding one year, usually to finance the purchase of fixed assets such as real estate, equipment, or transport vehicles. The template must show: the original amount, the remaining balance, the interest rate or profit margin, the remaining loan term, the current portion (the next 12 months of installments), and the non-current portion. Saudi banks rely on Shariah-compliant financing structures in most cases (Murabaha, Ijara), so the term used is profit margin rather than interest.

Drawn bank facilities

The portion drawn from a current debit credit line, from a financial guarantee letter, or from an open letter of credit. Facilities differ from loans in that they are available on demand, but the portion actually drawn is treated as an outstanding liability.

Lease obligations under IFRS 16

This is the most overlooked item in small and medium companies in Saudi Arabia. IFRS 16, adopted by the Saudi Organization for Chartered and Professional Accountants since 2019, requires the capitalization of long-term operating leases (over 12 months), so the lease becomes an asset (right-of-use asset) and a liability (lease obligation) on the balance sheet. If you rent a premises for 5 years at SAR 240,000 per year, you must calculate the discounted present value of the five cash flows and record it as a long-term lease obligation.

• Current portion: lease payments due within the next 12 months at their present value.
• Non-current portion: payments for years 2 through 5 at their discounted present value.
• Discount rate used: the company’s Incremental Borrowing Rate, typically between 6% and 9% for mid-size Saudi companies.

End-of-Service Benefit (EOSB)

The Saudi Labor Law obligates the employer to pay an End-of-Service Benefit calculated on the basis of the last salary for each year of service: half a month for the first five years, and a full month for any additional years. This is an accumulating liability that must be accrued monthly based on a simple actuarial study. A company with 40 employees and average tenure of 4 years may have an EOSB obligation reaching SAR 600,000 or more, and ignoring this figure materially distorts the balance sheet.

Deferred Tax Liabilities

These arise from differences between the accounting treatment and the zakat or tax treatment of certain items. For example, accounting depreciation may differ from the rates ZATCA accepts when calculating zakat and income tax, producing a temporary difference that translates into a Deferred Tax Liability. Joint-stock companies and foreign companies subject to 20% income tax are the most exposed to this item.

Measuring liabilities and the effect of the measurement method

The measurement method determines the amount shown in the statement of financial position, and it is not arbitrary but governed by strict IFRS standards. A measurement error means an error in every financial ratio built on liabilities.

Nominal value

Used for short-term liabilities maturing within 12 months, such as suppliers, payroll, and VAT. The recorded value is the amount expected to be paid, without discounting, because the time value of money is not material in the short term.

Discounted present value

Used for Long-Term Liabilities that extend beyond one year, such as lease obligations, interest-free loans, and End-of-Service Benefit. The recorded value is the present value of future cash flows, discounted at an effective interest rate or an incremental borrowing rate. Example: a lease obligation with a nominal value of SAR 1.2 million over 5 years becomes approximately SAR 990,000 at present value when discounted at 7%.

Fair value

Used for liabilities arising from financial derivatives or complex guarantees, where the liability is remeasured at every reporting date based on market conditions. Rare in small and medium companies but common in large joint-stock companies.

Complete liabilities statement template with a Saudi company example

The following example is for a contracting company in Riyadh, trading as “Advanced Riyadh Contracting,” that executes mid-size projects, has 65 employees, and posts annual revenue of SAR 18 million. Its total liabilities amount to SAR 5,800,000 distributed across current and long-term items as detailed below.

The 42/58 split between current and long-term gives a relatively healthy reading: the company does not rely excessively on short-term debt, and it has long-term financing supporting its fixed assets. If the ratio were reversed and 70% of the liabilities were short-term, an immediate liquidity risk signal would appear.

The relationship between the liabilities statement and the current and quick ratios

The liabilities statement is half of the equation in calculating the two most important financial ratios in liquidity management. The other half is current assets. Both ratios are used by banks, suppliers, and investors to assess the company’s ability to meet its short-term obligations.

Current Ratio

Calculated by dividing current assets by Current Liabilities. For the example above, if the company’s current assets were SAR 3,800,000, the ratio becomes 3,800,000 / 2,422,000 = 1.57. The healthy range in the contracting sector is between 1.4 and 2.0. Below 1 signals risk of inability to pay, above 2.5 may indicate poor use of liquid assets.

Quick Ratio

Calculated by dividing (current assets minus inventory) by Current Liabilities. Inventory is excluded because it is the slowest current asset to convert to cash. If the company’s inventory is SAR 900,000, the ratio becomes (3,800,000 – 900,000) / 2,422,000 = 1.20. This is a strong ratio, meaning the company can cover its short-term obligations without resorting to inventory sales.

Cash Ratio

• Definition: cash and cash equivalents divided by Current Liabilities.
• Healthy benchmark: 0.3 to 0.6 is sufficient for most sectors.
• Interpretation: a low ratio does not necessarily mean risk if the customer collection cycle is short and reliable.

The effect of the liabilities statement on the zakat return

The zakat system in Saudi Arabia levies zakat on a base called the “zakat base,” which is not net profit but an accounting formula that includes equity plus certain Long-Term Liabilities, minus deductions and other reconciling items. The liabilities statement is the reference ZATCA relies on to verify the validity of the base.

Liabilities added to the zakat base

Long-term loans and facilities, lease obligations under IFRS 16, and End-of-Service Benefit are added partially or wholly to the zakat base depending on the assets they finance. The general rule: if the liability finances a current asset it is added at 100% to the base, and if it finances a long-term fixed asset it is capped at certain limits.

Liabilities deducted from the base

• Operating Current Liabilities: suppliers, accrued payroll, VAT, and GOSI are deducted in full because they are operating liabilities that do not finance assets.
• Provisions tied to zakat-able assets: provisions for doubtful debts are tied to customer receivables.
• Declared dividends: deducted because they leave equity as soon as they are declared.

The effect of misclassification on the return

Misclassifying a short-term loan as long-term, or overlooking an IFRS 16 lease obligation, leads to an incorrect zakat base. The difference can be tens of thousands of riyals per year, and any subsequent ZATCA audit will uncover the error and generate adjustments and late-payment penalties. The attached template applies the correct classification automatically when linked to Qoyod.

How banks use the liabilities statement in credit assessment

Before a Saudi bank gives you a single riyal in financing, it requests the latest audited statement of financial position and the latest detailed liabilities statement. The bank uses it to answer four fundamental questions about the company’s ability to repay the new loan.

Debt-to-Equity Ratio

Calculated by dividing total liabilities by equity. A company with SAR 5.8 million in liabilities and SAR 4 million in equity has a leverage ratio of 1.45. Saudi banks prefer this to be below 2 for contracting and trade sectors, and below 3 for heavy industry sectors. A higher ratio signals elevated risk and may raise financing costs.

Debt Service Coverage Ratio (DSCR)

Net operating cash flow divided by the sum of loan installments and interest due during the year. Banks usually require this ratio to be at least 1.25, meaning the company generates cash flow that exceeds annual debt burdens by 25%.

Maturity profile analysis

• 30-day liabilities: suppliers, payroll, VAT, cheques payable, compared against available cash and expected collections.
• 90-day liabilities: dividends, next quarter loan installments, three months of GOSI.
• One-year liabilities: the current portion of loans, annual lease obligation.
• Post-year liabilities: the long-term financing structure.

Concentration risk

The bank also analyzes liability concentration: are 60% of suppliers a single supplier? Are all loans from a single bank? High concentration raises risk even if the aggregate numbers look healthy.

The difference between real and Contingent Liabilities

Everything covered so far has been real liabilities, meaning confirmed in occurrence, measurable in amount, and identified by counterparty. There is another type every business owner should know: Contingent Liabilities. These do not appear on the face of the statement of financial position; they are disclosed in the notes.

The accounting definition of a Contingent Liability

A Contingent Liability is a possible obligation that may arise from a past event, but whose occurrence depends on a future event outside the company’s control, or whose amount cannot be measured reliably. Examples: pending lawsuits against the company, guarantees provided to third parties, tax positions disputed with ZATCA.

The practical difference between the two types

How to disclose Contingent Liabilities

They must appear in the notes to the financial statements with full detail: the nature of the obligation, the estimated amount, the probability of occurrence (high, medium, low), and the actions the company is taking. If the occurrence becomes probable (more than 50%) and the amount can be measured with reasonable accuracy, it must be moved onto the face of the statement as a provision.

The most common errors in preparing a liabilities statement

Five errors recur in small and medium companies in Saudi Arabia, and each one leads to a misleading statement of financial position.

Confusing the liability with the expense

An expense is a line on the income statement; a liability is a line on the statement of financial position. When an accountant pays an electricity bill of SAR 8,000 in cash on the day of receipt, it appears only as an expense and reduces cash. But if the invoice is received on the 28th and not settled before the end of the financial period, it must appear as an expense on the income statement and as an accrued liability (suppliers or accrued expenses) on the statement of financial position. Confusing the two disrupts the accrual principle and distorts the period’s profit.

Overlooking lease obligations under IFRS 16

Many companies still treat rent as a simple monthly expense, ignoring the application of IFRS 16, which is now mandatory in Saudi Arabia. A 5-year office lease at SAR 25,000 per month must be recorded as an asset (right-of-use asset) at a present value of roughly SAR 1.2 million, and as a lease obligation at the same value. Ignoring this understates both assets and liabilities and changes every financial analysis ratio.

Forgetting the End-of-Service Benefit

An accumulating liability that grows monthly. A company 8 years old with 30 employees and an average salary of SAR 7,000 may have an EOSB obligation reaching SAR 800,000 or more. Ignoring this item makes the statement of financial position look healthier than it is, and when a wave of employees resigns at once, the company is caught off guard by an unanticipated liquidity gap.

Failing to separate the current portion of loans

• The error: recording the entire loan in Long-Term Liabilities without separating out the next 12 months of installments.
• The effect: a misleadingly high current ratio, and a misleading drop after the correction.
• The fix: at every reporting date, calculate the installments due within 12 months and move them to the Current Liabilities category.

Overlooking GOSI and VAT

Monthly GOSI contributions and collected VAT are mandatory government obligations, but some small companies treat them as cash flows passing through, recording them as a liability only at the moment of payment. This is an error against the accrual principle, and it leads to liquidity surprises on remittance dates.

How Qoyod generates the liabilities statement automatically

The practical difference between applying the template manually in Excel and running it inside Qoyod appears at two moments: at entry and at extraction. Qoyod turns the liabilities statement from a report you prepare monthly into a report you extract at the press of a button at any moment, reflecting the company’s reality at the moment of extraction.

Automatic feed from daily journal entries

Every credit purchase recorded in Qoyod automatically adds to suppliers, every sales invoice records the VAT payable in the dedicated account, and every monthly payroll run generates accrual entries for GOSI and End-of-Service Benefit. No re-entry of any number into the template is required; everything is fed from a single record.

Automatic classification between current and long-term

• Classification rules: Qoyod applies the 12-month rule automatically to loans and lease obligations.
• Current portion of loans: calculated from the amortization schedule entered when the loan is recorded, and updated monthly.
• Lease obligations: present value is discounted automatically at the adopted discount rate.
• End-of-Service Benefit: calculated monthly for each employee under the Saudi Labor Law.

Reports ready for banks and authorities

From the reports screen in Qoyod, you extract the statement of financial position and the liabilities statement in the format Saudi banks require, or in the ZATCA format for the zakat return, or in a chartered accountant format for audit. Reports can be exported in Excel, PDF, and XML for Phase 2 e-invoicing.

Liquidity and maturity alerts

Qoyod sends alerts before every liability falls due: an alert 3 days before VAT remittance, an alert 5 days before a bank loan installment, an alert one week before payroll date. These alerts shift financial management from reactive to proactive. This integrates with the accounting module and the financial reports in Qoyod to give you a complete real-time picture. Review the Qoyod plans to pick the best fit for your company size.

Frequently Asked Questions

What is the difference between the liabilities statement and the statement of financial position?

The statement of financial position presents three elements together: assets, liabilities, and equity. The liabilities statement takes only the second section and expands it into granular detail. Instead of a single total line, you get 15 to 25 lines explaining where the amount came from, when it falls due, and what its nature is. The statement is usually attached as an appendix to the main statement, or extracted on demand for analysis, bank financing, and zakat returns.

Does an office lease obligation belong in the liabilities statement?

Yes, if the lease term is longer than 12 months. IFRS 16, adopted by the Saudi Organization for Chartered and Professional Accountants, requires the capitalization of long-term operating leases, so the lease becomes an asset (right-of-use asset) and a liability (lease obligation) on the balance sheet. The liability is calculated at the discounted present value of all future lease payments at the company’s incremental borrowing rate.

How do I classify a 5-year bank loan between current and long-term?

You take the amortization schedule, sum the installments due within the next 12 months of the reporting date, and record that amount as the current portion of loans within Current Liabilities. The remainder is recorded as a long-term bank loan. This classification directly affects the current ratio and the bank’s reading of your company’s risk.

Is the VAT collected from customers a liability?

Yes, the 15% output VAT collected from customers is not company revenue. It is a trust amount that must be remitted to ZATCA. It is recorded as a liability from the moment the invoice is issued, and the net amount (output minus input) is settled at the end of each monthly or quarterly filing period. Late remittance immediately triggers a 5% penalty.

When do I record dividends as a liability?

Dividends move from equity to a liability the moment they are formally approved by the general assembly or the board of directors. Before approval, they sit within equity as retained earnings. After approval and until settlement, they become a current liability labeled “declared but unpaid dividends.” Overlooking this transition disrupts the zakat return.

Is the End-of-Service Benefit calculated from the employee’s first day of work?

Yes, the Saudi Labor Law requires accrual of the End-of-Service Benefit from day one: half a month for each of the first five years and a full month for any additional years. In accounting, a monthly provision must be set aside based on each employee’s latest salary, so the company is not surprised by a large liquidity gap during a wave of resignations or contract terminations.

How does the liabilities statement affect the zakat return?

ZATCA allows certain Long-Term Liabilities to be added to the zakat base (such as loans, lease obligations, and the End-of-Service Benefit), and allows operating Current Liabilities to be deducted in full. Misclassification leads to an incorrect zakat base, and any subsequent audit will uncover the error and generate adjustments and late-payment penalties. The attached template applies the correct classification automatically.

What is the difference between real and Contingent Liabilities?

A real liability is confirmed in occurrence, measurable in amount, and identified by counterparty. It is recognized on the face of the statement of financial position and enters the calculation of financial ratios. A Contingent Liability depends on a future event outside the company’s control, such as pending lawsuits or guarantees to third parties, and is disclosed in the notes to the financial statements without being recognized on the face. If occurrence becomes probable (more than 50%) and the amount can be measured with reasonable accuracy, it is moved onto the face as a provision.