Non-current liabilities
Learn what non-current liabilities are, see examples, and why they matter for your business.
Published Thursday 23 July 2026
Table of contents
Key takeaways
- Non-current liabilities are debts and obligations that fall due more than 12 months out, so they're also known as long-term liabilities.
- Common examples include long-term loans, bonds payable, mortgages, leases, and pension obligations.
- Current liabilities are due within a year, while non-current liabilities are settled later.
- Tracking them helps you protect cash flow, gauge solvency, and plan future investment.
What are non-current liabilities?
Non-current liabilities are debts and obligations your business isn't required to settle within the next 12 months. They're also called long-term liabilities, because you'll pay them off over a longer horizon.
These obligations usually fund bigger, long-term needs, like buying equipment, purchasing property, or financing growth. Because repayment is spread out, they sit apart from the short-term bills you settle month to month.
Examples of non-current liabilities
Non-current liabilities come in several forms, and most growing businesses carry at least one. Common examples include:
- Long-term loans
- Long-term leases
- Bonds payable
- Deferred tax liabilities
- Lines of credit
- Provisions, such as product warranties
- Pension or retirement obligations
- Mortgages
Current vs non-current liabilities
The split between current and non-current liabilities comes down to timing. Current liabilities are due within 12 months, while non-current liabilities fall due after that.
Current liabilities cover short-term commitments like accounts payable, wages, and short-term loans. Non-current liabilities cover longer commitments like mortgages, bonds, and multi-year loans.
Knowing which is which helps you read your balance sheet accurately and judge how much pressure sits on your near-term cash.
Where non-current liabilities appear on the balance sheet
On your balance sheet, liabilities are grouped by when they're due. Non-current liabilities are listed after current liabilities, since they're paid off further into the future.
Within that section, items are usually ordered by maturity, from the soonest due to the latest. Smaller or miscellaneous long-term obligations are often combined into a single line called "other non-current liabilities".
Why non-current liabilities matter for your business
Non-current liabilities shape how stable and how flexible your business is over the long run. Managed well, they let you fund growth without draining day-to-day cash.
They matter for your cash flow, because spreading repayment over years eases the pressure on short-term funds. They also signal your solvency, or your ability to meet long-term debts as your business grows.
Lenders and investors often look at ratios like debt-to-equity and interest coverage to see how comfortably you carry long-term debt. Keeping an eye on these helps you plan future investment with confidence.
Track your liabilities with Xero
Staying on top of what you owe, and when, keeps your business on solid footing. Xero brings your liabilities, reports, and cash flow together in one place, so you can see where your business stands and get one month free.
FAQs on non-current liabilities
Here are answers to some frequently asked questions about non-current liabilities.
Is accounts payable a non-current liability?
No. Accounts payable is a current liability, since it's usually due within a few weeks or months, well inside the 12-month mark.
What is the difference between current and non-current liabilities?
It comes down to timing: current liabilities are settled within a year, while non-current ones are settled later. On the balance sheet they're listed separately, so you can see short-term and long-term obligations at a glance.
How do you calculate non-current liabilities?
Add up every long-term obligation due after 12 months, such as long-term loans, bonds payable, and lease liabilities. The total is the non-current liabilities figure shown on your balance sheet.
Are non-current liabilities bad for a business?
Not necessarily. Long-term debt can fund growth and investment, and it's healthy as long as you can comfortably cover the repayments and interest.
Related terms
Learn more about non-current liabilities
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.