Current vs non-current liabilities
Learn how to split current and non-current liabilities on your balance sheet, with Singapore examples.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Current liabilities are due within 12 months after the reporting date or within your operating cycle, and non-current liabilities are everything else
- Under Singapore’s accounting standards, your right to defer settlement at the reporting date has decided classification since 1 January 2024
- Split loans and leases so repayments due in the next 12 months sit in current liabilities and the balance sits in non-current
- The split shapes your current ratio and working capital, which lenders use to judge whether you can meet short-term debts
What are current vs non-current liabilities?
Current liabilities are debts due within 12 months after the reporting date, settled in your operating cycle, or that you can’t defer for 12 months. Non-current liabilities, also called long-term liabilities, are all other debts.
Both types appear on your balance sheet. In Singapore, the rules sit in SFRS(I) 1-1, part of the Singapore Financial Reporting Standards (International). The Accounting and Corporate Regulatory Authority (ACRA) confirms that Singapore’s accounting standards are based on IFRS, the International Financial Reporting Standards.
SFRS(I) 1-1 mirrors International Accounting Standard (IAS) 1. According to the IFRS Foundation, amendments to IAS 1 took effect for annual periods beginning on or after 1 January 2024. They make your right, at the reporting date, to defer settlement for at least 12 months the deciding test.
Think of it like a two-year phone contract. The payments due this year are current, and the payments due in the second year are non-current.
Key differences between current and non-current liabilities
The main differences come down to timing and what each type says about your finances. Here’s how they compare:
- Current liabilities fall due within 12 months or your operating cycle; non-current liabilities fall due later
- Current liabilities usually cover day-to-day costs like supplier bills and wages; non-current liabilities often fund equipment or premises
- Current liabilities are paid from cash and other current assets; non-current liabilities are repaid over several years
- Current liabilities reflect your short-term liquidity; non-current liabilities reflect your long-term debt load
- Current liabilities appear first on the balance sheet; non-current liabilities follow them
Examples of current liabilities
Current liabilities are the everyday obligations most small businesses carry. Common examples include:
- money you owe suppliers for goods and services bought on credit, known as accounts payable
- wages and salaries owed to your employees at the end of the period
- goods and services tax (GST) you’ve collected and owe to the Inland Revenue Authority of Singapore (IRAS)
- income tax payable on your profits for the year
- short-term loans and bank overdrafts
- the current portion of long-term debt, meaning loan repayments due in the next 12 months
- customer deposits and payments received in advance for work you’re yet to deliver
If you’re GST-registered, you charge GST at the current rate of 9%. The amount you owe IRAS sits in current liabilities until you pay it.
Trade payables are a special case, because they’re part of your normal operating cycle. They stay current even when due more than 12 months after the reporting date, as BDO’s guide explains under IAS 1 paragraph 70.
Examples of non-current liabilities
Non-current liabilities usually relate to longer-term funding for your business. Examples include:
- the portion of bank loans due after the next 12 months
- lease liabilities for premises or equipment, after taking out payments due within 12 months
- credit facilities, but only when you have the right to defer repayment beyond 12 months
- deferred tax liabilities, which are always non-current under IAS 1 paragraph 56, according to the same BDO guide
- long-term provisions, such as the cost of restoring leased premises when the lease ends
- bonds or notes payable, which are rare for small businesses
A facility your bank can call in at any time is current, however long you plan to keep using it. That’s why the terms of each facility matter more than your repayment plans.
How to classify a liability as current or non-current
Work through these checks at each reporting date, which is usually your financial year-end. They’ll help you place every liability in the right group.
- Check the due date against your reporting date. Anything due within 12 months after that date is usually current.
- Check whether you have the right to defer settlement. If, at the reporting date, you can push payment out for at least 12 months, the liability is non-current.
- Consider your operating cycle. Trade payables stay current, even when they fall due after 12 months.
- Split loans into current and non-current portions. Repayments due in the next 12 months are current, and the remaining balance is non-current.
- Check loan covenants as at the reporting date. Covenants you must meet on or before that date affect classification; later ones don’t, but you must disclose the risk.
Here’s a simplified example of step 4. Say your business has a S$120,000 bank loan at 31 December, repaid at S$2,000 a month in principal, with interest left out for simplicity.
You’ll repay S$24,000 over the next 12 months, so that amount is current. The remaining S$96,000 is non-current. These figures are illustrative only.
Where liabilities appear on the balance sheet
A classified balance sheet groups liabilities by timing, so anyone reading it can see what’s due soon and what’s due later. Current liabilities come first, followed by non-current liabilities, with a subtotal for each and a figure for total liabilities.
The balance sheet then shows how your business is funded: Assets = Liabilities + Equity. Every dollar of assets is funded either by what you owe or by what the owners have invested and kept in the business.
Why the difference matters for your business
The split tells you and your lender two different things. Current liabilities show your short-term liquidity, while non-current liabilities speak to your long-term solvency.
Two quick measures rely on current liabilities. Your current ratio is current assets ÷ current liabilities, and it shows whether you can cover near-term bills. Your working capital is current assets − current liabilities, the buffer you have for day-to-day running costs.
Lenders often review both when you apply for finance. Getting the classification right gives them an accurate picture and helps you plan repayments with confidence.
Looking ahead, IFRS 18 replaces IAS 1 for annual periods beginning on or after 1 January 2027. The International Accounting Standards Board (IASB) focused mainly on the profit or loss statement. It carried the liability-classification clarifications forward, so the same test still applies.
Keep track of your liabilities with Xero
Knowing which debts fall due this year helps you plan cash flow and talk to lenders with confidence. Xero’s financial reports, including the balance sheet, show your current and non-current liabilities in one place, kept up to date by automated bank feeds.
You can share reports with your accountant in real time and spend less time on month-end admin. Try Xero today and get one month free.
FAQs on current vs non-current liabilities
Here are quick answers to common questions about classifying liabilities.
Can a non-current liability become current?
Yes. Each year, loan repayments due within 12 months of the reporting date shift into current liabilities. A covenant breach at the reporting date can move the whole loan.
Is a bank overdraft a current liability?
Usually, yes. Most overdrafts are repayable on demand, so they’re current even if you’ve used the same facility for years.
Are current liabilities the same as accounts payable?
Accounts payable is one type of current liability. Current liabilities is the wider group, which also covers GST, wages, tax, loan repayments and customer deposits.
What happens if I breach a loan covenant before year-end?
If the breach lets your lender demand repayment at the reporting date, the loan is current, even if the lender grants a waiver after year-end. A waiver agreed on or before the reporting date that gives you at least 12 months keeps the loan non-current.
Are long-term liabilities the same as non-current liabilities?
Yes, the two terms mean the same thing. SFRS(I) 1-1 uses “non-current”, while “long-term” is more common in everyday business conversation.
Related terms
Learn more about current vs non-current liabilities
Handy resources
Advisor directory
You can search for experts in our advisor directory
Xero Small Business Guides
Discover resources to help you do better business
Financial reporting
Keep track of your performance with accounting reports
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.