Non-current liabilities
Learn what non-current liabilities are, with examples and how they affect your long-term finances.
Published Wednesday 12 August 2026
Table of contents
Key takeaways
- Non-current liabilities are debts your business owes but won't pay off for at least 12 months, also called long-term liabilities
- Common examples include long-term loans, bonds, leases, deferred tax owed to SARS, and pension obligations
- They appear in a separate section of your balance sheet, below current liabilities, and affect how lenders and investors view your solvency
- Tracking non-current liabilities helps you plan cash flow, manage repayment schedules, and maintain a healthy debt-to-equity ratio
What are non-current liabilities?
Non-current liabilities are the debts a business owes but isn't due to pay for at least 12 months. They're also called long-term liabilities.
Because these obligations stretch beyond the next financial year, they don't put immediate pressure on your cash reserves. However, they do affect your long-term financial health and how creditors assess your ability to repay.
Non-current vs current liabilities: what's the difference?
The distinction comes down to timing. Current liabilities are due within 12 months (think trade payables, short-term loans, or accrued expenses). Non-current liabilities are due after 12 months.
This split matters when you review your working capital. Current liabilities eat into the cash and assets you need for day-to-day operations. Non-current liabilities sit further out, influencing your solvency rather than your immediate liquidity.
Types of non-current liabilities
Several categories of debt qualify as non-current. Below are the most common ones you'll see on a South African balance sheet.
- Long-term loans and borrowings: bank loans or private financing repayable over more than one year, often secured against business assets
- Long-term leases: property or equipment leases extending beyond 12 months, recorded as liabilities under IFRS 16
- Lines of credit: revolving credit facilities with repayment terms that push beyond the current financial year
- Bonds and debentures: debt securities issued to investors, typically repaid over several years
- Deferred tax liabilities: tax owed to SARS that arises from timing differences between accounting profit and taxable profit, payable in future periods
- Pension and retirement obligations: amounts set aside for employee retirement benefits, such as provident or pension fund commitments
- Provisions and deferred revenue: long-term provisions for future costs, or income received in advance for services you'll deliver later
How non-current liabilities appear on the balance sheet
On a standard balance sheet, liabilities are split into current and non-current sections. Non-current liabilities sit below current liabilities, giving you a clear view of what's due soon versus what's due later.
This layout helps you, your accountant, and potential lenders see the full picture at a glance. When you read a balance sheet, check whether non-current liabilities are growing faster than your assets, as that can signal rising financial risk.
Why non-current liabilities matter
Non-current liabilities shape your solvency, which is your capacity to meet obligations over the long term. A business can be profitable on paper yet still struggle if too much of its asset base is financed by debt.
Long-term debt is a large part of the South African business balance sheet. According to Statistics South Africa's Annual Financial Statistics, total liabilities in South Africa's formal business sector reached R9.8 trillion in 2024, and small enterprises carried a debt-to-assets ratio of 0.68 (about 68% of their assets financed by debt), with long-term loans the largest liability type for most industries.
Keeping non-current liabilities visible helps you judge whether future repayments are manageable. It also affects how lenders view your creditworthiness and whether investors see your business as financially stable. For more on how solvency differs from day-to-day cash needs, see the guide on liquidity vs solvency.
Key ratios: debt-to-equity and gearing
Two ratios help you measure how much of your business is financed by debt compared to owner equity.
- Debt-to-equity ratio: total liabilities divided by shareholders' equity. A ratio above 1 means you owe more than you own outright
- Gearing ratio: long-term debt divided by capital employed (equity plus long-term debt). Higher gearing means a larger share of your funding comes from borrowing
Neither ratio is good or bad on its own. What matters is how your figures compare to industry norms and whether your cash flow can cover the repayments. For a related measure of short-term health, review the current ratio guide.
Track your non-current liabilities with Xero
Accurate records make it easier to spot when long-term debt is growing and to plan repayments before they strain your cash flow. Xero's accounting software pulls your liabilities into real-time reports so you can see exactly where you stand. If you'd like to try it for your business, get one month free and see how simple tracking your finances can be.
FAQs on non-current liabilities
Below are quick answers to common questions about non-current liabilities.
What are examples of non-current liabilities?
Examples include long-term bank loans, bonds, finance leases, deferred tax owed to SARS, pension obligations, and long-term provisions. Any debt due after 12 months qualifies.
Is a long-term loan a non-current liability?
Yes. A loan with a repayment term extending beyond one year is classified as a non-current liability on the balance sheet.
Are non-current liabilities the same as long-term debt?
They overlap but aren't identical. Long-term debt usually refers to borrowings like loans and bonds. Non-current liabilities is the broader accounting category that also includes deferred tax, pensions, and long-term provisions.
How do non-current liabilities differ from current liabilities?
Current liabilities are due within 12 months, while non-current liabilities are due after 12 months. The distinction affects your working capital calculation and how lenders assess short-term versus long-term risk.
Related terms
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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.