Short-term Liabilities

Short-term liabilities — also called current liabilities — are debts a company must settle within one year. They include accounts payable, wages owed, short-term loans, and taxes due.

For example, if your business receives $10,000 worth of inventory on credit with a 60-day payment term, that $10,000 is a short-term liability until you pay it off.

If current liabilities exceed current assets, it is a red flag — the business may struggle to pay its bills on time.