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What Are Creditors Amounts Falling Due Within One Year?

creditors amounts falling due within one year

One of the most important items to look at on a balance sheet for a company is the ‘creditors amounts falling due within one year’. This figure shows the total debt that the company owes to creditors and that must be paid within the next 12 months. 

It’s an insight into the short-term liquidity and financial obligations of the company. If the number is high, there could be potential cash flow issues, whereas more modest figures indicate that debt is under control. 

As a result, creditors, investors and business analysts pay close attention to balance sheets and this line in particular when assessing a company’s financial health. 

In this article, we will explore what the term means in depth, so that its importance is clear to you. The article will also address your questions about how these amounts are broken down into different categories, the factors that affect the size of liability, as well as how creditors appear on a balance sheet. 

What does “Creditors’ Amounts Falling Due Within One Year” Mean?

A company’s balance sheet includes many line items. If you look at the line item called  “creditors amounts falling due within one year ”, you will see a figure that tells how much money the company owes to creditors which should be paid within the next 12 months.  Short-term loans, as well as accounts and dividends that are payable are examples of these amounts.

The number is significant as an indicator of the financial situation of the company. High creditors amounts signify the high size of debt a company has to pay within the next year, which can raise red flags about the company’s financial situation. It may raise concerns among investors as it shows difficulties in paying debts. On the opposite side, low creditors amount means that the company is healthy and its financial position is strong. 

How are Creditors’ Amounts Broken Down?

The total amount that a company owes within one year falls under several categories. The most common categories are:

  • Corporation Tax which is the tax owed to the government
  • Other taxes and social security costs- including VAT, PAYE, and National Insurance among others. 
  • Other creditors: such as suppliers, landlords, and utility companies.

Regardless of their due dates, these debts are all due within the coming 12 months. They all fall under the “Creditors amounts falling due within one year” figure to make it easier to see how much the company owes and how it is doing with debt compared to other companies. 

How the Total Owed to Creditors is Calculated

To give a concrete example of  how the total figure is obtained, let’s calculate what a company owes as follows:

  • Corporation Tax of £17,000
  • VAT and social security costs of £15,000
  • Short term loans of £20,000

The figure that will appear on the balance sheet is £52,000, which is the total amount of debt the company has to pay within one year. There could be other expenses too, this is just a simple example. 

What Factors Could Affect the Size of the Liability?

There are a few different factors that could affect the size of this liability. The most common ones are:

    • Interest rates – any rise in the interest rate will raise the amount of debt to be paid by the company increasing its liability. On the other hand, falling interest rates will lead to decrease in the amount of debt and lower the lability.
    • Contractual obligations- agreements to pay certain amounts of money at specific times have an impact on the size of the liability. A company’s “creditors’ amounts falling due within one year” on a balance sheet would be £350,000, if the company has to pay £50,000 in 3 months and £250,000 in twelve months.


  • Operational factors- Companies have operational costs and expenses to balance with sales and cash flow. Financially successful companies may have more options to pay their debt, while struggling companies might delay payments or default on their debts. 


How Do Creditors Appear on a Balance Sheet?

Creditors refer to the amount of money that a company owes, For example this could be invoices for goods and services that have not yet been paid. They often cover raw materials, goods, loans and services. 

You can find a list of this information under the liabilities section on a balance sheet but not all creditors are the same. The “long term liabilities” section includes secured creditors which are not paid within the next year. “Short-term/current liabilities include unsecured creditors which represents the amount of debt that is due within next year.  

Long-term liabilities are not included when calculating the “creditors’ amounts falling due within one year” figure. Only short-term liabilities are included, and therefore it is essential to understand the difference. 

Situations Where the Money Won’t be Paid in One Year

Although some debt is owed and classed as a current liability, it might not be paid within one year in some situations. This occurs when:

  • A loan agreement allows the company to refinance its debt.
  • An agreement with a landlord or a supplier is made to defer payment for a period of time, especially those who they have long-term agreement with. 
  • The company makes an early payment on a long-term contract. 
  • The company is struggling financially, and the debt is arranged to be paid over a longer period of time. 

These exceptional situations, however, do not appear on a balance sheet. If you want to make sure that it is the case in a certain business, ask for evidence before signing any agreements. 

Who May Want to See Your Balance Sheet?

Many people and organisations might request to see your balance sheet, such as:

  • Your bank – when you apply for a loan, your bank wants to check and assess the financial situation of your business before granting the loan, so they ask for your balance sheet. 
  • Your suppliers – Suppliers usually require their bills to be paid on time. When there is a delay in payment, they might ask for your balance sheet to make sure that they will receive their money even with delayed payments.
  • Your shareholders – shareholders are certainly interested in seeing how your company is performing. They have the right to access your balance sheet when you are a public company. 
  • Potential investors- When you want to attract investors, be ready with your balance sheet for potential investors who want to assess the risk of investing in your company.  
  • The government – the government might also want to see your balance sheet for tax-related issues. If you claim tax reliefs or benefits, they need to make sure that your figures are correct. In addition, your balance sheet provides evidence that you are paying the right amount of tax. 


Presenting Your Balance Sheet for Refinancing

If the business has a high amount of debt, owners may take steps to make it more manageable by refinancing. This means that they take out another loan to cover the total or partial amount of current debt. Reasons for doing this could be to consolidate debt into one single payment, to get a better interest rate on repayments or to extend the payment period. 

During this process, you will need to present your balance sheet so that the finance lender can assess your financial position and assess if you are a good candidate to lend to. Your balance sheet should include all your secured and unsecured creditors, for it provides the lender with a wider picture of your financial situation, and helps you to get your loan. 

Remember that your application will be rejected, and in worst-case scenarios it can lead to criminal charges, if you try to conceal information to mislead your lenders. 

Other Important Balance Sheet Terms

Now that you understand what creditors’ amounts falling due within one year is, here is a comprehensive list of other balance sheet terms that you might come across:

    • Assets – These are the company’s possessions that have a monetary value including cash, property, and stock. 
    • Liabilities – These include anything that the company owes money to. This includes lenders, suppliers, and credit cards. 


  • Equity- It is the difference between the assets and the liabilities. A company has a positive equity when the assets’ worth exceed the liabilities. However, the company has negative equity when the liabilities value is higher than the assets. 
  • Revenue- It is also called turnover which is the money that a company receives from different sources like sales. 


  • Expenses – this is the money that goes out of the company for different purposes such as paying salaries or rent, and buying supplies.
  • Profit – This is the money a company owns after subtracting expenses from revenues. If the revenue is higher than expenses, the company has a positive profit, while higher expenses that exceed revenue leave the company with negative profit. 
  • Stock:– This includes all raw materials, finished products or spare parts found in a company’s inventory.
  • Capital and reserves – this is the money a company leaves aside for investments, best, or emergencies. 
  • Called up share capital – This is the money that the shareholders invest in a company. 
  • Accumulated losses– this refers to the total number of losses a company has made over a period of time. 
  • Profit and loss account – This figure includes a summary of the revenue, expenses, and profit for a specific period of time. 

An accountant is always your best advisor if there are terms in the balance sheet that are hard to understand. They will offer you a detailed explanation so that your balance sheet will be correctly prepared, and will make sure all the needed information is there. 

If you are running a small business, hiring a full-time accountant is not necessary but you may want to have one retained for consultation on tax issues, and when preparing your balance sheet. Accountants can certainly save you time, guide you while navigating complex financial issues, and provide benefits to your business that will allow a comfortably offset initial outlay. 

Balance Sheet Tips

Now that you have a comprehensive idea about the balance sheet, its purposes and how it works, follow these tips to prepare one for your business:

    • Keep it up to date: A balance sheet that is outdated will have a negative impact on your business. Your balance sheet will be more trustworthy if it is prepared once a year for small businesses, and even more frequently for growing businesses. 


  • Include all assets and liabilities: Your balance sheet should include all the financial figures related to your business, including loans, overdrafts, stock,and intangible assets such as goodwill.
  • Double-Check the information for accuracy: you do not want a balance sheet with errors. To save yourself the problems that might happen because of errors,make sure all information included is correct. 
  • Consult Professionals- professional accountants are your trusted source of information and guidance. Preparing a perfect balance sheet that exactly reflects your financial situation will be guaranteed when you get professional help. 


These tips will help you prepare an accurate and up-to-date balance sheet. When you apply for refinancing or seek any other financial product, you can be sure your balance sheet is your success key. An error-free balance sheet facilitates the process of securing needed funds to grow your business. 

Final Thoughts

A creditor’s amount falling due within one year is an integral part of every balance sheet. It is the figure that shows how much money the company owes to creditors in the short term. Taking all current liabilities and calculating them will lead you to obtain the creditor’s amount falling due within one year.

Lenders look at this figure to decide whether giving businesses loans and financial products is safe and repayable.  However , it is not the only important factor. Revenues, expenses, profit and loss account as well as equity are also essential figures for lenders to look at. 

To ensure you understand everything related to your balance sheet, make sure you consult an accountant who will guide you through the process of preparing an accurate balance sheet that truly reflects your financial situation.



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