Liabilities, from context of Finance refers to monetary obligations of an organization to other entities. All IOU’s, either to a Vendor, Customer, Employee, Government etc., summed together amounts to Total Liability of an organization. Liabilities are typically looked from a short term and long term perspective and all IOU’s are essentially contracts with a specified date for settlement.
Liability is another major component of Balance Sheet of an organization and are analyzed on a daily basis. Liabilities also impact the cash flow of an organization based on when an IOU obligation is settled. Majority of Liability KPI’s are common across all industry segments and globally, which is due to standardized nature of accounting and finance.
There are several KPI’s under the family Liabilities and being a financial KPI, these should conform to the context of Amount KPI’s.
Examples of Liability KPI’s are
- Accounts Payable: Total amount owed to other entities, which includes only payments to be made to Vendors & Customers.
- Salaries & Wages: Payroll, Benefits and other amount payable to employees
- Taxes Payable: Sum of all different taxes such as Excise, Sales, VAT, TDS etc.
- Loans & Interest: Amount borrowed from banks and need to be repaid back with interest.
- Customer Advances: Amount collected from customers before fulfilling an Order and generating an Invoice.