Enter Other Liabilities Opening Balance

Opening Day Balance Sheet – Other Liabilities

The other liabilities opening balance forms part of the opening balance sheet of the business. Other liabilities are amounts which are owed by the business other than those already included in accounts payable.

Other liabilities include amounts owed to suppliers relating to operating expenses such as general and administrative expenses, sales and marketing expenses, finance costs and taxation.

The other liabilities opening balance is recorded in the balance sheet of the business under the heading current liabilities, which means they are payable within a year.

Other Liabilities Opening Balance in the Financial Projection

The other liabilities opening balance is simply the balance that was there before the first day of the financial projection. If the other liabilities is generated after the first day, it will show up as part of the other liabilities in the appropriate year. The opening other liabilities should not be included in both places as this will result in double counting.

The date on which the financial projection starts is entirely a matter of personal choice, usually it is better to have it consistent with the start of a financial year.

Established Business Plan

For an established business, there will normally be an other liabilities opening balance. The value of this opening balance can be found on the latest available balance sheet. The figure to use is the total of the amounts shown under the other liabilities related headings excluding accounts payable.

Startup Business Plan

For a startup business, we recommend the use of the startup costs calculator which produces an opening balance sheet for inclusion in the financial projections template.

The figure to use for the opening balance is the other liabilities value shown under the heading opening balance sheet in the calculator. This is effectively the amount of other liabilities the business has when it starts trading, and forms part of the startup funding together with the opening debt and equity injections.

Having entered the other liabilities opening balance, the template calculates the other liabilities at the end of each subsequent year by multiplying the average daily expenses for the year by the other liabilities days.

Average daily expenses = (Operating expenses + Finance costs + Income tax expense) / 365
Other liabilities = Average daily expenses x Other liabilities days outstanding

What’s the Next Step?

The next step in producing a five year financial projection for your business plan using our financial projections template, is to enter the opening debt balance in the opening balance sheet of the financial projection.

This is part of the How to Create Financial Projections Guide a series of posts on how our template is used to produce simple financial projections for a business plans.

Last modified January 29th, 2019 by Michael Brown

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.

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