Financial liabilities can be understood as cash or assets that are owed or have been committed to another entity and that must be paid in a specified period of time, whether in the short, medium or long term. Asset exchanges in which the company's position is unfavorable can also be included.
What types of financial liabilities are there?
Within financial liabilities, we can differentiate 3 different types of debts or commitments that can be acquired by a company:
- Financial liability to negotiate: is that liability that is issued with the intention of recovering it in the short or medium term. However, in the event of unstable conditions or transactions with different currencies, pay attention to the change in value.
- Derivative financial liability: in this case these are indirect financial liabilities resulting from the exchange of financial assets with specific conditions. To do this, the 2 parties must sign a prior contract that includes one of the key requirements: compliance with the agreed commitments.
- Financial liability at fair value: this is the financial liability arising from the valuation of assets and liabilities at the close of the accounting year of a period with the aim of eliminating fiscal imbalances.
What cases are not financial liabilities?
There are a series of situations that are outside the consideration of financial liability and that should be avoided confusing with this economic term:
- Contracts for the compulsory delivery of both goods and rights, including the provision of services
- Any debt that is pending to pay to the Public Administration.
The best examples of financial liabilities of a company
The existence of financial liabilities in a company does not have to imply something negative, since it is usually something common in many of them. The most important thing is to learn to anticipate and manage these financial liabilities:
- Debts acquired with certain characteristics such as specific repayment installments.
- The shares assigned to a third party or individual and the donation of cash face a payment.
- Debts resulting from commercial operations in which various types of suppliers and creditors are involved.
- Debt bonds and promissory notes.
- Loans or financial credits that neither banks nor specialized entities have provided.