Looking back at Xiaoxian's previous articles, I mainly introduced the contents of the asset item, and the whole asset item part has been written.

Today, I will begin to explain the current liabilities in the liabilities in the balance sheet. Non-current liabilities will be answered in subsequent articles.

Comparison of assets and liabilities

Before I explain liabilities, I want to compare the differences between assets and liabilities.

There are essential differences between assets and liabilities.

On the one hand, from the perspective of ownership and creditor's rights, the former represents what the enterprise owns, and the ownership is in the hands of the enterprise, while the latter represents what the enterprise owes, indicating that the ownership is in the hands of others. At this time, for enterprises, assets are the rights owned by enterprises, and liabilities are the obligations of enterprises to others, which belongs to an obligation.

On the other hand, from the perspective of security, there are also significant differences between the two. The former is not as safe as the latter to some extent. How to understand it?

In other words, for enterprises, the possibility of asset loss is actually relatively high. Suppose that an enterprise has a large amount of monetary funds, which are deposited in banks with CCC international credit rating in some civil strife countries. Once the bank headquarters is destroyed by terrorists, all the deposits may be lost, and even the deposits cannot be recovered from the other bank. Although this probability is very low, what I want to say is that there is a probability of asset loss. In addition, downstream customers may not repay.

The loss of the debtor is not so great for the enterprise. For example, if an enterprise owes money to someone else's family, if it doesn't pay it back on time, the other party will even go to court to sue, and the company will be enforced by the court, and it can't be repaid after being enforced by the court. Then, it will be included in the list of untrustworthy people, and may face a series of problems in the follow-up. This is the situation faced by the boss of a bicycle company.

Generally speaking, enterprises are only eligible to repay when they are at the end of their tether, but they cannot ask downstream customers to do the same. Therefore, this is a major difference between assets and liabilities.

Back to the topic, talk about current liabilities in liabilities.

When talking about current liabilities, I will also introduce them one by one according to the liquidity and influence of current liabilities.

1. Short-term loans

Short-term loans are easier to say, and can generally be simply understood as money borrowed from banks or other financial institutions.

Usually, borrowing money from financial institutions carries interest.

Therefore, enterprises and individuals should attach importance to short-term loans.

Short-term loans generally refer to loans with repayment period within one year, such as 30 days or 180 days.

For enterprises, loans borrowed from banks within one year are included in the short-term loan items at the debt end.

For individuals, if there are consumer loans, decoration loans, credit card arrears, flowers, JD.COM IOUs and other arrears with repayment period within one year, they are also included in the short-term loan column of personal balance sheet.

Note that it must be a debt with a maturity of one year.

If the term is not within one year and the repayment period is near, it should not be included in the short-term loan. I will talk about this problem in a later article.

So, what should we pay attention to in this item?

A. Currency

There are exchange rate fluctuations between different currency types, which may be very large. If a large number of foreign debts are borrowed, the actual debt cost may rise sharply, and there may be a problem of foreign exchange quota, and there may be a problem of insufficient foreign exchange quota when repayment is approaching.

Germany launched World War II after World War I, which was inseparable from its large amount of foreign currency prices to some extent. If there is an opportunity to talk about this topic in the future.

Generally speaking, when there are many foreign currency loans, we should pay attention to the relationship between the monetary funds of the same foreign currency and the corresponding loan amount. Of course, in the case of borrowing only a small amount of foreign currency, the risk is relatively controllable.

B.is the interest rate high or low?

Enterprises should try to choose banks with low interest rates or low interest rates when lending. For example, in the first quarter of 2020, the domestic epidemic was very serious. At that time, the government had a policy of supporting small and micro enterprises, and the loan interest rate in the banking system was the lowest. Last year was a good time to borrow money if enterprises were short of funds.

Generally speaking, in times of financial crisis or economic crisis, the interest on loans is often the lowest, which is a good opportunity for financing.

C. Ways of borrowing

There are many forms of short-term loans, such as mortgage loans, pledged loans, guaranteed loans, credit loans and discounted bills loans.

Among them, mortgage loan means that enterprises need to mortgage certain assets when borrowing money, such as monetary funds, land ownership, inventory and so on.

Pledged loan is generally a mortgage loan by the controlling shareholder or major shareholder with his own company shares;

A secured loan is a loan guaranteed by another company.

Usually, the parent company guarantees subsidiaries, or subsidiaries under the unified parent company guarantee other subsidiaries, or manufacturers guarantee distributors, agents, end customers or suppliers to obtain loans;

Credit loan is an unsecured and unsecured loan obtained because of the scale of the enterprise's own assets or the strength of the enterprise. General credit loans have a certain amount. The larger the enterprise, the easier it is to obtain the credit loan line of the bank.

General bill discount loan is a way for enterprises to get funds by holding bank bills or commercial bills in their hands and discounting them at banks.

In the way of borrowing, enterprises should pay attention to two things-the scale of collateral and interest rate.

Since most loans have collateral, except for credit loans, credit loans are used as collateral as much as possible. General collateral cannot be disposed of before the loan is paid off.

From the perspective of interest rate, enterprises should choose the method with the lowest interest rate as far as possible according to the specific situation.

D. Repayment cycle

For short-term loans, we must pay attention to the repayment period, and it is best to repay them in time. If you can't repay the loan in time, you can consider borrowing from the bank again.

However, it should be noted that after all, borrowing has interest, and excessive borrowing will lead to excessive debt pressure on enterprises.

2. Transactional financial liabilities and derivative financial liabilities

Not all enterprises have these two types of liabilities, which mainly involve foreign exchange contracts and interest rate swap contracts.

Because this piece of content can only be explained clearly within the enterprise, and I don't understand it, so this piece can only be briefly introduced.

For some multinational companies or enterprises that need to engage in international trade, such as China enterprises, when they need to import a large amount of crude oil, they will hold foreign exchange contracts and interest rate swap contracts, resulting in such liabilities.

If you need to buy foreign bulk raw materials, such as natural gas or liquefied petroleum gas, you may hold liabilities such as natural gas swap contracts, which are derivative financial liabilities.

Enterprises have such liabilities, usually to control the risks in their business activities, such as the impact of exchange rate fluctuations, crude oil price fluctuations or other commodity price fluctuations. If such assets appreciate, the enterprise will earn; If such assets are lost, the enterprise will lose money.

Therefore, for such liabilities, we focus on the position size of such liabilities.

Simply put, the position of such contracts should not be too large, or the scale of these two liabilities should be moderate.

If the scale is appropriate, the asset scale of this contract can be compared with the net assets or total assets of the enterprise to see if the ratio is too large, so as to determine the safety; At the same time, it can be compared with the operating cost scale of the enterprise to see if the proportion of raw materials is too large, so as to determine the possible loss scale.

For enterprises, holding the above contracts is to balance the impact of raw material fluctuations.

If the position is too large, the scale of such contracts will not match the fluctuation range of raw material prices. Once such liabilities change too much, enterprises will face losses instead, and enterprises should not hold such contracts at this time.

For enterprises, these two items are easy to appear.

For an individual's balance sheet, if he holds the same type of foreign exchange contract, crude oil and other future positions or option positions, it is easy to have such liabilities.

3. Notes payable and accounts payable

Simply put, these two items are money owed to suppliers.

Accounts payable are paid to suppliers in the form of remittance, and wire transfer payment in international trade also belongs to accounts payable mode.

Notes payable refer to the payment agreed by both parties in the form of notes, such as bank acceptance bills and commercial acceptance bills.

Since the whole cycle of bills is generally 6 months, if we pay the customer before the bill expires, the bill will still be hung on the other party's account, indicating that we owe the other party money.

Generally speaking, we think that notes payable and accounts payable have no interest. Assuming that the original agreed payment amount is 6,543,800,000 yuan, we still only need to pay 6,543,800,000 yuan after the expiration.

This is not the case with bank loans. If the loan is 6,543,800+million, the due repayment amount will definitely exceed 6,543,800+million.

In addition, due to the long term of bills, enterprises need to pay discount fees when discounting in advance. In fact, in most transactions, the amount of bills paid in the form of bills is higher than that paid in the form of cash or telegraphic transfer, and the excess is the discount fee. Of course, the extra part is not the so-called interest.

For notes payable and accounts payable, from the debtor's point of view, we mainly need to pay attention to several aspects.

A. Accounting period

For enterprises in most industries, the available accounting period is within 1 year, and the accounting period and transaction time nodes of different businesses are different. In this way, enterprises have arrears at different time nodes of the year, and enterprises should try their best to pay the payment in time when the due date is approaching.

Timely payment is an act of abiding by the contract. Of course, due to some objective reasons, it is easy to delay the payment for a few days or delay the payment of a few funds, which has little impact on the upstream and downstream.

However, for some special businesses or industries, the account age may exceed one year, such as transactions between enterprises and certain government departments (such as the military), or real estate industry and insurance industry.

B. Debt

From the enterprise itself, the value of notes payable is greater than the value of accounts payable. After all, paper money still has some disadvantages compared with cash. At the same time, the payment form of commercial paper is better than bank paper.

Thinking about the problem:

About insurance premium.

If we buy critical illness insurance and the premium payment period is 30 years, should these premiums paid to insurance companies be included in accounts payable and notes payable?

If we buy short-term insurance products such as accident insurance and medical insurance, but the premium is paid monthly, should the remaining unpaid premium be included in accounts payable and notes payable?

Due to space reasons, this article is the first part of the introduction of current liabilities. Please pay attention to next week's article for the next part of current liabilities.