Overview
Accrued liabilities represent expenses your business has incurred but has not yet paid. Examples include accrued payroll, payroll taxes, credit card balances, utilities, sales tax payable, and other short-term obligations.
Unlike revenue or operating expenses, accrued liabilities are not typically planned directly. Instead, they are the result of your company's accounting processes and payment timing.
To produce a complete set of forecasted financial statements, RunSmart automatically estimates future accrued liabilities using historical patterns from your QuickBooks data.
How Are Accrued Liabilities Forecasted?
RunSmart analyzes historical trends in your accounting records to estimate how accrued liabilities are likely to change over time. This includes evaluating patterns such as:
Historical relationships between expenses and accrued liabilities.
Payroll and payroll tax accrual patterns.
Vendor payment timing.
Recurring month-end liabilities.
Other historical accrual activity recorded in QuickBooks.
Using these historical patterns, RunSmart projects future accrued liability balances as part of your forecasted Balance Sheet.
Why Can't I Edit Accrued Liabilities?
RunSmart is designed to let you modify the business assumptions that drive your forecast—such as revenue, operating expenses, hiring plans, capital expenditures, and financing decisions. These are the decisions that naturally affect your future financial performance.
Accrued liabilities are different. They are the result of numerous underlying accounting transactions and payment timing, rather than a business assumption that can be adjusted independently.
For example, increasing an accrued liability could represent unpaid payroll, payroll taxes, utilities, interest, sales tax, or another obligation. Each scenario requires different accounting entries that affect other accounts throughout your forecasted financial statements.
To support manual editing, RunSmart would need to ask a series of additional questions every time an accrued liability was changed, such as what created the liability, which accounts should be affected, and when the obligation will be paid. While this level of control may be appropriate for enterprise financial modeling software, it would significantly increase the complexity of building and maintaining a forecast for most users.
Instead, RunSmart automatically estimates accrued liabilities using historical accounting activity and payment patterns from your QuickBooks data. This keeps your Balance Sheet, Income Statement, and Cash Flow Statement internally consistent while allowing you to focus on the business decisions that have the greatest impact on your forecast.
When Might Actual Results Differ?
Forecasted accrued liabilities assume your future accounting practices remain reasonably consistent with your historical data.
Actual balances may differ if your business experiences changes such as:
Hiring or reducing employees.
Changing payroll schedules or payroll providers.
Negotiating new vendor payment terms.
Paying vendors earlier or later than usual.
Carrying larger or smaller credit card balances.
Changes to sales tax obligations.
Other changes in accounting or payment practices.
These types of operational changes may cause actual accrued liabilities to differ from the forecast.
Are the Forecasts Reliable?
For businesses with relatively consistent accounting practices, historical payment timing is often a reliable predictor of future accrued liabilities.
However, accrued liabilities are estimates rather than management assumptions. While they help produce realistic forecasted financial statements, they should not be interpreted as precise future balances.
RunSmart continuously recalculates these forecasts whenever your QuickBooks data is refreshed, allowing your projected financial statements to reflect your most recent accounting activity.