Liability

Definition

A liability is something you owe—like a debt or an obligation. For businesses, liabilities include things like loans, accounts payable, or any other debts. They represent money that needs to be paid back in the future. 

Why it matters

Liabilities are essential for financing operations and supporting growth. Too many liabilities can weaken a company’s financial stability, making it harder to keep up with obligations and risking potential solvency problems. Smart liability management lets companies maintain financial stability, balancing debt and assets to stay secure and pursue future investments.