Accrued Expenses
Costs that have been incurred but not yet invoiced or paid at the balance sheet date, recognised as liabilities under accrual accounting.
Also known as: Accruals, Accrued liabilities, Provisions for expenses
One-line definition
Accruals reflect costs the business owes but hasn't yet paid — they are matched to the period in which the service was consumed, not when cash leaves.
Common examples
- Accrued wages and bonuses (period-end payroll lag).
- Accrued professional fees (legal, audit).
- Accrued utilities (invoiced in arrears).
- Warranty provisions.
TS red flag
Understated accruals inflate EBITDA and NWC. TS teams verify year-end accrual completeness by comparing to subsequent period invoices and cash payments.
Related terms
Net Working Capital (NWC / WCR)
Net Working Capital (NWC), also called Working Capital Requirement (WCR) — the normalised working capital a target needs to operate, and a direct lever on the M&A purchase price.
Deferred Revenue
Cash received from customers before the associated service or product has been delivered — a liability on the balance sheet.