What is a liability in accounting?

A liability is a financial obligation a company owes to another party, settled through future payments of cash, goods, or services. Liabilities are classified as current, non-current, or contingent depending on timing and certainty. In T&E management, these include accrued card charges, vendor invoices, and employee reimbursements.

What is the difference between current and non-current liabilities?

Current liabilities are obligations due within one year, including accounts payable, accrued card charges, and outstanding employee reimbursements. Non-current liabilities mature after one year, such as long-term leases or multi-year vendor contracts. Most T&E obligations are current liabilities.

What is corporate card liability?

Corporate card liability defines who is legally responsible for paying the card issuer: the employee (individual liability), the company (corporate liability), or both (joint liability). The model a company chooses affects reconciliation workflows, employee cash flow, and how unreconciled charges appear on the balance sheet.

What is the difference between individual and corporate liability for a corporate card?

Under individual liability, employees pay the card issuer and receive reimbursement from their company for approved business expenses. Under corporate liability, the company pays the issuer directly, removing personal financial risk from employees. A 2024 Peeriosity survey found 58% of companies use corporate liability.

How do accrued T&E liabilities affect the balance sheet?

Accrued T&E liabilities arise when employees have traveled and incurred expenses but haven't yet submitted expense reports. These unrecorded obligations understate what the company owes, creating balance sheet inaccuracies at period close. Navan Expense surfaces unsubmitted card charges before close, giving finance teams an accurate view of outstanding T&E liabilities without waiting for manual submissions.

Why do T&E liabilities often go unrecorded until period close?

T&E liabilities are delayed in the accounting record because they require employee submission and manager approval before the obligation appears in the ledger. The gap between when travel occurs and when a report is filed can span several days or weeks. Navan Expense closes this timing gap by capturing transactions at the point of purchase, creating a running liability record from the moment a charge is made.

How does Navan help finance teams manage T&E liabilities?

Navan connects corporate card transactions, receipts, and expense reports in one platform. Card charges are captured in real time, giving finance teams a continuous view of accrued T&E liabilities rather than waiting for month-end submissions. This reduces manual accrual entries, shortens the obligation-to-recognition cycle, and supports accurate balance sheet reporting at every close.

Navan - Business Travel Solutions & Expense Management

Liability

A liability is a financial obligation a company owes to another party as a result of past transactions or events, settled through future payments of cash, goods, or services. Liabilities appear on the balance sheet alongside assets and equity, classified by timing: current liabilities are due within one year, non-current liabilities mature after one year, and contingent liabilities represent potential future obligations. In travel and expense management, liabilities include accrued corporate card charges, outstanding employee reimbursements, and vendor invoices awaiting payment.

Victoria Landsmann

•May 18, 2026•

7 minute read

Key Takeaways

Liability is a financial obligation a company owes to another party, settled through cash or service payments over time. In travel and expense (T&E) management, liabilities include accrued corporate card charges, outstanding vendor invoices, and employee reimbursements awaiting settlement. Finance teams track these obligations on the balance sheet to maintain accurate reporting and prevent end-of-period surprises.

Navan Expense captures corporate card charges at the point of purchase, so accrued T&E liabilities appear on the balance sheet before close rather than surfacing as unplanned surprises.
Corporate card liability falls into three types: individual (employee pays), corporate (company pays), and joint; a 2024 Peeriosity survey of finance leaders found 58% of companies choose corporate liability.
Global business travel spending reached $1.57 trillion in 2025 (GBTA), and delayed expense submissions are a leading cause of understated liabilities; Navan Expense closes this gap by surfacing unsubmitted charges automatically.

What is a Liability?

A Liability is a present obligation a company owes to another party as a result of a past transaction or event, expected to result in an outflow of resources such as cash, goods, or services. In accounting, liabilities represent what a business owes and appear on the balance sheet alongside accounts payable, accrued expenses, and outstanding debt.

The foundational accounting equation reflects this directly: Assets = Liabilities + Equity. Every dollar a company owns is funded either by something it owes (liabilities) or by owner's investment (equity). For finance teams managing corporate travel and expense programs, understanding liability types shapes how accruals are recorded, how vendor payments are structured, and how employee reimbursements are timed relative to close.

What are the three types of liabilities?

Liabilities are classified by timing and certainty:

Current liabilities: Obligations due within one year, including accounts payable, accrued wages, tax liabilities, and short-term debt. In T&E programs, corporate card charges and outstanding employee reimbursements are the most common current liabilities.
Non-current liabilities: Obligations due after one year, such as long-term leases, pension obligations, and multi-year loan agreements. Travel program contracts, including multi-year hotel preferred-rate agreements, may create non-current obligations.
Contingent liabilities: Potential obligations that may arise depending on future events. In travel programs, unused ticket credits and disputed charges can create contingent liabilities when the resolution timeline is uncertain.

How liabilities appear in T&E programs

Corporate travel generates liabilities at every stage of the booking-to-reconciliation cycle. When an employee books a flight or hotel, the company incurs an obligation that may not appear in the ledger until after expense approval and reconciliation. This timing gap is one of the most common sources of understated liabilities for finance teams, particularly in the days leading up to fiscal period close.

Three T&E scenarios create liabilities that require careful tracking:

Accrued card charges: When employees use corporate cards for business expenses, those charges represent current liabilities until reconciled and settled. Delays in expense submission mean the balance sheet may understate what the company actually owes the card issuer.
Employee reimbursements: When employees pay for travel out of pocket and submit an expense report for repayment, the reimbursement obligation is a liability from the moment the expense is incurred, not the moment the report is submitted.
Vendor invoices: Hotel folios, car rental charges, and supplier invoices that arrive after a trip create accounts payable liabilities that must match the correct fiscal period.

Corporate card liability: individual, corporate, and joint

One of the most operationally significant liability decisions in any T&E program is how corporate card liability is structured. The choice determines who is legally responsible for card charges and who pays the card issuer directly.

Individual liability: The employee is personally responsible for all charges. The company reimburses approved business expenses after the employee pays the issuer. This model limits the company's financial exposure but requires employees to front costs, which creates a cash flow burden for frequent travelers.
Corporate liability: The company pays the card issuer directly for all charges. Employees are not personally liable, which protects their personal credit and removes the out-of-pocket burden. A 2024 Peeriosity survey of finance and accounting leaders found that 58% of companies use corporate liability for their primary card program [1].
Joint liability: Both the employee and the company share responsibility. Personal expenses are the employee's obligation; business expenses are the company's. This model requires clear policy enforcement to prevent disputes over charge classification.

The liability model a company selects has direct consequences for expense reconciliation workflows. Under corporate liability, all charges flow through the company's accounts payable function, meaning delays in reconciliation show up as unresolved liabilities in the general ledger. Under individual liability, the primary reconciliation risk is delayed reimbursement to employees who have already settled their card balance.

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How accrued T&E liabilities work in practice

Accrued liabilities represent obligations that have been incurred but not yet invoiced or paid. In T&E management, they are one of the most underappreciated balance sheet challenges because the obligation exists the moment an employee travels, not the moment a receipt is submitted.

Consider a common scenario: a sales team travels the final week of a fiscal quarter for a client conference. Flights, hotels, and meals are charged to corporate cards and paid out of pocket. The trips end on the last day of the quarter, but expense reports aren't submitted until the following week. From a strict accrual accounting standpoint, those charges belong in the current period even though no report exists yet. Without a proactive capture mechanism, the finance team closes the quarter with understated liabilities and an inaccurate balance sheet.

This problem scales with travel volume. Global business travel spending reached $1.57 trillion in 2025, according to the GBTA 2025 Business Travel Index [2]. For organizations running material travel programs, even a two-to-three-day gap between travel completion and expense submission can create significant unrecognized liabilities.

Navan Expense addresses this by capturing corporate card transactions at the point of purchase and surfacing unsubmitted receipts before close, so finance teams see accrued T&E liabilities in real time rather than estimating them through manual accrual entries. The Forrester TEI study commissioned by Navan found that automated expense workflows saved 80% of the processing time previously spent per expense report [3].

Best practices for managing T&E-related liabilities

Finance teams that manage T&E liabilities effectively share a few common approaches:

Align card liability model to company size and cash flow: Corporate liability makes sense for most mid-to-large organizations because it centralizes payment and removes the employee cash burden. Individual liability may suit smaller programs where personal accountability serves as a more direct spending control.
Set clear submission deadlines before period close: The most effective T&E programs tie expense submission windows to the fiscal close calendar. Requiring all expenses to be submitted within five to seven business days of travel completion reduces the accrual gap before close. Expense report automation removes manual bottlenecks from the submission workflow, reducing the gap between travel and recognized liability.
Use real-time card data as an early warning system: Corporate card transactions that haven't been reconciled represent potential unrecorded liabilities. Running a weekly review of open card charges against submitted expense reports reveals the liability gap before close.
Accrue for known unsubmitted travel at period-end: When close arrives with outstanding travel charges that haven't been expensed, the accounting team should create an accrual entry rather than wait for the next expense report cycle. This approach prevents the liability from shifting to the wrong fiscal period.

When should you revisit your liability structure?

Liability structures in T&E programs often outlive the context in which they were designed. An individual liability model that worked well at 50 employees starts to create reconciliation problems at 500, when the volume of card charges and reimbursements grows faster than the finance team. Similarly, a corporate liability structure without strong submission enforcement creates accumulating unrecorded liabilities.

Three signals suggest it's time to reassess:

Expense accrual adjustments are a recurring feature of monthly close, indicating the submission timing gap is structural rather than occasional.
Employee complaints about reimbursement delays are increasing, signaling that the liability cycle from obligation incurred to payment made is taking too long.
Balance sheet reconciliation reviews regularly find accounts payable items tied to T&E that were missed in the prior period.

Navan's spend visibility tools give finance teams a real-time view of card activity, unsubmitted charges, and outstanding liabilities before they create close-period complications. Connecting booking, card, and expense data in one platform shortens the obligation-to-recognition cycle that creates balance sheet gaps.

Balance sheet: The financial statement where all liabilities appear alongside assets and equity; accurate T&E liability recording is essential for a balance sheet that closes without manual adjustments.
Cost center: The organizational unit to which T&E liabilities are assigned; accurate cost center attribution determines which department's budget absorbs each travel obligation.
Fiscal year: The 12-month accounting period within which liabilities must be recognized; T&E liabilities incurred in one fiscal period but recorded in the next create audit and reporting complications.

Sources

[1] Peeriosity, "Corporate Card Liability and Payment Practices," March 2024, https://www.peeriosity.com/shared-services/articles/2024/03/corporate-card-liability-and-payment-practices/

[2] GBTA, "2025 Business Travel Index Outlook," https://www.gbta.org/research/2025-business-travel-index-outlook-bti/

[3] Forrester Consulting, "The Total Economic Impact of Navan," https://navan.com/resources/reports/forrester-tei-navan

Accurate liability management is the foundation of a balance sheet that closes on time and holds up to audit. Navan Expense connects card transactions, receipts, and expense reports in one platform so finance teams track T&E obligations in real time, not in retrospect.

Frequently Asked Questions About Liability

A liability is a financial obligation a company owes to another party, settled through future payments of cash, goods, or services. Liabilities are classified as current, non-current, or contingent depending on timing and certainty. In T&E management, these include accrued card charges, vendor invoices, and employee reimbursements.
Current liabilities are obligations due within one year, including accounts payable, accrued card charges, and outstanding employee reimbursements. Non-current liabilities mature after one year, such as long-term leases or multi-year vendor contracts. Most T&E obligations are current liabilities.
Corporate card liability defines who is legally responsible for paying the card issuer: the employee (individual liability), the company (corporate liability), or both (joint liability). The model a company chooses affects reconciliation workflows, employee cash flow, and how unreconciled charges appear on the balance sheet.
Under individual liability, employees pay the card issuer and receive reimbursement from their company for approved business expenses. Under corporate liability, the company pays the issuer directly, removing personal financial risk from employees. A 2024 Peeriosity survey found 58% of companies use corporate liability.
Accrued T&E liabilities arise when employees have traveled and incurred expenses but haven't yet submitted expense reports. These unrecorded obligations understate what the company owes, creating balance sheet inaccuracies at period close. Navan Expense surfaces unsubmitted card charges before close, giving finance teams an accurate view of outstanding T&E liabilities without waiting for manual submissions.
T&E liabilities are delayed in the accounting record because they require employee submission and manager approval before the obligation appears in the ledger. The gap between when travel occurs and when a report is filed can span several days or weeks. Navan Expense closes this timing gap by capturing transactions at the point of purchase, creating a running liability record from the moment a charge is made.
Navan connects corporate card transactions, receipts, and expense reports in one platform. Card charges are captured in real time, giving finance teams a continuous view of accrued T&E liabilities rather than waiting for month-end submissions. This reduces manual accrual entries, shortens the obligation-to-recognition cycle, and supports accurate balance sheet reporting at every close.