In January or February, many small and mid-sized businesses get the same request from their accountant: "Please send us an overview of multi-year commitments not shown on the balance sheet, with the remaining term and the amount per year." Without a list, someone starts digging. Through the director's inbox, the folder of scanned leases, the lease company's online portal. A few days later an overview goes back, and nobody is quite sure it is complete.
That digging is avoidable. The figures the accountant asks for are exactly the figures good contract management needs anyway. Collect them now, and January becomes an afternoon's work instead of a week.
Why the accountant asks
A balance sheet shows what a business owns and owes on a single day. What it leaves out are commitments you have entered into that only turn into payments later. A lease on your premises that runs for another four years is the obvious example. In the Netherlands, Article 2:381 of the Dutch Civil Code requires the notes to the annual accounts to disclose the total of financial commitments, guarantees and contingent liabilities that are not included in the balance sheet. Small private companies are not exempt. How much detail the note needs depends on the size of the business, and that is for your accountant to decide. Most other European countries have an equivalent rule, because it comes from the EU Accounting Directive.
For a bank or an investor, this note is not a formality. Anyone applying for credit will want to know whether 400,000 euros of rent and lease payments are committed on top of the debts on the balance sheet. An incomplete list can make for an awkward conversation.
What belongs on the list
Not every contract counts. A subscription you can cancel month to month is not a multi-year commitment. The list covers agreements you cannot walk away from in the coming years without paying.
| Type of commitment | Example | Where to find the amount |
|---|---|---|
| Rent | A commercial lease with four years left to run | Monthly rent times the months until the first break option |
| Operating lease | Company cars, printers, machinery | Lease instalment times the remaining term, per asset |
| Multi-year services | IT support, cleaning, software with a fixed term | The annual contract value times the remaining years |
| Purchase commitments | A purchase obligation towards a supplier | The minimum volume or amount you have to take |
| Guarantees and security | A bank guarantee for the rent, a parent company guarantee or a surety | The guaranteed amount in the deed or guarantee letter |
Two things regularly go wrong. The first is counting the term to the end date when the contract can be cancelled earlier. What matters is the minimum you would still have to pay if you gave notice at the first opportunity. A contract with a minimum contract duration until the end of 2028 and an annual break after that is a commitment until the end of 2028, not until the end of its latest renewal.
The second is forgetting guarantees. They cost nothing each month, so they never show up in the books. A bank can still call on them. A parent company that guarantees its subsidiary's rent to the landlord has a contingent liability that belongs in the note.
The real problem: the data is scattered
Businesses rarely struggle to understand what a commitment is. They struggle because the contracts sit in ten different places. World Commerce & Contracting found that contract data is spread across 24 systems on average (WorldCC, 2025). A small business has fewer, but the pattern holds: the lease is with the director, the vehicle leases in a portal, the software contracts with IT and the bank guarantee in a folder in the finance office.
Weshare reports that 95% of organisations lack full visibility of their contractual obligations (Weshare, 2025). For the annual accounts, that means the list is rebuilt from loose pieces every year, and every year something can go missing.
Five steps to build the list
Start with the bank statements, not the contracts. Pull every recurring payment from the past twelve months. Each fixed monthly or annual payment points to a contract, including the ones nobody remembered.
Find the contract behind each payment. Note the start date, end date, notice period and the first date on which you can cancel. If you cannot find the contract, ask the supplier for a copy. They always have one.
Strike out anything cancellable month to month. What is left are your multi-year commitments.
Work out the remaining amount per contract, split into the next year, years two to five and anything beyond. That split matches how accountants usually present commitments in the notes.
Add the guarantees and security. Ask your bank for a list of outstanding bank guarantees, and check whether any sureties or parent company guarantees have been given.
Keep the result in a contract register, not in a spreadsheet you email in January and then lose. Next year you only need to add new contracts and remove the ones that ended.
A worked example
Take a technical installation company with 30 staff. It rents a warehouse for 6,000 euros a month on a lease that runs until the end of 2029. It leases eight vans at an average of 750 euros a month, with an average of 26 months left. It has an IT support agreement of 2,400 euros a month under a multi-year contract ending in December 2027. And its bank has issued an 18,000 euro guarantee for the rent.
As at 1 January 2027, that adds up to 216,000 euros of rent over three years, 156,000 euros of vehicle leases and 28,800 euros of IT support. Just over 400,000 euros of commitments, plus an 18,000 euro guarantee, and none of it on the balance sheet. The first list this company sent its accountant last year left out the IT contract and the bank guarantee. They only surfaced when the accountant went through the bank statements.
Do it now, not in January
There are two reasons to build this list in November or December rather than when the accountant asks.
The first is time. January is when the finance team closes the year, files the fourth-quarter VAT return and runs payroll changes, all at once. A list that is ready in December saves days in the busiest weeks of the year.
The second matters more. When you line up terms and notice dates in November, you can see which contracts can be cancelled from 1 January while there is still time to act. The list your accountant needs is the same list that shows which commitments you can still end. It ties straight into next year's budget: the committed costs in your budget are largely the same items that end up in the notes to the accounts.
Do not forget record retention either. Contracts are part of your business records, and Dutch law requires you to keep them for seven years. Our entry on contract archiving explains how to do that without ending up with ten storage locations again. For the clauses that most often create a multi-year commitment, see the purchase obligation clause and the minimum contract duration clause in our clause library.
Read also: Contract Management Statistics 2026: 28 figures on cost savings, risk and AI adoption
Tired of rebuilding the commitments list every year? Tracking Contracts keeps the term, notice date and contract value against every contract, so the overview for your accountant is one export away. Try it free for a month.
Sources
- World Commerce & Contracting (2025): contract data spread across 24 systems on average
- Weshare (2025): 95% of organisations without full visibility of contractual obligations
- Dutch Civil Code, Book 2: Article 381 on commitments not included in the balance sheet