One question we get from founders is around how to project their credit cards, which can sometimes have large balances. It’s crucial to handle credit card expenses in a way that mirrors your monthly income statements. This makes it easier to compare historical figures to projections and spot any discrepancies or trends. So we suggest using your existing chart of accounts, instead of having a dedicated line on your projections for credit card bills.In practice, this means modeling expenses on an accrual basis, recognizing them in the month they were incurred regardless of when the credit card bill is actually paid. Of course, anyone who’s used a credit card will realize that this could result in a timing difference between expenses and cash outflows.To account for this, assuming that you’ll be running big credit card bills, you can include a “Credit Card Payable” line or a “Credit Card Liability” item in the liabilities section of your model’s balance sheet. This represents the outstanding balance you owe on the card. You can project this balance as a percentage of monthly expenses, as it will likely stay relatively constant over time.However, there may be instances where you make large, one-time purchases on the card, such as a 12-month prepayment for an annual software subscription. In these cases, you’ll still recognize the full expense in the month of purchase on an accrual basis. But you’ll want to manually adjust the credit card payable balance to spike upward, then decrease as you pay off the card. This helps illustrate the cash impact more accurately, and will help you get a more accurate bank account balance.