In Q4 2021 the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) released proposed amendments to their accounting standards that will require buyers of goods/services who use supplier finance programs/arrangements in respect of their payables to disclose key terms of those supplier finance programs in their financial statements.
The purpose of the proposals is therefore to enable investors, creditors, and other stakeholders in respect of a buyer to assess the effects of supplier finance programs on such buyer’s liabilities and cash flows by requiring a buyer to provide both quantitative and qualitative disclosures regarding its use of supplier finance programs. Both FASB and IASB do make clear in their proposals though that the proposals will not deal with how a payable which forms part of a supplier finance program should be characterized on the balance sheet of a buyer.
BAFT strongly supports the goal to achieve increased transparency in the reporting of Supplier Finance Arrangements. However, we also believe that fostering increased understanding of supply chain finance, its benefits, and how it can be best used in line with standard market practice is crucial to achieving this goal.