New standards for disclosing Supply Chain Finance programs

January 2023

Supply Chain Finance (SCF), sometimes called Reverse Factoring or Approved Payable Finance, has become increasingly popular over the past years. Most value focused corporates are using SCF programs to help their suppliers with access to early payments and harmonize the payment terms based on market standards.

With SCF gaining traction and popularity, there were unfortunately also companies that misused SCF. Many articles were published about Greensill, Carillion, Abengoa, and others. By looking into the details, it becomes clear that the bankruptcies were not primarily caused using SCF but due to wider company’s challenges and how they intended to misinterpret SCF.

Triggered by these events, there were many conversations on how to properly treat SCF from an accounting point of view. Globally, there are two main accounting associations, the Financial Accounting Standards Board (FASB) with a focus on the US and the International Accounting Standard Board (IASB) for Europe. Both increased their efforts over the past years to provide guidance on how to properly disclose SCF and provide clear visibility for all users of financial statements.

FASB went through an extensive process of proposing suggestions on how to provide more transparency, allowed industry stakeholders to provide feedback, and finally decided on the new standards. On Sep 29th, 2022, FASB issued new disclosure rules for SCF programs. Corporates that are obliged to report under the U.S. GAAP standards will have to disclose the key parameters, such as terms and size, of their SCF programs in the footnotes of their financial statements. However, the rules, which come into effect for fiscal years beginning after Dec 15th, 2022, will not require the reclassification of trade payables as financial liability. Such a move could have lowered credit ratings and increased costs of capital for companies using SCF.

Even though some corporates stated that such disclosures and applying the rule retrospectively would create a data-gathering burden and be costly and inefficient, more transparency is generally welcomed by all stakeholders. The overall objective of the new standards is to demand the users of financial statements for additional information about the use of SCF by the corporate to understand the effect of those programs on an entity’s working capital, liquidity, and cash flow.

The main provisions are to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

Right now, the rules mentioned below will become valid for corporates reporting in the U.S. IASB is still discussing on setting standards for Europe and the rest of the world. There is a significant likelihood that IASB will issue rules that are very similar to what FASB has provided as there is a global need for consistency in the disclosure of SCF programs.


Summary of FASB’s requirements:

FASB’s description of the main provisions of what corporate buyers that use SCF programs must disclose in each annual reporting period:

  1. The key terms of the programme, including a description of the payment terms (including payment timing and basis for its determination) and assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary

  2. For the obligations that the buyer has confirmed as valid to the finance provider or intermediary:
    a. The amount outstanding that remains unpaid by the buyer as of the end of the annual period (the outstanding confirmed amount)
    b. A description of where those obligations are presented in the balance sheet
    c. A roll forward of those obligations during the annual period, including the amount of obligations confirmed and the amount of obligations subsequently paid. (the roll-forward requirement goes into effect in 2024)

The buyer should disclose the outstanding confirmed amount as of the end of each interim period.



CRX Markets is well prepared to support clients and help them with the preparation to properly disclose SCF programs by providing comprehensive reporting, including the overview of total credit line, program utilisation, number of suppliers, max tenor, etc. By having an extensive network of financial institutions across the globe under one technical and legal framework, our clients can mitigate the risk of relying on a single funding bank via a multi-bank approach. Beside all given and future disclosure rules, the CRX platform approach is one of the smartest ways to obtain the transparency and resilience that is demanded by auditors, analysts and last but not least the suppliers.