The FASB approved new rules this month that will require companies to disclose information about the key terms of supply chain finance programs.
The FASB will likely issue the new standard this fall, the Wall Street Journal reported earlier this month.
Supply chain finance is an arrangement between a supplier and a buyer in which the supplier can receive early payment on their invoices. These transactions are also known as reverse factoring, payables finance or structured payables arrangements.
The FASB heard from stakeholders about a lack of transparency in the arrangements, because there are no detailed disclosure requirements.
Under the proposed standard, buyers in the arrangement will need to disclose a general description of the payment terms on their balance sheets as well as the assets pledged as security or other forms of guarantee. Learn more.