Supplier finance arrangements: Financial reporting considerations

In recent years, there has been calls for more transparency on how supplier finance arrangements affect an entity’s liquidity risk, cash flows and financial liabilities. 

In response, the Australian Accounting Standards Board (AASB) amended AASB 107 Statement of Cash Flows and AASB 7 Financial Instruments: Disclosures to require disclosures about supplier finance arrangements. 

These new disclosures are applicable for reporting periods beginning on or after 1 January 2024, with transition relief available. 

While not in scope of the amendments, other financial reporting matters entities with supplier finance arrangements should take into consideration include: 

• Presentation of liabilities on the balance sheet
• Classification and presentation of cash flows
• Disclosure of judgements and accounting policies 
• Impact on covenant compliance and other regulatory requirements. 

Read more in our Reporting Update.