IASB amends supplier financial disclosure rules

The International Accounting Standards Board has added new disclosure requirements to improve the transparency of supplier financial arrangements and the impact of a company’s liabilities, cash flows and liquidity risk.

The new disclosure rules come in response to investor concerns that the financial arrangements of some companies’ suppliers are not sufficiently visible, hindering investor analysis.

The amendments also supplement existing requirements in International Financial Reporting Standards and require a company to disclose a number of items for its supplier financial arrangements, including terms and conditions; The amount of liabilities, which is part of the agreement, breaks down the amounts for which suppliers have already received payment from financial providers and indicates where these liabilities are on the balance sheet;

range of payment terms; as well as information about liquidity risk.

“The new disclosure requirements will make visible a company’s use of supplier financial arrangements and enable investors to make better-informed investment decisions by demonstrating how that use has affected the company’s operations,” IASB Chairman Andreas Barkov said in a statement on Thursday.

IASB Chairman Andreas Barkov


Supplier financing arrangements are often referred to as supply chain finance, trade payables financing or reverse factoring arrangements.

The amendments affecting IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures will be effective for annual reporting periods beginning on or after 1 January 2024.

For more information, the IASB has published A Webcast and article by IAS member Zach Gast on the new requirements and their benefits.

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