Supplier Finance Accounting Issues

Some third-party arrangements could mean reclassifying payables as loans.

As more companies adopt supply chain finance (SCF) programs, and even look to such programs to bolster the bottom line, concerns are growing that third-party arrangements could trigger accounting problems.

In some SCF programs, an intermediary pays a “marketing fee” to the company for information about its payables and then approaches the company’s suppliers to offer them early payment in return for a discount.

Shelly Luisi, senior associate chief accountant in the SEC's OCA, says that to her knowledge, the SEC hasn’t provided any additional public guidance on how to account for potentially problematic payables transactions since Comerford’s comments.

Nonbanks supporting SCF programs may have advantage. Robert Kramer, vice president of working capital solutions at PrimeRevenue, says that Comerford was talking specifically about bank-run SCF programs where the buyer company signed a contract with the bank

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