Three Things We’ve Learned About New FASB Disclosure Requirements for Supply Chain Finance

By Nathan Feather • Published April 6, 2023 • 6 minute read

In December, the Financial Accounting Standards Board’s (FASB) new requirements for how supplier finance programs must be reported by public companies went into effect. We’ve written about what these changes mean for PrimeRevenue clients and how PrimeRevenue is helping companies meet these requirements with ease. But now that these standards have been into effect for nearly a quarter, I’d like to reflect on our experience.

First, it’s important to point out that PrimeRevenue is an advocate for clarification on accounting treatment from governing bodies like FASB and IASB. At a minimum, it filters out bad actors and bad supplier finance accounting treatment decisions. More importantly, transparency helps to educate financial stakeholders on how supplier finance affects a company’s working capital and cash flow. In a nutshell, clarification and consistency is a good thing for everyone involved.

As for the changes themselves, PrimeRevenue has been helping clients meet the current requirements for the last four years. We believe our work with clients and their auditors has helped shape the current direction of the FASB’s guidelines. It has also shaped how our solution helps companies easily meet these requirements.

What We’ve Learned

Here is what we’ve learned as we’ve helped clients navigate changing regulatory requirements:

Bespoke is better. Getting the data to meet bare minimum reporting requirements is the easy part. Helping customers understand what they need to report, why, and to what extent they want to report information (and the internal analysis and tracking required to make that happen) is a different story. FASB’s guidance is intentionally vague and one-size-fits-all reporting capabilities don’t make sense in these conditions. While one company may want to disclose less detail, another may prefer to disclose more. PrimeRevenue’s team has deep experience helping clients develop their own reporting standards in accordance with regulatory guidance, then configuring our solution accordingly so you can meet these requirements at the click of a button.

Capabilities must be flexible and functional. We believe in meaningful innovation, not innovation for the sake of product marketing. No one needs more tech fatigue. Our reporting tools are designed to meet our clients where they are – to embrace and tailor to existing workflows and business processes rather than create new ones. If you want to have reporting delivered to your inbox, we can do that. If you want to access it on-demand, we can do that too.

Not everyone gets global supply chain reporting requirements – we do. As FASB and IASB reporting requirements evolve, so does the complexity involved in meeting these requirements. This is especially true for global supply chain organizations. PrimeRevenue understands these complexities. As the leading provider of multi-funder supply chain finance, it’s in our DNA. We are used to reporting on different credit lines with different financial institutions in different jurisdictions.

Experience Matters

Our advice to companies concerned about meeting new disclosure reporting requirements is this – don’t go at it alone. Find a partner that understands best practices and industry-by-industry nuances to guide you. Seek solutions that are tailored to your needs and existing workflows, not those that add to your burden. Most of all, seek proven experience and expertise!