In response to investors’ calls for more transparency of the impact of supplier finance arrangements on the financial statements, the International Accounting Standards Board (the Board) is proposing additional disclosure requirements for companies that enter into these arrangements. The Board proposes1 amending IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures.

The proposals do not address the classification and presentation of the related liabilities and cash flows. Rather, the proposals intend to complement the IFRS Interpretations Committee’s agenda decision Supply Chain Financing Arrangements – Reverse Factoring published in December 2020.

Supplier finance arrangements are not new – but to fill a perceived gap in existing IFRS® Standards, the proposals introduce targeted disclosure requirements that would enhance the transparency of these arrangements and their effects on a company’s liabilities and cash flows.

Gabriela Kegalj
KPMG global IFRS presentation leader

Which arrangements would be captured?

The Board’s proposals apply to supplier finance arrangements2, which have the following characteristics:

  • a finance provider3 pays amounts a company (the buyer) owes its suppliers;
  • the company agrees to pay the finance provider at the same date as, or a date later than, suppliers are paid; and
  • the company is provided with extended payment terms or suppliers benefit from early payment terms, compared with the related invoice payment due date.

However, the proposals do not apply to arrangements for financing receivables or inventory.

What would be the new disclosure requirements?

The proposals introduce a new disclosure objective in IAS 7 for a company to provide information about its supplier finance arrangements that would enable users (investors) to assess the effects of these arrangements on the company’s liabilities and cash flows.

While transparency is expected under existing IFRS Standards, the proposals introduce specific requirements for companies to provide the information users need, as illustrated in the example below.

Example: Supplier finance arrangement with Finance Provider A
Qualitative information            
[Disclose terms and conditions (e.g. extended payment terms and security or guarantees provided)]
Quantitative information

End of reporting period


Beginning of reporting period


Carrying amount of liabilities

Presented within trade and other payables:

2,000 1,500
– of which suppliers have received payment from finance provider 1,500 1,100
Range of payment due dates
Liabilities that are part of the arrangement XX-XY days after invoice date XZ-ZX days after invoice date
Trade payables that are not part of an arrangement YY-YX days after invoice date YZ-ZZ days after invoice date


The proposals also add supplier finance arrangements as an example to existing disclosure requirements in:

  • IFRS 7 for factors a company might consider in providing select quantitative liquidity risk disclosures about its financial liabilities; and
  • IAS 7 for non-cash changes in liabilities arising from financing liabilities. 

What might companies need to consider now?

Companies may need to start collating additional information to satisfy the proposed new disclosure requirements.

For some supplier finance arrangements, the information a company might need to meet certain of the new disclosure requirements may not always be readily available – i.e. the carrying amount of financial liabilities for which suppliers have already received payment from finance providers. It would need to obtain this information from its finance providers.

The Board expects that finance providers would generally be able to make this information available, at least on an aggregated and anonymised basis (e.g. where restrictions may exist).

Next steps – Have your say by 28 March 2022

The amendments would be applied retrospectively by applying IAS 84. The Board has not yet proposed an effective date but earlier application would be permitted.

Read the exposure draft and don’t miss your opportunity to have your say before 28 March 2022. For further information on the proposals, speak to your KPMG contact.

1  Exposure Draft 2021/10: Supplier Finance Arrangements

2 Also referred to as supply chain finance, payables finance or reverse factoring arrangements

3 Also referred to as the factor

4 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors