Supply chain finance and its accounting treatment: An emperical study on reclassification of trade payables and its implications for the professional field

Supply Chain Finance (SCF) is more and more main stream within corporate supply chain financing solutions. Implementing an SCF program normallychanges the terms and conditions of the trade payables, which could impact balance sheet classification. From an accountant’s point of view the implementation of an SCF program focuses on the issue of whether trade payables should continue to be classified as an accounts payable or as another liability such as debt finance. The international accounting framework does not provide clear guidance in this matter. Better understanding of the factors that currently play a role in reclassification can improve the transparency on how RFPs should be treated both in practice and in financial reporting.

In this paper the outcomes of an empirical study into Supply Chain Finance and its accounting treatment will be presented. The aim of the study is to indicate the factors that are of importance with regard to the reclassification of trade payables. Also, in this study we want to explore how the current lack in accounting regulations can be tackled, given the fact that uncertainty about accounting treatment of trade payables can play a role in the decision making process of Supply Chain Finance Programs. In short, with this study we will provide an overview of relevant factors in the reclassification of trade payables and shortly discuss the implications of reclassification issues for the professional field.