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The recent amendments to Ind AS 7 and Ind AS 107 introduced disclosure requirements for Supplier Finance Arrangements (SFAs) to enhance transparency around liquidity and working capital financing practices. SFAs—often referred to as reverse factoring or channel finance—involve a buyer, supplier and finance provider, enabling suppliers to receive early payment while buyers obtain extended credit terms. Historically, limited disclosures made it difficult for users to distinguish trade payables from arrangement-driven financing and to assess liquidity risk. The amendments require entities to disclose the terms of each arrangement, the carrying amounts of SFA-related liabilities (including amounts already settled by finance providers), and ranges of payment due dates for both SFA and comparable non-SFA payables. Entities must also explain non-cash changes in these liabilities. Although classification as trade payables or borrowings is not prescribed, entities must exercise judgement considering Ind AS 1 and 109. The amendments apply from FY 2026 with limited transition reliefs.
BACKGROUND
In an effort to enhance the financial transparency of general-purpose financial statements, the Ministry of Corporate Affairs has recently issued the Companies (Indian Accounting Standards) Second Amendment Rules, 2025. This amendment introduces several significant chang
