Supply Chain Finance & Trade Finance Knowledge Center
Explore our verified library of Supply Chain Finance & Trade Finance transactions. Every entry is reviewed for IFRS compliance and real-world accuracy by our technical accounting team.
Factoring Without Recourse — True Sale of Receivables (Derecognition Under ASC 860)
Recording the sale of trade receivables to a factor without recourse — removing the receivables from the balance sheet when the seller transfers substantially all credit risk to the factor.
Factoring With Recourse — Secured Borrowing (Receivables Remain on Balance Sheet)
Recording factoring WITH recourse as a secured borrowing — the receivables are not derecognized because the seller retains the credit risk, and the advance from the factor is recognized as a short-term liability.
Reverse Factoring / Supplier Finance Program — Buyer's Accounting (ASU 2022-04 Disclosures)
Recording a supplier financing program from the buyer's perspective — where the buyer's bank pays suppliers early and the buyer repays the bank on extended terms — with the critical balance sheet classification and ASU 2022-04 disclosure requirements.
Reverse Factoring — Supplier's Perspective (Early Payment Discount on Approved Payables)
Recording the supplier's decision to accept early payment from the buyer's bank under a supply chain finance program — with the discount cost recognized as a financing expense.
Commercial Letter of Credit — Importer's Accounting (Contingent Liability at Issuance)
Recording a commercial letter of credit issued by an importer's bank in favor of an overseas supplier — creating a contingent liability at issuance and recognizing the goods and payable when documents are presented.
Standby Letter of Credit — Financial Guarantee Backing a Performance Obligation
Recording a standby letter of credit issued as a financial guarantee — a contingent obligation that is called only if the applicant defaults on an underlying obligation, distinguished from a commercial L/C.
Dynamic Discounting — Buyer Uses Own Cash to Offer Early Payment Discounts to Suppliers
Recording dynamic discounting from the buyer's perspective — using the company's own excess cash to pay suppliers early in exchange for a discount, earning a return on cash while improving supplier liquidity.
Trade Receivable Securitization — Off-Balance-Sheet Funding Through Conduit (ASC 860)
Recording the transfer of trade receivables to a securitization conduit (ABCP conduit or term securitization) — with the derecognition analysis determining whether receivables are removed from the balance sheet.
Forfaiting — Exporter Sells Long-Term Export Receivables at Discount (Without Recourse)
Recording forfaiting — the purchase of export receivables by a forfaiter at a discount, providing the exporter with immediate cash for long-term export contracts without credit risk.
Asset-Based Lending (ABL) — Revolving Facility Secured by Receivables (Borrowing Base)
Recording draws and repayments on a revolving credit facility secured by accounts receivable — with the borrowing base calculation determining the maximum available credit.
Trade Credit Insurance — Protecting Receivables Against Buyer Default (No Derecognition)
Recording trade credit insurance that protects accounts receivable against non-payment — with the insurance NOT causing derecognition of the receivable, only creating a contingent recovery asset.
Documentary Collection — Documents Against Payment (D/P) Revenue Recognition
Recording revenue on a documentary collection transaction — where the exporter's bank collects payment from the importer's bank in exchange for releasing shipping documents, with revenue recognized at shipment under CIF terms.
Incoterms and Revenue Recognition Cutoff — FOB vs. CIF vs. DAP for International Shipments
Applying Incoterms to determine the correct revenue recognition date for international sales — ensuring that shipments in transit at period-end are recognized in the correct period.
Factoring Company — Purchasing Receivables (Factor's Accounting: Receivable Asset and Fee Income)
Recording from the FACTOR's perspective — purchasing trade receivables from clients at a discount, recognizing the purchased receivable as an asset and the factoring fee as revenue earned over the collection period.
Confidential Invoice Discounting — Borrowing Against Receivables (Customer Unaware)
Recording confidential invoice discounting — a financing arrangement where the company borrows against its receivables without the customer knowing, retaining control of the collection process.
ASU 2022-04 Supplier Finance Program Disclosure — Required Disclosures for Buyer Entities
Preparing the required ASU 2022-04 disclosures for a company operating a supplier finance program — the key terms, outstanding obligations, and changes during the period that must be disclosed in the financial statement notes.
Export Credit Agency Finance — Government-Backed Export Loan Receivable
Recording export finance guaranteed by an export credit agency (EXIM Bank, UK Export Finance, Bpifrance) — where the government guarantee enables the exporter to obtain low-cost financing for capital goods exports.
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