The U.S. Securities and Exchange Commission is asking blue-chip companies about a popular financing arrangement that frees up cash but potentially hides risks from investors. The funding, often provided by banks, pays a company’s suppliers earlier than they would normally be paid, at a slight discount. It then collects the balance from the company down the road, generally later than the company would have paid their supplier directly. While similar to loans, supply-chain financing is often not clearly called out on a company’s financial statements. In June, the agency gave guidance on supply-chain and other types of short-term financing in light of coronavirus disruptions.

Source: Wall Street Journal August 27, 2020 11:12 UTC