The failure of Brazilian retail giant Americanas has once again thrown the spotlight on a lack of transparency around the use of supplier finance by large corporations.
The retailer, which has 1,800 stores across Brazil, went into bankruptcy protection on 19th January after incoming CEO Sergio Rial revealed that he and his team had found 20bn BRL (4bn USD) in previously unreported debt. Rial resigned shortly after.
The newly-disclosed borrowing had previously been obscured within a supplier finance programme under which Americanas engaged with suppliers on 90-day terms and multiple banks offered early payment to those suppliers. Following the revelations, Americanas said that its current cash position stood at only 800m BRL, down from a previously reported 7.8 bn BRL.
As Bloomberg Law reports, Americanas' financial reporting was covered by the accounting standards issued by the International Accounting Standards Board (IASB) which, unlike FASB, has yet to make the reporting of supplier finance mandatory. IASB has postponed a decision on when to take that step until its next meeting.
The Working Capital Forum is hosting a webinar on SCF reporting standards on 16th February.
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