BC31 In developing the requirements, the IASB considered various types of supplier finance arrangements and noted that an entity might enter into arrangements with varying structures and for various reasons. For example:

(a) an entity obtains extended payment terms from the finance providers. The finance providers pay suppliers the amount they are due on the invoice due date, while the entity pays the finance providers an amount greater than the invoice amount, at a date later than the related invoice date.

(b) an entity does not obtain extended payment terms from the finance providers, but the entity might have negotiated extended payment terms with its suppliers in the light of supplier finance arrangements being in place. Suppliers that are part of the supplier finance arrangement can choose to be paid a discounted amount by the finance providers earlier than the invoice due date.

BC32 The IASB decided to use the term ‘supplier finance arrangements’ to refer to the type of arrangements to which the amendments apply and developed the scope of the requirements:

(a) to capture all supplier finance arrangements, irrespective of:

(i) the reason an entity entered into those arrangements;

(ii) the form or labelling of the arrangements; or

(iii) where and how an entity presents the related liabilities and cash flows in its statement of financial position and statement of cash flows.