Small entities. Paragraph 7.1B says a small entity is not required to comply with Section 7, so a company using Section 1A need not give these disclosures, although it should still consider whether a material arrangement needs explaining for a true and fair view. Qualifying entities using the reduced disclosure framework. Before the Periodic Review a qualifying entity could skip Section 7 entirely. Paragraph 1.12(b) now makes the exemption from paragraph 7.20C conditional on equivalent disclosures being included in the consolidated financial statements in which it is included (Basis for Conclusions B7.5). A subsidiary whose parent does not disclose its supplier finance in enough detail must give the disclosure itself. See qualifying entities and the reduced disclosure framework. Entities outside Section 7. Paragraph 7.1A excludes mutual life assurance companies, retirement benefit plans and certain investment funds.

Supplier finance arrangements disclosures

Q: What might the note look like?

Illustration only. A manufacturer with a 31 December 2025 year end uses one bank programme. Suppliers can sell approved invoices to the bank at a discount. The company pays the bank 120 days after invoice date; supplier invoice terms are 60 days. No security is given and the company pays no fees. DisclosureExample content Key termsPayment to the bank 120 days after invoice; no interest charged to the company; no security or guarantee Carrying amount and line item£2.4 million within trade creditors Payment due dates: in the arrangement115 to 120 days after invoice date Payment due dates: comparable trade creditors30 to 60 days after invoice date Non cash changes£0.1 million exchange differences on euro invoices In this first year no comparatives are given for the terms, ranges or non cash changes, relying on paragraph 1.42.

Q: What mistakes come up?

Looking only at the payables ledger. Treasury or procurement often set these programmes up; the finance team may not know which suppliers are in one. Ask the bank for a confirmation at the year end. Missing the qualifying entity condition. Subsidiaries that used to drop Section 7 entirely now need to check what the group accounts say. Quoting a single due date range when terms vary widely between suppliers or countries. Paragraph 7.20C(b)(ii) asks for explanation or stratified ranges. Using IFRS wording in FRS 102 accounts and volunteering the amount already paid by the provider without checking it is reliable. It is not required under FRS 102. Ignoring the link with key metrics. Extended terms lengthen creditor days and can affect payment practices reporting, so the narrative should be consistent across the annual report. Solar Protect provides tax investigation insurance for businesses and fee protection schemes for accountancy practices. Read how our cover works or get a quote.

A company that uses supplier finance, often called reverse factoring or supply chain finance, must now explain it in the notes: the key terms, how much of its payables sit in the arrangement, the payment due dates compared with ordinary trade payables, and non cash changes. Under FRS 102 the rules are in paragraphs 7.20B and 7.20C, effective for accounting periods beginning on or after 1 January 2025; under IFRS they are in IAS 7 paragraphs 44F to 44H, effective from 1 January 2024.

Tax investigation insurance from £108.75 a year (£9.06 a month).Pays up to £100,000 of your accountant's fees if HMRC opens an enquiry. No excess. Buy online in a few minutes.

See my price in 2 questions How the cover works Accountant? Offer cover to your clients or call 01795 841 310

What counts as a supplier finance arrangement?

Paragraph 7.20B of FRS 102 describes these arrangements as ones where one or more finance providers offer to pay amounts the entity owes its suppliers, and the entity agrees to pay the provider on the same date as, or later than, the suppliers are paid. The effect is extended payment terms for the buyer, early payment for the supplier, or both, compared with the invoice due date. The paragraph notes they are often called supply chain finance, payables finance or reverse factoring.

Two things are expressly outside the definition:

arrangements that are solely credit enhancements for the entity, such as financial guarantee contracts; and
instruments used to settle directly with a supplier, such as a credit card.

The test looks at substance, not the label a bank uses. A purchasing card that pays the supplier immediately is out of scope; a bank programme under which suppliers can sell approved invoices early, with the buyer paying the bank on day 120, is in scope.

What does FRS 102 require to be disclosed?

Paragraph 7.20C requires disclosure in aggregate for all supplier finance arrangements of:

Key terms and conditions, for example extended payment terms, interest charges and any security or guarantees provided. Arrangements with dissimilar key terms are described separately.
At the end of the reporting period, the carrying amounts of the financial liabilities that are part of an arrangement and the balance sheet line items they are presented in.
The range of payment due dates, for example 30 to 40 days after invoice date, both for those liabilities and for comparable trade payables outside the arrangement. Comparable payables are, for example, those in the same line of business or jurisdiction. Where ranges are wide the entity must explain them or give additional, stratified ranges.
The type and effect of non cash changes in the carrying amount of the liabilities, such as business combinations, exchange differences or other transactions that do not use cash.

These sit in Section 7 alongside the existing requirement in paragraph 7.22 to present a net debt reconciliation. The new paragraphs add disclosure only; they do not themselves change how the payable is recognised or measured. See the cash flow statement for the rest of Section 7.

Worried about an HMRC check? Tax investigation insurance pays your accountant’s fees if HMRC opens an enquiry or compliance check. Solar Protect cover pays up to £100,000 with no excess. It never pays tax, interest or penalties.

From £108.75 a year (£9.06 a month) for individuals, £117.57 for sole traders and £207.50 for companies and partnerships, including IPT and the £20 admin fee.

See my price in 2 questions or call 01795 841 310.

★★★★★ Rated 4.9 out of 5 on Trustpilot from over 160 reviews

How does IAS 7 differ?

The FRC based the FRS 102 paragraphs on the IASB’s May 2023 amendments, Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7). The IAS 7 version has a stated objective in paragraph 44F: to let users assess how the arrangements affect the entity’s liabilities, cash flows and exposure to liquidity risk. Paragraph 44H then requires:

the terms and conditions of the arrangements;
at both the beginning and the end of the period, the carrying amounts and line items of the liabilities in the arrangement;
at both dates, the carrying amount of those liabilities for which suppliers have already received payment from the finance provider;
the range of payment due dates for the liabilities and for comparable trade payables; and
the type and effect of non cash changes.

The FRC’s Basis for Conclusions (paragraph B7.4) says the key difference is that Section 7 does not require disclosure of amounts already settled by finance providers with suppliers. Respondents had mixed views on whether that information was worth its cost, so the FRC left it out on proportionality grounds. The IASB’s announcement also lists liquidity risk information, reflecting the consequential changes to IFRS 7. The IASB amendments apply to annual reporting periods beginning on or after 1 January 2024. For a wider comparison see IFRS and FRS 102 compared.

Point	FRS 102 (7.20C)	IAS 7 (44H)
Effective for periods beginning on or after	1 January 2025	1 January 2024
Carrying amounts and line items	End of period	Beginning and end of period
Amounts already paid to suppliers by the provider	Not required	Required
Payment due date ranges	Required	Required
Non cash changes	Required	Required

When do the FRS 102 requirements start, and is there transition relief?

Paragraph 1.37(a) makes paragraphs 7.20B and 7.20C effective for accounting periods beginning on or after 1 January 2025, a year before the rest of the Periodic Review 2024 amendments, with early application permitted. A company with a 31 December year end therefore gives the disclosures first in its December 2025 accounts.

Paragraph 1.42 gives relief in the first period: comparatives are not needed for the terms and conditions, the payment due date ranges or the non cash changes. The current year carrying amount is still required, and the company should be able to support it from the bank’s programme statements.

Who is exempt?

Small entities. Paragraph 7.1B says a small entity is not required to comply with Section 7, so a company using Section 1A need not give these disclosures, although it should still consider whether a material arrangement needs explaining for a true and fair view.
Qualifying entities using the reduced disclosure framework. Before the Periodic Review a qualifying entity could skip Section 7 entirely. Paragraph 1.12(b) now makes the exemption from paragraph 7.20C conditional on equivalent disclosures being included in the consolidated financial statements in which it is included (Basis for Conclusions B7.5). A subsidiary whose parent does not disclose its supplier finance in enough detail must give the disclosure itself. See qualifying entities and the reduced disclosure framework.
Entities outside Section 7. Paragraph 7.1A excludes mutual life assurance companies, retirement benefit plans and certain investment funds.

What might the note look like?

Illustration only. A manufacturer with a 31 December 2025 year end uses one bank programme. Suppliers can sell approved invoices to the bank at a discount. The company pays the bank 120 days after invoice date; supplier invoice terms are 60 days. No security is given and the company pays no fees.

Disclosure	Example content
Key terms	Payment to the bank 120 days after invoice; no interest charged to the company; no security or guarantee
Carrying amount and line item	£2.4 million within trade creditors
Payment due dates: in the arrangement	115 to 120 days after invoice date
Payment due dates: comparable trade creditors	30 to 60 days after invoice date
Non cash changes	£0.1 million exchange differences on euro invoices

In this first year no comparatives are given for the terms, ranges or non cash changes, relying on paragraph 1.42.

What mistakes come up?

Looking only at the payables ledger. Treasury or procurement often set these programmes up; the finance team may not know which suppliers are in one. Ask the bank for a confirmation at the year end.
Missing the qualifying entity condition. Subsidiaries that used to drop Section 7 entirely now need to check what the group accounts say.
Quoting a single due date range when terms vary widely between suppliers or countries. Paragraph 7.20C(b)(ii) asks for explanation or stratified ranges.
Using IFRS wording in FRS 102 accounts and volunteering the amount already paid by the provider without checking it is reliable. It is not required under FRS 102.
Ignoring the link with key metrics. Extended terms lengthen creditor days and can affect payment practices reporting, so the narrative should be consistent across the annual report.

Solar Protect provides tax investigation insurance for businesses and fee protection schemes for accountancy practices. Read how our cover works or get a quote.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.