Payables finance pays suppliers early on the buyer's credit, while the buyer still pays on the original due date
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Ossiano Guides · Paying on terms
Suppliers sell invoices the buyer has approved to a finance provider. The discount is priced on the buyer's credit. Since 2023 in the US and 2024 under IFRS, buyers publish their program terms and balances each year.
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01 · The structure
The buyer sets up the program, and each supplier chooses invoice by invoice whether to sell
In , a large buyer helps its suppliers get paid early. The program is led by the buyer. Suppliers get cash by selling their invoices to a finance provider, a step called . That is how the Global Supply Chain Finance Forum (GSCFF) defines it on its payables finance page.
The same idea goes by several names. The GSCFF lists Approved Payables Finance, , and Supplier Finance.
The buyer is the program's , the strong party the program is built around. It usually sets up the program with one or more finance providers, for all of its suppliers or some of them. The finance provider then signs up each supplier. This includes checks, which confirm who the supplier is, and checks. After that, the supplier decides for each invoice. It can wait for the buyer to pay on the due date, or sell the invoice early at a , the GSCFF explains.
Figure 1 · Interactive
Follow one approved invoice through a payables finance program
Tap a stage to see which party acts at each step.
Steps 1 to 8 are drawn from the Global Supply Chain Finance Forum Standard Definitions (2016) and its payables finance technique page, and FASB ASU 2022-04 (September 2022). Step 9 is drawn from FASB ASU 2022-04.
02 · The trigger
Finance starts when the buyer approves the invoice without conditions
Nothing can be financed until the buyer says yes to the invoice. The trigger is the buyer's unconditional approval of the invoice for payment, according to the GSCFF. Unconditional means the buyer cannot later refuse to pay that invoice.
Once approved, the invoice becomes an . The buyer has made a firm promise to pay it, one it cannot withdraw. The GSCFF adds that the finance provider normally pays 100 percent of the invoice, less a financing discount.
US accounting rules describe the same step. In a , the buyer tells the finance provider, or a platform that sits between them, which supplier invoices it has confirmed as valid. That wording comes from FASB ASU 2022-04.
03 · Pricing and risk
The supplier's discount is priced on the buyer's credit
The supplier gets paid early, at a cost set by how safe the buyer is as a payer. The GSCFF's Standard Definitions (2016) say the financing cost is typically aligned with the credit risk of the buyer. So the supplier's price depends on the buyer's strength, not its own.
The finance provider relies on the buyer to pay. It typically finances to the supplier. That means it cannot claim the money back from the supplier if the buyer fails to pay. The supplier still keeps some risk, for example if its own promises about the invoice turn out to be untrue, the GSCFF notes.
Here is an example with made-up numbers. A supplier holds a $1,000,000 invoice due in 90 days. It sells the invoice on day 30, so 60 days are financed. At an all-in rate of 5.50 percent a year, counted on a 360-day year, the discount is $9,166.67. The supplier receives $990,833.33. The buyer still pays $1,000,000 on day 90. Try other numbers in Figure 2.
Figure 2 · Try it
What early payment costs a supplier in a payables finance program
Move the slider and tap the pills to set the invoice, terms, payment day and rate.
Invoice terms, days
All-in annual rate (illustrative)
Days financed
-
Discount
-
Net proceeds to supplier
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How it works: days financed equal the invoice terms minus the early payment day (the day is capped at the terms minus one). The discount equals the invoice times the all-in annual rate times the days financed, divided by 360. This count is the US money market standard. Net proceeds equal the invoice minus the discount.
Our Research Desk used simple interest on a 360-day year: invoice x annual rate x days financed / 360. The rates shown are for illustration and are not Ossiano pricing.
This calculator explains the concept only. Actual discounts vary with the buyer's credit, the program terms, the currency and the finance provider.
04 · The buyer's side
The buyer's bill keeps its terms and its due date
For the buyer, nothing about the bill changes. The payable stays due by the buyer until its original due date, the GSCFF's Standard Definitions state. If the supplier sold the invoice, the buyer simply pays the finance provider instead.
Procter & Gamble (P&G) shows how one large buyer describes its program. Its annual report (Form 10-K) for the year ended June 30, 2026 says it supports a Supply Chain Finance program with several global financial institutions. P&G is not a party to the agreements between its suppliers and the banks. The banks let suppliers use P&G's credit standing when setting their pricing. P&G's obligations to its suppliers do not change when a supplier chooses to sell. Payment terms under the program generally range from 60 to 180 days. P&G reports these amounts within Accounts payable, the bills it owes.
"The Company does not provide any form of guarantee under these financing arrangements."
The Procter & Gamble Company, Form 10-K for the fiscal year ended June 30, 2026, Supplier Finance Programs note
05 · Disclosure
US and IFRS buyers now publish their program terms and balances
Buyers must now tell investors about these programs. In the US, the accounting standard setter FASB issued in September 2022. It applies to fiscal years beginning after December 15, 2022. Buyers disclose the key terms of the program, the confirmed amount still unpaid at period end, and where that amount sits in the accounts.
From fiscal years beginning after December 15, 2023, buyers also publish a . This table starts with the opening balance, adds invoices confirmed, takes away invoices paid, and ends with the closing balance. The update changes disclosure only. It does not change how the amounts are recognized, measured or presented, according to FASB.
Outside the US, the IASB issued its on May 25, 2023. They apply to annual periods beginning on or after January 1, 2024. Buyers disclose the terms and conditions, the amounts owed and where they sit on the balance sheet, the ranges of payment due dates, and information on liquidity risk, the IFRS Foundation announced.
This section is a reference summary of what must be disclosed. It is not accounting advice. It does not cover how program amounts are classified in the accounts.
Figure 3
What buyers disclose under US GAAP and IFRS
Read across a row to compare the two standards.
Sources: FASB, Accounting Standards Update No. 2022-04, Liabilities: Supplier Finance Programs (Subtopic 405-50), September 2022; IASB, Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7), May 25, 2023. Reference summary only; not accounting advice.
06 · In the filings
Filed balances show programs running at scale at six large US filers
The new rules put real numbers in public. P&G's fiscal 2026 rollforward reports $5,790 million of confirmed obligations at the start of the year and $6,176 million at June 30, 2026. During the year it confirmed invoices of $18,110 million and paid confirmed invoices of $17,741 million. It also reports translation and other of $16 million. These are the figures as filed.
Company data filed with the SEC shows other large programs. AT&T reported $4,455 million at September 30, 2025, up from $2,498 million at December 31, 2024. Boeing reported $2,703 million at December 31, 2024 and $2,107 million at March 31, 2025. At December 31, 2024, Eaton reported $398 million, PPG $251 million and ADM $222 million.
Figure 4 · Interactive
Supplier finance obligations reported by six US filers
Tap a company to show only its rows. Amounts are in USD millions, as filed.
Sources: US SEC EDGAR, XBRL company concept SupplierFinanceProgramObligation for Procter & Gamble, AT&T, Boeing, Eaton, PPG and Archer-Daniels-Midland; Procter & Gamble Form 10-K for fiscal year ended June 30, 2026, supplier finance rollforward. Amounts as filed.
07 · Ossiano view
The payables finance data is now public, and it shows programs working at scale
OBSERVATION 01
Disclosure turns programs into data
The rollforward shows money moving through a program, not just a year-end balance. P&G confirmed $18,110 million and paid $17,741 million in fiscal 2026. The Research Desk can now track program activity filer by filer.
OBSERVATION 02
Buyer credit reaches the supplier
Pricing tied to the buyer's credit lets a supplier fund its invoice on the stronger balance sheet in the chain. Development lenders use the same idea for suppliers in emerging markets, as in the IFC and Banco Santander facility of June 2026.
OBSERVATION 03
Trade terms stay with the trade contract
The buyer's bill stays due on its original date, and P&G states its obligations are unaffected by suppliers' financing decisions. Payment terms and funding stay separate decisions.
Summary
Payables finance lets suppliers be paid early on the buyer's credit, while the buyer pays on the original due date
Payables finance is a program run by the buyer. Suppliers get cash by selling invoices the buyer has approved. The buyer's unconditional approval is what starts the finance. Each supplier chooses whether to wait for payment or sell early at a discount. That discount is usually priced on the buyer's credit. The buyer still pays the full amount on the original due date.
US buyers now disclose program terms, the confirmed amount still unpaid, and a rollforward. The IFRS rules apply from January 1, 2024. P&G alone reported $6,176 million of confirmed obligations at June 30, 2026.
Related guides: Extending terms, keeping suppliers strong; Dynamic discounting; Supplier payment terms for importers; Trade finance vs supply chain finance; Receivables finance; The cash conversion cycle.
Instrument cards: Payables finance; Dynamic discounting; Invoice discounting; Factoring; Open account. Every term on this page is defined in the Trade Finance Glossary.
For questions on how payables finance programs apply to existing or planned supplier relationships, contact the Ossiano Research Desk.
Sources
- The Procter & Gamble Company, via SEC EDGAR, Form 10-K for fiscal 2026, Supplier Finance Programs: Rollforward (Details), R98, August 4, 2026. Supports: confirmed obligations at the beginning and end of fiscal 2026; invoices confirmed, confirmed invoices paid, and translation and other.
- The Procter & Gamble Company, via SEC EDGAR, Form 10-K for fiscal 2026, Note: Supplier Finance Programs, R24, August 4, 2026. Supports: program description; P&G not party to supplier and bank agreements; obligations unaffected and no guarantee (quoted); payment terms of 60 to 180 days.
- IFRS Foundation, IASB increases transparency of companies' supplier finance, May 25, 2023. Supports: amendments to IAS 7 and IFRS 7 issued May 25, 2023; effective January 1, 2024; required disclosures.
- Global Supply Chain Finance Forum, Payables Finance, technique page, October 31, 2024. Supports: definition and other names; program set-up and supplier on-boarding; approval trigger and irrevocable commitment; supplier's choice; 100 percent financing less a discount; reliance on buyer credit without recourse; recourse kept for the supplier's own promises.
- Global Supply Chain Finance Forum, Standard Definitions for Techniques of Supply Chain Finance (ICC-hosted PDF), 2016. Supports: financing cost aligned with the credit risk of the buyer (page 45); the payable stays due until its due date (page 9).
- Financial Accounting Standards Board, Accounting Standards Update No. 2022-04, Liabilities: Supplier Finance Programs (Subtopic 405-50), September 2022. Supports: program features; key terms, confirmed amount outstanding and rollforward disclosures; effective dates; disclosure-only scope.
- Alternative Reference Rates Committee, SOFR "In Arrears" Conventions for Syndicated Business Loans, July 22, 2020. Supports: Actual/360 as the standard US money market day count, used in Figure 2.
- Board of Governors of the Federal Reserve System, Selected Interest Rates (Daily), H.15, September 29, 2026. Supports: money market rates annualized on a 360-day year, used in Figure 2.
- The Procter & Gamble Company, via SEC EDGAR, Form 10-K for fiscal 2026, Supplier Finance Programs: Additional Information (Details), R97, August 4, 2026. Supports: obligations presented within Accounts payable.
- AT&T Inc., via SEC EDGAR, XBRL company concept SupplierFinanceProgramObligation, CIK 0000732717, October 31, 2025. Supports: obligations at September 30, 2025 and December 31, 2024 (Form 10-Q, third quarter 2025).
- The Boeing Company, via SEC EDGAR, XBRL company concept SupplierFinanceProgramObligation, CIK 0000012927, April 23, 2025. Supports: obligations at December 31, 2024 and March 31, 2025 (Form 10-Q, first quarter 2025).
- Eaton Corporation plc, via SEC EDGAR, XBRL company concept SupplierFinanceProgramObligation, CIK 0001551182, February 27, 2025. Supports: obligations at December 31, 2024 (Form 10-K, fiscal 2024).
- PPG Industries, Inc., via SEC EDGAR, XBRL company concept SupplierFinanceProgramObligation, CIK 0000079879, February 19, 2026. Supports: obligations at December 31, 2024 (Form 10-K filed February 19, 2026).
- Archer-Daniels-Midland Company, via SEC EDGAR, XBRL company concept SupplierFinanceProgramObligation, CIK 0000007084, February 20, 2025. Supports: obligations at December 31, 2024 (Form 10-K, fiscal 2024).
- The Procter & Gamble Company, via SEC EDGAR, XBRL company concept SupplierFinanceProgramObligation, CIK 0000080424, August 4, 2025. Supports: obligations at June 30, 2025 and June 30, 2024 (Form 10-K, fiscal 2025).
- The Procter & Gamble Company, via SEC EDGAR, Form 10-K for fiscal 2026, Cover Page, R1 (accession 0000080424-26-000103), August 4, 2026. Supports: document period end date of June 30, 2026.
- Global Supply Chain Finance Forum, Standard Definitions for Techniques of Supply Chain Finance, 2016. Supports: payables finance definition and early payment at a discounted value, used in Figure 2.
- International Finance Corporation, World Bank Group and Banco Santander partner to unlock working capital and jobs, June 23, 2026. Supports: development lender facility letting emerging market suppliers finance against buyer credit.
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