Sales of trade receivables - New impact on the statement of cash flows

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Overview

Companies should analyze the terms and provisions in their receivables purchase agreements to assess the impact of the ASU on their statement of cash flows and related disclosures.

In reporting periods prior to adoption, public companies should consider the disclosures required for standards that have been issued but are not yet effective (SEC Staff Accounting Bulletin No. 74).

Prior to the adoption of the ASU, cash inflows from securitization programs of trade receivables were often reported entirely as operating cash inflows. The ASU will result in a change whereby some of the amounts collected on the receivables will be presented as operating cash inflows while other portions will be presented as investing cash inflows. Depending on the type of program and the timing of cash paid to the company, it could result in a significant reduction in operating cash inflows. 

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David Lukach

Partner, PwC US

Frank Serravalli

Partner, Financial Markets, PwC US

Tel: +1 (646) 742 7510

Chris Merchant

Partner, Financial Markets Group, PwC US

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