Companies Unveil Details About Supply-Chain Financing Under New Rule
The disclosures also help to convey the widespread use of these programs, which have gained in popularity over the past three years, particularly for companies seeking to preserve cash. “It’s probably normalizing because we don’t necessarily have that crisis mode,” said Rudi Leuschner, associate professor of supply-chain management at Rutgers University.
The disclosures could prove especially valuable to investors as recession fears continue to loom. A worsening economic outlook could limit companies’ ability to pay their suppliers, he said.
“If a company is seriously in trouble, having a larger amount outstanding that they still owe to their suppliers could raise the trigger point of a potential bankruptcy to a very high level,” Leuschner said. “It very quickly can devolve into a really bad situation.”