Challenging Year Highlights Supply Chain Risks

Companies are under increasing pressure to closely manage their supply chains, including providing more transparency on financing strategies and improving workers' rights.

The year 2020, with all of its tumult and tragedy, has challenged the relationship between companies and supply chains. Companies have faced operational challenges in sourcing goods from suppliers impacted by the COVID-19 pandemic. Moreover, many suppliers have found themselves in financial extremis and facing difficulty meeting their ongoing cash-flow needs. To meet their needs, companies and suppliers have begun to use supply chain financing arrangements with increasing regularity. Such arrangements have, however, raised concerns with the US Securities and Exchange Commission (SEC) and prompted the Financial Accounting Standards Board (FASB) to consider the proper accounting treatment. Finally, while not a new phenomenon, the year 2020 has seen new litigation seeking to hold companies