Selling off your accounts receivable to banks or collections agencies in exchange for cash has long been a nifty way for public companies to strengthen the balance sheet. New accounting rules for asset transfers, however, are about to make that maneuver much harder to do.
Historically, the trick had been to sell those receivables at a discount, in a way that transferred most—but not all—of the collection risk to a third party; the company could then use that infusion of capital to fund business operations. Under old accounting rules such transfers could typically be treated as a sale, where the asset disappears from the balance sheet and is replaced by cash.
