Investors usually scan the liabilities section of the balance sheet for labels such as debt, notes payable and loans to gauge a company’s leverage. For retailers, many also consider operating lease liabilities, which appear on the balance sheet but are usually excluded from debt figures. However, there is another debt-like obligation that rarely carries any of these labels: the supplier finance program, also called reverse factoring or supply chain finance. If used aggressively, it can make a company look less leveraged and more cash-generative than it really is.
