The simple version

A buyer takes a long time to pay a supplier's bill, as much as half a year after the work is complete. The supplier usually cannot wait that long.

So a bank pays the supplier early and takes a cut for doing it, then collects the full amount from the buyer when the long date arrives. The bank sets that cut by looking at the buyer, not the supplier.

Nothing the buyer owes changes in size or in timing. What changes is who is waiting, and the waiting has been sold to a bank at a price the supplier pays.

The numbers

• The Procter & Gamble Company's Form 10-Q for the quarter ended September 30, 2026 states that payment terms for suppliers under its Supply Chain Finance program generally range from 60 to 180 days.
• The same filing puts the amount due to suppliers participating in that program at approximately $6.5 billion as of September 30, 2026 and $6.2 billion as of June 30, 2026. The filing states amounts in millions of dollars except per share amounts or as otherwise specified, and gives these two figures in billions.
• The filing states that all outstanding amounts related to suppliers participating in the program are recorded within Accounts payable.
• The company's annual report note for the fiscal year ended June 30, 2026 describes an ongoing program to negotiate extended payment terms with its suppliers consistent with market practices, and a Supply Chain Finance program supported with several global financial institutions.
• That note states the company is not party to the agreements between suppliers and the banks, that the banks allow suppliers to use the company's own credit standing in setting their costs, and that the company provides no guarantee under the arrangements.
• The same note gives a roll-forward of the confirmed obligation for the fiscal year ended June 30, 2026: $5,790 at the start, $18,110 of invoices confirmed, $17,741 of confirmed invoices paid, $16 of translation and other, and $6,176 at the end. Those lines add to $6,175 rather than the printed $6,176, a difference of one unit that we read as rounding in the filing. The prior year's lines add exactly.

Why it does not read as borrowing

Money a company has borrowed from a bank sits with its borrowings, and repaying it shows up in the financing part of the cash statement. Money a company owes a supplier sits among its trade bills, and paying it shows up in the operating part.

Here the buyer never borrows from the bank. The bank's dealing is with the supplier, who sold it the right to collect, and the buyer still owes the original bill for the original sum on the original date.

So a bank is funding the gap, priced off the buyer's standing, while the buyer's accounts show only trade bills. That is why there is a disclosure requirement attached to it: without one, a reader cannot see how much of the trade-bills line a bank is standing behind.

None of that makes it wrong, and the filing says plainly that the sums due and the dates do not change according to whether a supplier finances them. It does mean a company can lengthen how long it holds cash without the lengthening showing up where a reader looks for borrowing.

The actual math on a $100,000 bill

A supplier completes the work and issues a bill for $100,000 due in 180 days. The buyer records $100,000 among its trade bills and keeps its cash.

The supplier sells the right to collect to the bank for a cut of 2 percent, a rate of ours, taking $98,000 now instead of $100,000 in half a year. On the long date the buyer pays the bank the full $100,000.

So the supplier gave up $2,000 to be paid about six months early, which works out near 4.1 percent a year on the $98,000 it received. The $100,000 and the 2 percent cut are ours, while the 180 days comes from the filing, and no filing we read gives a cut for any supplier.

What this means

When a company holds cash longer, the question is who is covering the gap and what that costs them. Here the answer is the supplier, out of a cut paid to a bank, and it never shows as a cost in the buyer's own accounts.

For anyone reading a set of accounts, the trade-bills line is worth checking against the disclosure that sits beneath it. A rising line can mean slower payment, a bigger business, or a bank standing behind more of it.

The transferable habit is to ask where a debt is recorded, not just how big it is. Two debts of the same size can sit in different places and tell a reader very different things about a company.

What this is NOT

This article explains how a supply chain finance arrangement works and where the resulting obligation is recorded, using The Procter & Gamble Company's Form 10-Q for the quarter ended September 30, 2026 and the supplier finance note in its annual report for the fiscal year ended June 30, 2026, both read on November 3, 2026, as the worked example. The $100,000 bill, the 2 percent cut and the yearly rate derived from them are ours, and no filing we read gives a cut for any supplier. It is not a recommendation to buy, sell or hold any security, and not a view on any company or on whether this arrangement is appropriate. It is not accounting, legal or tax advice, and anyone applying these rules should work from the standards themselves and a qualified accountant. The roll-forward difference of one unit is described as we read it and is not a claim that any figure is wrong. This is not a political endorsement or criticism of anyone.

Sources

• The Procter & Gamble Company, Form 10-Q for the quarterly period ended September 30, 2026, filed with the Securities and Exchange Commission, accession 0000080424-26-000256: the 60 to 180 day payment terms, the approximately $6.5 billion and $6.2 billion amounts due to participating suppliers, the Accounts payable treatment, and the amounts-in-millions presentation note. Read November 3, 2026: https://www.sec.gov/Archives/edgar/data/80424/000008042426000256/pg-20260930.htm
• The Procter & Gamble Company, Supplier Finance Programs note for the fiscal year ended June 30, 2026, as rendered in the filing, accession 0000080424-26-000103: the description of the program, the use of the company's credit standing by the banks, the absence of any guarantee, and the obligation roll-forward. Read November 3, 2026: https://www.sec.gov/Archives/edgar/data/80424/000008042426000103/R24.htm