How does IFRS 15 affect vendor financing?

Under IFRS 15, if payment terms exceed 12 months, the vendor must separate the financing component and recognize interest income separately. Revenue is recognized at the cash sale price equivalent.

What is the effective cost of vendor financing to the buyer?

Calculate the IRR of the payment stream (negative of the outflows): this is the effective interest rate. Compare to alternative financing sources to determine whether vendor financing is expensive or competitive.

Vendor Financing & Installment Sale Calculator

Analyze vendor financing and installment payment structures. Calculate implicit interest rate, present value of deferred payments, and financial statement impact for both seller (revenue recognition) and buyer (off-balance-sheet analysis).

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Analyze vendor financing and installment payment structures. Calculate implicit interest rate, present value of deferred payments, and financial statement impact for both seller (revenue recognition) and buyer (off-balance-sheet analysis). Use the vendor financing result to inform your calculation.

Vendor Financing & Installment Sale Calculator

How to Use

Frequently Asked Questions

How does IFRS 15 affect vendor financing?

What is the effective cost of vendor financing to the buyer?