Are You Following GAAP’s New AR Rules For 2025

AR teams should be aware of four new changes to GAAP standards, requiring changes to your processes to ensure compliance and maintain accurate financial reporting: 

1.      Comprehensive Income Statement Expenses
New GAAP rules require a more detailed breakdowns of income statement expenses. This increased granularity affects how AR teams report and analyze expenses related to credit losses and bad debts, leading to more precise financial reporting.

2.      Transparent AR Error Corrections
Updated guidelines now require more comprehensive disclosures when correcting errors in previously issued financial statements. AR teams must ensure that any adjustments related to AR are clearly reported, detailing the nature of the error

 3.      Proposed Changes For Stock Payments
In January 2025, the Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update. The most relevant for AR teams is the rule that requires AR maintain more accurate records of outstanding receivables that could impact financial ratios used by investors.

4.      Simplifying Credit Loss Measurements for Private Businesses
A December 2024 proposal from FASB would mean that private businesses and some nonprofits may no longer need to use complex models for estimating credit losses on AR. If your organization qualifies for this more straightforward approach, best practice is to work with accounting to update your loss estimation methods.

The full list of changes can be found on FASB’s website, here.