Off Balance Sheet Financing

This exercise, in essence, evolves around a re-working of the debt position of a corporation from being recorded on balance sheet to one which at best, is reflected by way of a contingent liability with corresponding disclosure in the notes to the accounts.

Usage of derivatives and special purpose companies are inter alia, devices that can be applied in shifting liabilities into those classified as contingent liabilities. Receivables financing is one of the many instances where the financing of a corporation can be structured off balance sheet.