Skip to main content

Looking for Valuant? You are in the right place!

Valuant is now Abrigo, giving you a single source to Manage Risk and Drive Growth

Make yourself at home – we hope you enjoy your new web experience.

Looking for DiCOM? You are in the right place!

DiCOM Software is now part of Abrigo, giving you a single source to Manage Risk and Drive Growth. Make yourself at home – we hope you enjoy your new web experience.

Looking for TPG Software? You are in the right place!

TPG Software is now part of Abrigo. You can continue to count on the world-class Investment Accounting software and services you’ve come to expect, plus all that Abrigo has to offer.

Make yourself at home – we hope you enjoy being part of our community.

FASB eyes CECL relief on some receivables for private firms; What it means for financial institutions

Regan Camp
April 16, 2025
Read Time: 0 min

Equipment-financing firms and others could benefit

FASB's Credit Losses-Topic 606 Receivables project doesn't directly affect financial institutions, but it could offer insight on efforts to reduce the CECL burden.

CECL-related proposal from FASB


Equipment-financing firms, accounts receivable lenders, and other private firms managing contract-based receivables could benefit under a CECL-related proposal from the Financial Accounting Standards Board (FASB). And while the project doesn’t directly apply to traditional lending portfolios, it nevertheless offers useful insight for community banks and credit unions.

Need help simplifying CECL? We can help.

Connect with an expert

Simplifying CECL for certain receivables

FASB’s Credit Losses–Topic 606 Receivables project is focused on reducing the burden of estimating expected credit losses for a narrow set of receivables. Specifically, it addresses accounts receivable and contract assets stemming from revenue transactions – those falling under ASC Topic 606 (Revenue from Contracts with Customers). These are not traditional loan products, but rather, receivables generated through the delivery of goods or services tied to performance obligations under a contract.

Examples include equipment rental payments, service contracts, or installment-based product deliveries where the revenue is recognized over time. These receivables are typically short-term, non-interest-bearing, and based on billing customers after goods or services have been delivered, making them different in nature from loans evaluated under standard CECL practices.

Applying the full current expected credit loss (CECL) model to these types of receivables has proven time-consuming and expensive for many private companies and not-for-profits. This FASB proposal aims to ease that burden, particularly for entities like equipment financing firms or accounts receivable lenders, which rely heavily on contract-based receivables.

Breaking down Credit Losses-Topic 606 Receivables

In December 2024, FASB issued a proposed Accounting Standards Update (ASU) that introduces both a practical expedient and an accounting policy election. At a high level, if an organization has no history or expectation of significant credit losses on these contract receivables, it could elect not to apply CECL to them at all.

This option functions as a “common sense” exemption. Where credit loss risk is minimal, a complex model may not be necessary.

If finalized, the proposed update could be meaningful for entities that consistently collect in full and don’t experience material losses. For those organizations, the ASU offers a path to scale back CECL documentation and modeling efforts without compromising the integrity of financial reporting.

Implications for community financial institutions

The proposed changes are narrowly targeted and not directly applicable to traditional lending portfolios. However, the discussed adjustments still offer the following insight for community banks and credit unions:

  1. Validation of simpler approaches
    Community financial institutions often look to broader industry practices when shaping internal policies. If FASB embraces a simplified approach in one area, it may influence examiner expectations elsewhere within CECL application.
  2. CECL’s boundaries are becoming clearer
    These discussions help define where CECL applies and where it doesn’t. Greater clarity can reduce uncertainty for institutions still fine-tuning their interpretation of the standard.
  3. FASB Is listening
    This project adds to a growing list of examples where standard-setters are acknowledging the compliance burden on smaller institutions. It shows momentum for targeted relief when the risk profile doesn’t justify additional complexity.

What financial institutions can do now

The comment period for this proposed ASU closed in January 2025. Feedback was reviewed in the March Private Company Council (PCC) meeting, with some discussion around whether the scope should be expanded, for example, to include receivables acquired in business combinations.

A final decision on the ASU has not yet been announced, but this remains a conversation worth following by community financial institutions.

Even if this proposal doesn’t apply to them directly, financial institutions might still see it as a positive sign that regulators are open to common-sense relief when the risk doesn’t warrant added complexity. Developments like this could shape future guidance and examiner expectations.

Stay tuned for future Abrigo updates on FASB’s movements and how they may impact CECL strategy and compliance. Meanwhile, check out additional resources on CECL and learn more about how Abrigo’s expert CECL advisors provide allowance support.

Explore the Project:
Track updates directly from FASB here,

About the Author

Regan Camp

Vice President, Portfolio Risk Sales and Services
Regan Camp is Abrigo’s Vice President of Portfolio Risk Sales and Services, leading a team of subject matter experts who assist financial institutions in accurately interpreting and applying federal accounting guidance. He began his career in financial services as a commercial loan officer at a $2.1 billion institution. He then

Full Bio

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

Make Big Things Happen.