In July 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The update is designed to simplify how organizations apply the current expected credit loss (CECL) model to short-term receivables.
For not-for-profit (NFP) organizations, this change can significantly reduce the cost and complexity of estimating credit losses on receivables arising from revenue transactions.
