A possible Strait of Hormuz cost spike is pushing companies to review their contracts as higher oil, freight, tariff, and supply-chain costs raise accounting questions about revenue, receivables, inventory, and cash flow.

When shipping, fuel, and materials costs jump, businesses face a question that sounds simple but can be difficult to answer: who pays?

For companies with flexible contracts, the answer may be the customer. For companies locked into fixed prices, the added cost may cut directly into profit. And for finance teams, the issue does not end when an invoice goes out.

Accountants say companies need to decide whether a surcharge can be booked as revenue, whether customers are likely to pay it, whether inventory is still worth what the company paid for it, and whether once-profitable contracts have turned into money losers.

To dig deeper, visit the original article on the Thomson Reuters blog.