What is Reverse Factoring?
Also known as supply chain finance or supplier finance, reverse factoring involves a funder advancing payment to its clients’ suppliers at an accelerated rate, giving both parties a number of benefits.
Reverse factoring differs from traditional factoring in that it is the buyer, not the supplier who initiates the funding. It is designed to provide value to all three parties involved: The buyer, the supplier and the funding facility.
The supplier, for instance, can trade with customers that demand longer payment terms than normal without tying up cash flow for long periods, accessing up to 100% of the invoice value well in advance of its due date. The buyer, meanwhile, can take advantage of early settlement discounts and foster strong relationships with their suppliers.
The factoring company creates a more durable business relationship, as all parties benefit. When working with large ordering companies, they are also able to reach suppliers more easily than reaching out to each supplier company individually.
As a specialist and experienced invoice finance broker, we can help businesses to secure the most suitable factoring facilities for their requirements. Call our team of reverse factoring experts on 0800 9774833 to find out how we can help, or get an instant quote using the tool below: