Benefits Of Making Reverse Factoring Payments
06 Jul, 2016 1:42 PM
Reverse factoring is when a finance company, such as a bank, interposes itself between a company and its suppliers and commits to pay the company's invoices to the suppliers at an accelerated rate in exchange for a discount. This is a lower-cost form of financing that accelerates accounts receivable receipts for suppliers.
Reverse factoring is becoming popular, particularly with large retailers who get stock from a number of smaller, trade suppliers. But it can work for all sorts of firms in a variety of circumstances.
Below are benefits of a company paying its suppliers through reverse factoring:
• The company can foster very close links with its core group of suppliers since this can be a major benefit to them in terms of accelerated cash flow.
• 100% of the invoice value is available for factoring, rather than the discounted amount that is available through a normal factoring arrangement.
• The company no longer has to deal with requests from suppliers for early payment.
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Benefits of Reverse Factoring Benefits of a Company Paying Reverse Factoring
