Reverse Factoring is a buyer-led initiative where the buyer’s good credit rating is utilized for favorable financing for the suppliers. Buyers can make use of longer payment terms and, in return, offer their suppliers a cost efficient way to finance their receivables and gain immediate inflow of liquidity.
The outcome is not only optimizing the working capital and decreasing the need for external funding, but also reducing Supplier risk. Through the use of a technology platform and a third-party funders it offers mutual benefits for both trading partners.
The suppliers are usually located in several countries, invoicing with multiple different currencies across various jurisdictions. Reverse Factoring arrangements will last for many years while banking relationships might change. This creates a need for a bank-independent, flexible and scalable solution which works with multiple funders (bank & non-bank funding sources) covering the different jurisdictions.
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