Reverse Factoring
Unlocking Working Capital With Reverse Factoring
Easiest solution to pay suppliers on time
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For any business managing cash flow is a constant challenge. Long and often delayed payment cycles create financial strain, and stall growth opportunities. Reverse factoring offers an easy solution to optimise working capital and keep operations uber smooth while ensuring suppliers get paid on time.
By leveraging a TReDS (Trade Receivables Discounting System) platform, buyers can push their payment dates without negatively affecting sellers. On the other hand suppliers gain access to quick, low-cost financing.
What Is Reverse Factoring?
Reverse factoring helps businesses to pay their sellers faster by involving a third-party financier. Contrary to factoring, where sellers have to sell their unpaid invoices, reverse factoring is pitched by the buyer. This guarantees that sellers receive their payments sooner while buyers get flexible payment terms.
A TReDS platform (Trade Receivables Discounting System) plays a pivotal role in this entire process. Sellers can choose to trade approved invoices for early payments from financiers at competitive rates, making it an ideal situation for both the parties.
How Reverse Factoring Works?
Reverse Factoring Vs. Factoring
Factoring
Initiation
Initiated by the buyer
Initiated by the supplier
Financing Terms
Better terms for sellers
Higher fees and interest rates for sellers
Process
Uses a TReDS platform for seamless, digital financing
Suppliers sell invoices independently
Efficiency
Recourse is on buyer
Recourse is not on buyer but seller
The Role of TReDS Platforms in Reverse Factoring
A TReDS platform is an online marketplace which facilitates reverse factoring for businesses. Registered buyers, sellers, and financiers are on the same platforms and engage with each other seamlessly for early payments and liquidity optimisation.
As businesses evolve and expand into uncertain economic landscapes, reverse factoring provides them with the long rope of financial stability. Through a TReDS platform, companies can optimise cash flow and further strengthen supplier networks.
