Reverse Factoring

This type of factoring deals with the maturity of invoices issued to you by your suppliers. Hence, rather than your asset – receivable, it is your liability – payable that is being financed.

The standard procedure for your supplier is to conclude an agreement on assignment of receivables it has from your company. You, as the customer, then sign an agreement on acknowledgement of obligation (payable). This procedure may take form of recourse or non-recourse factoring.

Alternatively, the factoring company accedes to a payable you have to your supplier. As financing in this case is not provided based on the transfer of an asset, it may be realized exclusively for highly creditworthy clients or solely in combination with “standard” factoring.

In addition of increased cash flow, the benefit for you is having a tool to help your suppliers obtain financing under more favorable terms.

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