What is the
Reverse Factoring (RF) Program

Reverse Factoring (RF) is a payables financing solution where a Bank (e.g. DBJ) makes early payments to Suppliers on behalf of the Buyer in exchange for a discount (paid by the supplier).

This product allows Suppliers to get payments earlier than the credit terms (e.g. – 30, 60 or 90 days) offered by Buyers (aka – Anchor Firms)

Reverse factoring is driven by large companies with the motive of improving the cash flow situation for their suppliers and themselves – It is a “Buyer-led” Programme.

Reverse Factoring is considered to be a win/win/win product for Buyers (Anchor Firms), Suppliers and Financial Institutions/banks.

Why should you participate in the Reverse Factoring program?
  • Pay one entity versus several (lowers cost). That is, it can simplify cash management and the payable process. (Paying only the Lender versus multiple suppliers – lowering costs and reduced time)
  • Improves efficiency of existing admin staff (no need to field queries about payments & have less payments to process – reduced calls and emails)
  • Can facilitate E-invoicing
  • Gives all your suppliers the option to get paid within a few days
  • Improves suppliers’ cash flows, putting them in a position to provide better products and/or services.
  • By extending your payments, you will have more cash on hand
  • This cash is interest free
  • Extending payments by 30 days can generate $20.8 Mil more in liquidity  (See example below)

How it works:

1. Typical Supplier and Buyers Relationship

Supplier delivers goods or services along with invoice

2. Buyer reviews and Logs Invoices in the System

Buyers accepts goods or services and approves invoices for payment. (Suppliers are advised)

3. Notification of Early Payment

Supplier sends early payment request to the Bank

4. Payment sent from Banking Institutions

Bank makes payment to the Supplier at a discount of the invoice value (i.e. – purchase of the Supplier’s receivables)

5. Fulfillments of Credit Line

Buyers will make payments (clear its payables) to the Bank for the full amount of the approved invoice.

A technology platform will facilitate these transactions through communication with all three parties.