Reverse factoring is when a factoring company, 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.
Under this solution, you as the buyer provide a platform for suppliers to sell invoices to us at a discounted rate and gets immediate access to cash whereas you get more time to pay the invoices. This helps in optimizing working capital for both the supplier and the buyer thereby providing liquidity to all business
Below are benefits of a buyer paying its suppliers through reverse factoring:
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