Reverse Factoring / Supplier Finance

Reverse factoring is a financial arrangement where a buyer works with a finance provider to offer early payment to their suppliers. The buyer agrees to pay the finance provider at a later date, while the finance provider pays the supplier early—often at a lower financing cost because it’s based on the buyer’s creditworthiness, not the suppliers.

How It Works:

1. Supplier delivers goods/services to the buyer and issues an invoice.
2. Buyer approves the invoice.
3. Supplier has the option to receive early payment from a finance provider (bank/fintech).
4. Finance provider pays the supplier (minus a fee/discount).
5. Buyer repays the finance provider at the agreed extended terms (e.g., 60–90 days).