Reverse factoring

Reverse factoring is a financial management technique that allows a company to immediately pre-finance outstanding amounts to pay its suppliers.

How does reverse factoring work?

First, a company receives its deliveries and invoices from a supplier. Next, this company sends the invoice to a factoring company who pre-finances the invoiced amount as soon as possible. Finally, the company must repay this amount to the factoring company within the time specified on the supplier's original invoice.

What is the difference between classic factoring and reverse factoring?

Unlike classical factoring lies with reverse factoring the initiative with the customer and not the supplier. Moreover, the factoring company to the customer's financial health, not the supplier's, to assess the risk of unpaid invoices.

Updated 05/15/2018

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