Supply chain finance

Supply chain finance allows a large company to procure products or services from a large number of suppliers by extending its payment terms. It is based on reverse factoring.

How does reverse factoring work?

Reverse factoring allows a large company (principal) to propose to its supplier to be paid as soon as its invoice has been approved and validated by the principal. More precisely:

• the supplier delivers his goods and issues an invoice (1)

• the client validates the invoice on the secure platform (2)

• the supplier can make an assignment of his invoice, which corresponds to requesting advance payment of the invoice (3)

• the bank, which is often a factor, pays the invoice in advance (4)

• the bank is reimbursed by the client when the invoice is due (5).

Reverse factoring life cycle

Advantages of reverse factoring

Let's list here the main advantages of reverse factoring for the principal and his suppliers.

For the principal

• Build loyalty with strategic suppliers and prevent their possible default.

• Secure the entire supply chain

• Improve working capital requirements (WCR) by increasing supplier payment times

• Allows to appear as a Responsible Company (CSR) by supporting its suppliers, which are generally small and medium-sized enterprises (SMEs).

• Dematerialized solution: everything is done on a platform secured by a password for each user.

For suppliers

• Suppliers, even those in financial difficulty, have access to credit because the risk is not based on their rating but on that of the client.

• They benefit from much more advantageous rates than those they could negotiate with their bank.

• Dematerialized solution: everything is done on a platform secured by a password for each user.