What is Reverse Factoring or Supply Chain Financing?

Reverse Factoring or Supply Chain Financing is when a bank or finance company commits to pay a company’s invoices to the suppliers at an accelerated rate in exchange for a discount. It is unlike traditional invoice factoring, where a supplier wants to finance his receivables. Reverse factoring or supply chain financing is a financing solution initiated by the ordering party to help his supplier finance their receivables more easily and typically at a lower interest cost than what would normally be offered.

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