Introduction
Reverse factoring is a form of financing that allows you to sell your accounts
receivables to a third party. In other words, instead of waiting for customers
to pay you for the goods or services that you’ve already delivered, reverse
factoring allows you to receive funds from a lender before those invoices are
paid. Since the money comes from a third party and not directly from your
customers, it frees up capital in your business—a benefit that can help grow
your company faster than ever before.
What Is Reverse Factoring?
Reverse factoring is
the name of an alternative financing method where you sell your invoices to an
investor and get paid immediately. Instead of going through a traditional bank,
you can apply with a reverse factoring company. The process is pretty simple:
·
Your business sells its unpaid invoices for cash
up front, usually at a discount
·
The buyer pays once they receive payment from
the customer on invoice (the “factored account”)
Reverse factoring is often used by companies that need extra capital quickly
and don’t have time to wait for traditional financing methods to be approved or
rejected
How Does Reverse Factoring Work?
The process of reverse factoring is simple. The factor gives you an advance
on your invoices, and when the money from those invoices is collected, you pay
back the factor in full. That's it!
You can use this cash flow to fund growth or pay down debt—whatever makes
sense for your business. The nice thing about factoring is that there are no
long-term contracts or commitments; you only have to sign a contract if and
when you need it. You can also cancel at any time if things aren’t working out
for some reason.*
Benefits of Reverse Factoring
Reverse Factoring is a great way to get cash flow, as well as money for your
business. When you use reverse factoring, you’re essentially selling your
invoices at a discount in exchange for immediate funding. This can help you
free up capital and give you the opportunity to invest in things that are more
important than paying off old bills.
If you're looking for financing options for your business or want to use
funding for growth, reverse factoring may be the right choice for your company.
It's popular among small businesses because it allows them to quickly access
cash by selling their outstanding invoices upfront -- which means companies
don't have to wait months before they can receive funds from suppliers and
customers!
It frees up capital.
As mentioned above, the money you make from reverse factoring will typically
be in the form of a cash advance. This can be a huge help for your business
because it frees up capital that would otherwise have to be used for paying
your suppliers.
With this new found cash, you can use it to grow your business in any number
of ways:
·
Invest in new equipment or hire employees. If
the demand for your product has slowed down due to competition or other
factors, an influx of cash could help you meet that demand by hiring more
people or buying more machines.
·
Take on new clients. If there is still plenty of
demand for your products but lack of funds is preventing you from filling
orders quickly enough, reverse factoring could finance those orders so that
they get filled faster than ever before!
Conclusion
We are so excited about the possibilities for reverse factoring. While there
may be some skeptics out there, we believe it can be a valuable tool for
businesses of all sizes. If you’re interested in learning more about how
reverse factoring might benefit your business, contact us today!
No comments:
Post a Comment