Longer payment periods
Upon delivering the goods or performing a service, the supplier will inevitably issue an invoice. Its amount is just as important as the payment period. No matter how long it is – a few days of extension are always worth gaining. At the same time, the reputation of a reliable and timely payer enables the buyer to maintain good relationships with the supplier, continuity of supply and even to negotiate more favorable prices and discounts in return for the guarantee of the timely payment. These seemingly contradictory goals can be achieved by using the reverse factoring service, which is offered by an increasing number of banks and factoring institutions.
Contrary to the traditional factoring, the factor, at the request of the buyer and under a framework contract, finances the suppliers chosen by the buyer.
Broadly speaking, the process looks as follows: after the buyer has received the goods and accepted the invoice, the invoice is handed over to the bank or the factor that pays for it. Depending on the agreements with the buyer, the factor makes the payment immediately (if the aim is to provide the supplier with the working capital) or on the due date. Finally, the supplier makes the payment to the bank on the ...