An Introduction to Reverse Factoring

‍Introduction

Reverse factoring has established itself among the numerous strategic financing options as a significant solution to create a liquidity base and to strengthen the resilience of small and medium-sized enterprises (SMEs) in particular. This approach enables fast payments to suppliers and extended payment terms for invoice sellers, which ultimately benefits the entire supply chain.

At Aequitex, we set ourselves the goal of redefining the dynamics of supply chain financing and technology by now also offering reverse factoring services via our digital factoring marketplace. We want to enable SMEs to optimize their working capital while strengthening relations with their suppliers. In this blog post, we shed light on reverse factoring and its transformative potential for corporate financing.

What is Reverse Factoring?

In contrast to the traditional sale of receivables, in which the supplier sells his invoices to a third party with a discount and thereby pre-finances them, the buyer initiates the process in reverse factoring. Reverse factoring is often used by companies when they offer their suppliers an early payment, but at the same time want to maintain an increased degree of liquidity. In this case, the ordering company can send the invoice of its supplier to a factoring provider (e.g. Aequitex), which arranges a prompt payment to the supplier and is then paid at a later date by the ordering company. This allows the company to keep its liquidity level at a higher level for much longer, while the supplier receives accelerated payments. In this way, reverse factoring can bridge the financial gaps of both parties and at the same time build a mutually advantageous buyer/supplier relationship.

Reverse Factoring with Aequitex

At Aequitex, we offer an innovative reverse factoring solution for SMEs and suppliers in Switzerland via our online marketplace. As soon as a company orders goods and receives an invoice from the supplier, the invoice can be uploaded directly to the Aequitex marketplace, where our investor community can buy it and thus pay the supplier and pay the debt quickly. The "ordering/buying" company will later pay the invoice to Aequitex on the original due date. This mutually advantageous agreement not only guarantees early payments for suppliers, but also enables the ordering company to make important investments immediately without lowering its degree of liquidity, which also has an effect on working capital.
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Benefits of Reverse Factoring with Aequitex

Reverse factoring with Aequitex offers a variety of advantages for invoice sellers and suppliers:
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For the ordering company (invoice sellers):
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... the process is carried out completely and quickly online via our digital marketplace.

... expands its image as a reliable customer.

... the relationship with its suppliers is strengthened by smooth and fast payments.

... the method offers greater financial flexibility through more liquid funds for other initiatives.

... a competitive advantage over the competition, as necessary investments can be made immediately without having to immediately touch the working capital.

... Flexibility and convenience: With our innovative technology, Aequitex offers a seamless experience. After registration, you can access our marketplace at any time.
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For suppliers:
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... receive their payments earlier to ensure liquidity for ongoing operations.

... the accuracy of the cash flow forecasts is improved by payment predictability.

... it offers the certainty of a prompt payment, which contributes to the general trust in the customer relationship.

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‍Conclusion

In summary, reverse factoring via Aequitex offers a strategic financial solution for buyers and suppliers alike, promotes stronger relationships and improves liquidity management within the supply chain. By using our digital marketplace and our innovative technology, companies can optimize their working capital and make necessary investments with confidence and thus gain a competitive advantage. Also join the Aequitex community to use the full potential of (reverse) factoring and advance your company in today's dynamic market situation.

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