Reverse factoring: how to perform together with the whole supply chain

There can be no successful business without an established network, optimised flows and profitable partnerships with its suppliers. This is well known by companies whose business depends on a close-knit network of relationships built and strengthened over time. In this, reverse factoring can be a valuable ally, thanks to the win-win dynamic that benefits both suppliers and client companies. We delve into this financial instrument with Giorgio Destri, Sales Manager of the Turin Branch.

How could reverse factoring help my company?

Reverse factoring is a financial solution for SMEs and a valuable ally for large companies too, to foster growth and support their working capital.

This solution, in fact, allows suppliers to receive payments in advance from the financial institution for the receivables they owe the company, obtaining liquidity quickly, while the contracting company that makes use of it, by assigning its trade debts to the bank, has the possibility of extending payment.

In an economic landscape where it is essential to have solid liquidity and to maintain stable business relations, reverse factoring is a crucial pillar for the financial stability of companies. By fostering a stable cash flow with rapidly available liquidity, the instrument helps small and medium-sized companies in particular and eases the administrative burden of large companies.

Furthermore, through the myIfis portal, Banca Ifis has made this tool completely digital, simplifying the management of document flows in line with ESG principles and an increasingly paperless policy.

How would my company and my supply chain benefit?

Suppliers benefit enormously from reverse factoring, mainly in terms of immediate access to liquidity. Instead of waiting for the end of conventional payment periods, they can receive payment of invoices in a short period of time, once they have been approved by the purchasing company. This solution not only improves cash flow, but also supports growth in orders with your customer, creating an environment of trust and collaboration between the players involved.

Thanks to this tool, a company can better monitor the supplier chain and support them, improving financial and cash flow management, as well as supporting job growth for the suppliers themselves, regardless of their size: from micro enterprises to small and medium-sized enterprises.

In terms of digitisation, reverse factoring not only contributes, as can be easily imagined and as partially already mentioned, to the dematerialisation of processes related to invoice management (which can also be fully handed over to the factor), but also becomes an important foothold for enhancing corporate data governance, with particular reference to cash flows.

Do you want to optimise flows along your supply chain?

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Are there alternative solutions based on the characteristics of my company?

An alternative to reverse factoring is “confirming”, which provides for centralised management by the assigned debtor of payment orders from suppliers, with the possibility of examining on a case-by-case basis the possible request for mobilisation of receivables for some of them.

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29 July 2024