Reverse factoring or Approved Payables Finance is a buyer-led supply chain finance program offering all sellers in their supply chain access to early payment.
Financial Institutions provide credit without recourse to sellers in reverse factoring, basis credit-worthiness of the buyer. Sellers can choose to access low-cost working capital without additional obligations in their Balance Sheet through reverse factoring.
Process flow
- Buyer uploads approved invoices of sellers who have agreed to access such financing in Veefin SCF in case of a semi-automated system. If not, Veefin SCF accesses details of accepted invoices directly by integrating with the Buyer’s ERP systems
- Invoice details are sent to the financial institution with the final disbursement amount as per sanction terms auto-calculated
- Seller receives either the full invoice amount or the amount after deducting the interest upfront depending on sanctioned terms
- On the mutually agreed upon due date between the buyer and the financial Institution, the buyer makes good of the total amount due.
- In case of a delay beyond the due date, penal interest charges are levied as per financial Institution’s sanction terms to the seller
Distinctive Features
Auto-financing
Upon confirmation from sellers, approved invoices uploaded in ERP systems by buyers automatically trigger financing requests provided sanctioned limits are available.
Flexible Due Date
Incase the buyer wants to extend the line of credit beyond agreed credit period, they could avail reverse factoring for a longer tenure optimizing their working capital.
Customizable Interest Parameters
Interest Bearing entities, Interest Collection (Upfront/rear-ended), Interest Sharing (Between Buyer and Seller), Interest posting intervals customized to suit sanction terms.
Customized Reporting
Dashboards and reports can be custom-built with updated data on invoices due, overdue invoices, interest accrual, and limit utilizations.