The rise of Multi-Reverse Factoring
“Multi-Reverse Factoring” is an alternative to conventional financing as it balances both working capital and securing supplier payments in an environment where access to traditional bank financing is ever more complicated.
However, this “Multi-Reverse Factoring” offer is particularly dedicated to central purchasing agencies, franchise networks and more widely to any type of consortium and would not address to a unique purchaser but to a group of members.
This option fits perfectly with a consortium that aims to offer its members excellent service and conditions, enabling them to conduct their business under the best possible terms.
The advantages of Multi-Reverse Factoring
Indeed this type of structure has the advantage of offering a wide array of benefits to all parties.
Members not only benefit from automated and streamlined management via a designated supplier internet platform but also gives them the option to optimize cash flow by being able to settle suppliers’ invoices by cash on delivery or ask to delay payment.
Suppliers in turn can rapidly identify trade disputes, reduce their DSO and improve cash flow by receiving advance payments guaranteed by the financier without recourse and with off balance sheet treatment.
As for the consortium, it has the advantage of being able to acquire new members while fostering existing suppliers and member loyalty. It has the possibility of gaining a better view of business generated and potentially maximizing revenue without having to bear the risk that one of its members may default.
However, even if this type of program is very attractive in the current climate of economic growth and need for funds, it is worth keeping in mind that it takes a long time to implement and requires putting together a large team that includes the purchasing and accounting department, a financial officer and general management….
Ultimately, the increase in potential and thus the success of a project will largely depend on the ability of the consortium and the factor in convincing and rapidly enrolling stakeholders.