Reverse Factoring

Reverse Factoring (also known as Payable Finance) is usually a buyer-led product initiated by the buyer to support its suppliers by providing an early payment solution to them. The bank makes early payment to the supplier against approved invoices by the buyer, while the buyer settles its trade payable at the maturity date of the invoice.

Advantages for Buyers:

Non Funded Obligation on Buyer

The buyer makes a commitment to pay at the deferred maturity date. Therefore, SNB books these transactions under contingent liability (non-funded) on the buyer, while the customer, the buyer, continues to show its payables on its books.

Improving Working Capital Positioning

Buyers can benefit from extending payment terms (extending their days payable) while paying suppliers early, thus improving their cash conversion cycle (CCC).

Strengthening Relationships with Suppliers

Relationships with suppliers are strengthened by providing them with early payment and ease of execution through a user-friendly digital platform.

Quick and seamless execution.

Advantages for Suppliers:

Improving Working Capital Position

By obtaining early payment, suppliers can reduce their cash conversion cycle (CCC) and reduce days sales outstanding (DSO).

Obtaining Cost-Effective Finance

Suppliers, by using Reverse Factoring, can obtain early cash for their future due receivables at affordable rates that are better than their existing funding rates from their current banks.

Does not Require Suppliers’ Facilities

Suppliers get early payment on their receivable without utilizing their credit facilities from their banks.

Boosting Supplier’s Cash Forecasting

Suppliers can choose which and how many invoices to be paid early before the maturity date. This allows them to easily forecast their liquidity, i.e., future cash flows, and make advance plans.

Ease of SCF Operations

Suppliers can finance a single invoice or multiple invoices through the program as and when they require, through an easy process.

Product Inquiry: Email to: SupplyChainFinance@alahli.com

To apply for the product, you might kindly reach out directly to your Relationship manager or contact us on: SupplyChainFinance@alahli.com