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Supply Chain Finance

Supply Chain Finance

Strengthen your supply chain
and your working capital

Supply chain finance – also known as reverse factoring – allows you to secure longer payment terms while providing your suppliers with liquidity at an early stage. This gives you and your supplier financial leeway – and strengthens the existing business relationship in the long term.

With Traxpay you can take advantage of the benefits of supply chain finance efficiently and quickly. Talk to us about how you too can benefit from reverse factoring.

Any questions?

Portrait Sven Weissmann | Traxpay
  • Dr Sven Weissmann (CSO)
  • +49 69 597 72 15 33
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What is reverse factoring?

On average, suppliers in Germany have to wait 73 days for their money (source: Coface Credit Insurance). A long time – too long for some suppliers – between paying for materials and components and receipt of payment from the buyer. Bridging this period with their own liquidity can overburden suppliers, especially when they are growing rapidly and dealing with numerous orders. At the same time, however, many customers cannot pay earlier – also for reasons of liquidity.

Supplier financing, or reverse factoring, solves this problem for both sides. It enables you to pay your suppliers quickly, while you, as the buyer, pay the invoice later.

In contrast to classic factoring, the initiative for reverse factoring does not come from the supplier, but from you as the customer. In doing so, you take advantage of your own good creditworthiness as a buyer to extend your own payment terms for your supplier invoices.

Reverse factoring is implemented with the help of a third party, the financing partner: if your supplier wants to be paid earlier for liquidity reasons, you can make this happen. For this purpose, your supplier assigns their receivables to a financing partner or sells them to them (depending on regulatory requirements). In return, your supplier immediately receives its money from the financing partner, and with that the risk of default (i.e. the risk that you do not pay) is transferred from the supplier to the financing partner. Your supplier thus saves the costs of credit default insurance while at the same time receiving liquidity. The supplier grants the financing partner a discount based on their buyer’s creditworthiness, which is generally more favourable than interim financing through banks or factoring companies.

As a buyer, this in turn enables you to extend payment terms with your suppliers and thus meet your own working capital targets. In other words, you secure your own liquidity and pay the financing partner only on the agreed payment date.
Your suppliers’ performance and liquidity, and your own, remain stable thanks to supplier financing.

Reverse factoring therefore represents a WIN-WIN situation for buyers and suppliers, and supports you to grow together and in partnership – by maintaining a strong supply chain.

Reverse factoring made easy
with Traxpay

Here’s how our financing platform can help you with supplier financing:

  • Fully automated and easy to integrate
  • Highly flexible
  • Improves supplier relationships
  • One platform for managing different sources of funding
  • Access to competitive and bank-independent financing sources for your suppliers

Advantages of reverse factoring for customers

1

Longer payment terms for the purchase of goods and services without straining the supplier relationship

2

Liquidity provision by house banks or new alternative financing partners

3

The potential to reduce the balance sheet and thus improve key financial figures/rating

Advantages of reverse factoring for suppliers

1

Claims settled in full and in the shortest possible time

2

Risk of payment default is borne by the financing partner

3

Liabilities to upstream suppliers can usually be paid out of own liquidity

Advantages of reverse factoring for customers

1

Longer payment terms for the purchase of goods and services without straining the supplier relationship

2

Liquidity provision by house banks or new alternative financing partners

3

The potential to reduce the balance sheet and thus improve key financial figures/rating

Advantages of reverse factoring for suppliers

1

Claims settled in full and in the shortest possible time

2

Risk of payment default is borne by the financing partner

3

Liabilities to upstream suppliers can usually be paid out of own liquidity

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