Reverse factoring
Reverse Factoring
NKNI offers Reverse Factoring service. Reverse factoring is a financing method that improves the cash flows of both buyers and sellers in the international business. The buyer contracts with NKNI, that steps into the middle of certain buyer/seller transactions. NKNI pays the seller, giving the buyer additional time to pay for its purchase. That means the buyer gets to hold on to its cash longer, which improves its working capital. The seller receives payment directly from NKNI much sooner than its original invoice terms would otherwise allow,which improves the seller's cash flow.
Benefits for suppliers
Access lower cost funding. Funding is based on the buyer’s credit rating instead of the supplier’s, meaning that suppliers are typically charged a lower interest rate for
funding.
Improve working capital. By receiving early payment on their invoices, suppliers can accelerate their cash flow and improve their working capital position by reducing their days sales outstanding strains could be eased with an expedited payment turnaround.
Support innovation. Early payments can play an important role in enabling suppliers to invest in research and development (R&D) and expand their businesses.
Improve cash forecasting. Suppliers may benefit from having greater certainty overthe timing of future payments, making it easier for them to forecast their cash flows effectively and ensure that their business decisions are based on accurate information.
Reverse Facoring
Benefits for buyers
Improve working capital. Reverse factoring can also bring working capital benefits for buyers, which often set up reverse factoring programs when taking steps to increase their days payable outstanding.
Reduce the risk of supply chain disruption. Reverse factoring can reduce the risk of disruption to the supply chain, as suppliers are less likely to struggle to meet orders if they have access to early payments.
Strengthen supplier relationships. Buyers can strengthen their relationships with their suppliers by providing them with a user-friendly reverse factoring program.
Improve negotiating position. Buyers that offer reverse factoring to their suppliers
may also be in a better position to negotiate favourable commercial terms with
those suppliers.