Reverse factoring is a traditional approach of factoring in modern-day supply chain finance. It is a buyer-led financing option wherein both the suppliers & the buyers receive a short-term credit against the invoice.
How it works?
The cash flow cycle for the average importer in South Africa is marked by extended lead times for goods distribution, followed by a similarly protracted period to receive customer payments. This extended timeline places significant pressure on the business's cash flow.
Typical Standard Cash Flow
Average DPO = 5
Typical Cash Flow with Reverse Financing
Average DPO= 25
Over time, you can anticipate a reduction of approximately 20 days in your Cash Conversion Cycle(CCC)
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