Reverse factoring:
pay your suppliers early
and protect your cash flow

Supplier payment terms are a cash-flow lever — but one that wears thin. Stretching them weakens your strategic suppliers, deprives you of early-payment discounts, and eventually costs you in price, delivery priority or the quality of the relationship. Conversely, paying early to secure better terms drains your working capital. This tension becomes critical when your key suppliers are smaller than you — their financial health determines your deliveries — or when the law caps your payment terms in any case, as the French LME (Loi de modernisation de l'économie) does. Many buyers treat this dilemma as unavoidable. Yet there is an instrument designed precisely to resolve it.

Reverse factoring turns traditional factoring on its head: it is you, the buyer, who sets up the programme. In practice, you approve your suppliers' invoices; a funder pays them straight away (in return for a modest discount based on your credit quality, and therefore at a rate your suppliers could never obtain on their own); and you repay the funder on the normal due date, or even later. Everyone benefits: the supplier is paid within days, secures its cash flow and can offer you better terms; you keep — or extend — your payment terms without damaging the relationship; and your supply chain becomes more resilient, which in the current climate is an insurance policy beyond price.

A successful reverse factoring programme depends on three things. First, calibration: the supplier scope (usually starting with strategic suppliers), volumes, limits and how the programme fits with your existing credit facilities — it should complement your financing, not cannibalise it. Second, negotiation: terms vary significantly from one funder to another (banks, factors, specialist platforms), and our competitive tender covers the discount rate, platform fees and the flexibility of the arrangement. Third, adoption — the success factor that is too often overlooked: a programme your suppliers do not understand is a dead programme. We prepare the supplier pitch with you, join presentations where needed and track the take-up rate over the first few months. Our experience on both sides of the relationship — we also advise suppliers on traditional factoring (invoice finance) — gives us credibility with yours.