At Viva, we like to be on the cutting edge and leverage our experience and diverse backgrounds in accounting and finance. That’s why we offer unique services to our clients that you aren’t likely to find elsewhere. One of those services is Reverse Factoring, also known as Quick Pay.
What is Reverse Factoring?
In traditional factoring, a supplier or service provider essentially sells invoices to the factor (Viva Capital), and the factor collects payment from your customer when the supplier’s or service provider’s invoice is paid. Reverse factoring is very similar, with one key difference: We initiate the process with the customer and offer the benefits to their suppliers/providers.
How this works is the customer chooses an invoice they have received and authorizes Viva Capital to advance the money, minus a mutually agreed percentage, to the supplier or service provider. The customer then pays Viva Capital the full amount of the original invoice within their normal cash cycle and receives a rebate based on the discount that was agreed to with the supplier or service provider.
On the surface, it seems like there is little difference, but the benefits are actually huge.
Of course, all of the benefits of traditional factoring apply. This is still a third-party quick pay system. The supplier or service provider receives expedited payment providing them access to cash quickly and providing them working capital to grow.
The added benefit really applies to the supplier/service provider. Since the supplier or service provider now has access to cash quickly and a reliable payment stream, the two parties have a stronger relationship leading to growth for both companies.
In addition, it can also make payments much less complicated for your company. You have the option to turn over invoices for multiple suppliers to Viva Capital, simplifying your accounts payable to one entity. The process is streamlined, and the accounts payable department is more efficient.
If you want to build stronger relations with your suppliers or service providers, resulting in stronger business relationships and increased profitability without disrupting your cash cycle or tying up your working capital, then reverse factoring is the perfect option.
Customize your payables program today.