Reverse factoring
involves the use of invoices qualified by the buyer to enable early
payment. While traditional factoring uses invoices to raise cash by
selling these to a factor at a discount, reverse factoring
uses the credit worthiness of a known buyer to raise finance early and
so pay off the money early.
becasue of this,
reverse factoring can provide up to 100% of the value of the invoice,
less the fee and any allowable interest. It could be of use also in
situations where enforcement of a debt proves difficult or where fraud
is a comon part of business life in a given geographical area.