Reverse Factoring

Reverse factoring — also known as supply chain finance (SCF) or approved payables financing — is a buyer-initiated programme where suppliers can receive early payment on approved invoices at a financing rate based on the buyer's credit rating, not their own. The buyer pays the funder at the original invoice due date.

Traditional factoring is initiated by the supplier — you sell your invoices to a factor at your own credit cost (often 15–30% annualised). Reverse factoring is initiated by the buyer — suppliers access financing at the buyer's lower credit cost (typically 0.5–2% per annum). SCF is significantly cheaper for suppliers of large, creditworthy buyers.

Both parties benefit. Suppliers receive early payment at low cost without using their own credit lines. Buyers can extend payment terms (increasing DPO) without harming supplier relationships. It's most valuable when there is a significant credit quality gap between buyer and supplier.

DPO (days payable outstanding) is the average number of days a buyer takes to pay suppliers. Reverse factoring allows buyers to extend DPO — paying the financier later — while suppliers receive payment quickly from the funder. Extended DPO improves the buyer's working capital position.

Most bank-based SCF programmes require buyers with $50M+ in annual payables to be economically viable. Fintech platforms can work with smaller buyers. OAKRG assesses whether a buyer's payables volume justifies the programme setup cost and identifies the right platform.

A full reverse factoring programme — including funder selection, platform setup, legal documentation, and supplier onboarding — typically takes 3–6 months. Simpler fintech-based programmes can be implemented faster.

Yes. OAKRG designs reverse factoring programmes, introduces buyers to SCF funders and platforms, and manages the supplier onboarding process for manufacturers, retailers, and large buyers globally.