Factoring vs Reverse Factoring: Cost-Benefit Analysis

⚙️ Parameters

Monthly Receivables ($M) 2 Payment Terms (days) 60 Supplier Credit Rating BB Buyer Credit Rating A Factoring Fee (% of invoice) 3% Advance Rate (%) 85%

Traditional Factoring Flow

🏭Supplier sells receivable to factor at a discount

🏦Factor advances 80-90% immediately

🏢Buyer pays factor on due date

💵Factor releases reserve minus fees

Reverse Factoring Flow

🏢Buyer approves invoice on platform

🏦Bank offers early payment at buyer's rate

🏭Supplier chooses to accept early payment

💵Buyer pays bank on original due date

🔀 Factoring vs Reverse Factoring

⚙️ Parameters

Traditional Factoring Flow

Reverse Factoring Flow

💰 Cost Comparison

Traditional Factoring

Reverse Factoring

📊 Annual Cost by Invoice Volume

📈 Cost Sensitivity to Credit Rating Gap