Finance payments or collect on invoices early.
The 2 sides of reverse factoring
Advantages for customers that use reverse factoringThrough reverse factoring, BBVA can pay your supplier on the agreed date, or offer to pay it in advance. Plus, if you need it, when that date arrives, you can defer the payment (BBVA will pay the bill and defer your payment).
Advantages for suppliersIf you are a supplier and you want to get paid without having to wait 60 or 90 days, you can do this through your client's reverse factoring. How is it done? BBVA will pay it in advance, minus an amount for fees and interest
This example will make it clear
An electric car company opens a reverse factoring facility. In February, it buys parts from 2 different suppliers and agrees to pay both invoices within 90 days.
One of the parts manufacturers prefers not to wait, so through the reverse factoring of the electric car company, it gets paid early in exchange for an amount that includes fees and interest.
The other manufacturer decides to wait 90 days. The payment comes due and the electric car company decides to defer the payment, meaning BBVA pays the manufacturer and defers that payment for the electric car company.
Online banking speeds up the work of both parties involved: help managing payments and advances.
How it works
Reverse factoring offers possibilities for the customer who contracts the service and its suppliers; it has 2 sides, so to speak. This is a summary of how it works:
- A company opens a reverse factoring facility for a given amount.
- This company uses it to manage payments and to defer them if needed.
- This company's suppliers can get their invoices paid early through this reverse factoring facility (after accepting the terms and conditions of a contract).
The different uses of reverse factoring provide liquidity at key times.