Reverse factoring is a type of supplier finance solution that companies/buyers can use to offer early payments to their suppliers based on approved invoices. Suppliers participating in a reverse factoring program can request early payment on invoices from the buyer or other financial institution, with interest or discount and with the buyer or supplier sending payment to the financial institution on the invoice maturity date if it is the latter.
Many RMs use it interchangeably with PO financing. We recommend when applying with any lenders, to check their glossary if any, to make sure you are not applying for the wrong loan type delaying your process. Or sending our article over to clarify if they meant the same thing.
Check out our blog for more on reverse factoring.