How It Works

A Reverse Factoring transaction begins when a buyer uploads an invoice on the platform, on behalf of the seller and creates a Factoring Unit (FU). An FU contains necessary details of the invoice in digital format which is sent to financiers for bidding. The buyer then chooses the most suitable bid. The Seller receives funds from the financier within 24 hours. On the due date of payment, the buyer pays the outstanding amount to the Financier.

Factoring (or reverse factoring) is not a loan and differs from traditional bank credit. It is a true sale of an asset (invoice in this case) and does not create a liability on the balance sheet. Unlike a bank credit which involves two parties, factoring involves three parties – the seller, the buyer and the factor or the financier. The credit decision is based on the creditworthiness of the buyer, instead of the MSME seller.