Reverse Factoring: A Strategic Financial Lever for Your Business
Pay your suppliers as soon as the invoice is approved—without using your own cash. That’s the power of reverse factoring: strengthening business relationships while keeping your working capital under control.
Between cash flow pressures, extending payment terms and supply chains under strain, finance directors and procurement teams are searching for solutions.
What if payment became one of them?
With reverse factoring, you offer your suppliers immediate settlement whilst preserving your treasury. The result? Strengthened commercial relationships and controlled Working Capital Requirements.
At Aria, we integrate this functionality directly into your existing tools. Reverse factoring becomes a strategic lever to better manage your treasury and strengthen supplier relationships.
Reverse Factoring: Definition
Traditional Factoring
What is factoring? It’s when a supplier transfers their customer debts to a financial organisation (called a factor) who advances the money without waiting for the due date. In exchange, the factor takes a small commission and manages the debt collection.
A solution for suppliers wanting to improve their cash flow without depending on sometimes lengthy customer payment terms.
But there’s a catch: often complex to implement, traditional factoring is based on supplier risk. This model suits large enterprises but leaves behind the long tail – those SMEs and mid-sized companies that constitute an essential part of the supplier base. Where traditional factoring excludes these players, reverse factoring is based on the debtor’s risk (the buyer), thus opening broader access to financing.
Reverse Factoring
Unlike traditional factoring, here it’s the buyer who initiates the process. Once the invoice is validated, the factor immediately pays the supplier. The buyer reimburses at maturity, according to agreed terms (30, 60, or 90 days).
Everyone wins:
- The supplier is paid without delay
- The buyer preserves their treasury
- The commercial relationship is strengthened
Long reserved for large corporations, this invoice financing solution is now opening up to all businesses. Aria integrates this mechanism directly into your tools: ERP or TMS. Reverse factoring becomes a click-away functionality.
And thanks to the dynamic discounting offered by Aria, you pay your suppliers earlier in exchange for a small discount on the invoice.
Why Adopt Reverse Factoring?
Better Supplier Relationships
With reverse factoring, your suppliers receive payment upon invoice validation – without having to wait 30, 60, or 90 days.
They secure their cash flow, you strengthen the commercial relationship.
And as a bonus? A supply chain that holds steady thanks to secure cash payments.
Treasury Optimisation
With Aria, you offer immediate settlement whilst maintaining your usual payment terms. Your funds remain available for better management of your Working Capital Requirements.
Two options according to your situation:
Treasury in surplus? You can use your treasury to finance the payment advance. Aria orchestrates everything and you get better value from your cash than placing it in a term account.
Tight treasury? Aria finances the payment advance for you. You extend your settlement terms without impacting your suppliers’ health or degrading your WCR.
A Solution to Payment Delays
Payment delays remain one of the pain points in commercial relationships. For small businesses, each day of delay weakens cash flow. These tensions can damage supplier relationships, even threaten operational continuity.
Reverse factoring reduces these risks. The supplier is paid upon invoice validation. On your side, you remain compliant with regulations and avoid penalties under the Late Payment of Commercial Debts (Interest) Act 1998.
It’s also a concrete way to support more ethical procurement policy, recognised by frameworks like responsible procurement charters and the Small Business Commissioner’s Fair Payment Code.
Early Payment Discounts
With Aria, early payment becomes an immediate economy lever. Through dynamic discounting, you access discounts calculated based on the payment date chosen by the supplier.
Practically, the earlier the invoice is settled, the greater the discount. If the supplier requests payment upon issuance, a reduction automatically applies. The closer the date approaches the initial due date, the more this rate decreases.
A win-win solution: you optimise your purchases and the supplier secures their cash flow.
How to Deploy Reverse Factoring with Aria?
Simple Deployment
No need to overhaul your tools: Aria integrates natively with your current environment. More than a supplier factoring tool, it’s integrated financing in your existing information system. Whether you use an ERP like NetSuite, SAP or Oracle, or a TMS like other systems, our API easily connects to your platforms.
Deployment is rapid, friction-free, and your teams maintain control. Aria works behind the scenes to automate payments, secure your supplier relationships and simplify treasury management.
Payment Solutions Adapted to All Treasury Needs
Next-generation reverse factoring (Pay Early)
With Aria, reverse factoring becomes accessible to all your suppliers, including those in the long tail. These smaller suppliers, often excluded from traditional arrangements, can now benefit from early payment.
Everything is orchestrated via a fluid digital interface, without operational overhead for your teams.
What do you gain? Loyal suppliers, a more solid supply chain and a more responsible procurement policy.
Payment term extension (Pay Later)
With payment term extension, you maintain control over your cash outflows without weakening your suppliers. Aria advances invoice amounts upon issuance – you then reimburse at 30, 60, or 90 days.
This solution allows you to optimise your treasury outflows, absorb activity peaks or economic uncertainties, whilst ensuring timely payments to suppliers.
Aria Transforms Reverse Factoring into an Integrated Solution in Your Financial Stack
With Aria, reverse factoring becomes a native component of your financial environment, activatable directly from your tools.
In a few clicks, you improve your treasury, enhance your procurement policy and strengthen your entire supply chain. An integrated B2B payment solution that transforms payment into a strategic advantage.
FAQ – Reverse Factoring with Aria
Is Aria compatible with my ERP or TMS?
Yes, Aria integrates natively with the main tools used by finance and procurement teams: ERP (NetSuite, SAP, Oracle), TMS and other systems. Integration happens without disrupting your existing user journeys, thanks to our API-first solution.
Is Aria suitable for small suppliers?
Yes, one of Aria’s strengths is including the long tail of your suppliers, often forgotten by traditional financing tools.
Can I combine Pay Early and Pay Later in the same strategy?
Absolutely! Aria allows you to activate reverse factoring (Pay Early) and deferred payment (Pay Later) on the same interface, depending on your treasury situation.
