Reverse Factoring

Extend payment terms for your suppliers

With Reverse Factoring, you can help suppliers obtain financing at attractive conditions from PostFinance based on your own good credit standing. Your company confirms the accuracy of the invoices, and PostFinance pays your suppliers right away. This enables you to extend the payment terms for your suppliers, and they are paid as quickly or even more quickly by PostFinance.

Reverse Factoring: a win-win scenario for your suppliers and your company

  • Generate additional liquidity
  • Improved balance sheet figures

  • A boost to the supply chain thanks to inter-company cooperation

    • Your company uploads the approved supplier invoice data to PostFinance
    • PostFinance pays the supplier invoices for the amount you have specified (minus interest) either right away or on the due date
    • PostFinance sends you a repayment invoice electronically for each repayment date (5 to 360 days after the due date)
    • Your company pays the invoice amount back to PostFinance on the repayment date
    This illustration shows how reverse factoring works. 1. The creditors deliver the goods/service plus invoice to your company (with a 90-day term of payment, for instance). 2. Your company sends the invoice information to PostFinance. 3. PostFinance pays the invoice to the creditor ahead of schedule (e.g. after 30 days). 4. Your company pays the invoice amount to PostFinance as per agreement (e.g. after 90 days).
  • Your company benefits

    • You can extend payment terms for your suppliers
    • Generate additional liquidity from your supplier liabilities
    • Improve balance sheet figures by increasing your supplier liabilities (e.g. reduce the cash-to-cash cycle, increase cash ratio, reduce gearing)
    • Satisfied suppliers and improved supplier loyalty
    • Simple processing with an automated payment solution

    Your suppliers benefit

    • Generate additional liquidity from receivables for your company
    • Improve balance sheet figures by reducing accounts receivable (e.g. reduce the cash-to-cash cycle, decrease the debt-equity ratio, increase the cash ratio, reduce gearing)
    • PostFinance assumes the risk of default on your company’s accounts receivable
    • Attractive financing conditions (using the good credit standing of your company and of PostFinance)
    • Better financial planning
    • Your company will not incur any costs from PostFinance for processing the programme. Depending on your company’s rating and the structure of the programme, you may incur hedging costs (e.g. guarantee, joint guarantee, credit insurance) through a third party. You can, on request, pass on any hedging costs to the suppliers.
    • Your suppliers will receive attractive interest rates from 0.5% a year including hedging costs (depending on the credit standing of the suppliers and your company as well as other factors). The interest rates can be defined for each supplier on a case-by-case basis, and are set in consultation with your company.

    Key requirement for Reverse Factoring

    • Your company has a satisfactory credit rating
    • Supplier invoices are due on a regular basis
    • Supplier liabilities amount to a financing volume of at least CHF 5 million (e.g. liabilities amongst participating suppliers of at least CHF 3 million and a 60 -day extension of payment term)
  • Your company

    Assumptions

    • Purchasing volume of CHF 48 million a year, turnover of CHF 100 million a year.
    • Extension of payment terms for suppliers from 30 days to 90 days

    Results

    • CHF 8 million of additional liquidity
    • 29-day reduction in the cash-to-cash cycle
    • Overall costs of CHF 0 (hedging costs passed on to suppliers)

    Your supplier

    Assumptions

      • Accounts receivable of CHF 12 million a year to your company
      • Payment after 30 days instead of 90 days

    Results

    • Cash-to-cash cycle and liquidity unchanged compared to the original situation before payment terms were extended
    • Costs of CHF 40,000 for CHF 2 million of liquidity with 2.0% interest (equates to a 0.33% deduction from the value of the invoice)