Financial Glossary: What is confirming?

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Confirming or reverse factoring is presented as the opposite tool to factoring, as confirming manages the invoices for payment instead of managing the invoices for collection.

Confirming or reverse factoring is the alternative that companies have to manage payments owed to their suppliers so that they have the option of liquidating them before the due date.

A confirming contract therefore involves the debtor company, the supplier and the confirming entity.

The debtor companies inform the confirming entities of their payment invoices so that they are the ones who inform them and manage the payment with your suppliers. 

The supplier requests, if it is in his interest, that payment be made in advance. In exchange for an advance payment fee and interest rate.

Why choose confirming as a service for your company?

Advantages of confirming:

-Cost reduction

This is the main benefit, as with factoring services, when contracting this service with the confirming company. The personnel resources involved are reduced and therefore the time spent on managing payments to suppliers is saved.

-Our supplier can advance the invoice at any time.

 The financial entity that manages the Confirming offers the advance payment of the invoice amount to the supplier, before its due date, thus providing liquidity. This strengthens the relationship between the company and its suppliers.  

-The company will always maintain the initiative to pay.

When a debtor company uses this confirming entity, it maintains a payment initiative, which reduces uncertainty and facilitates commercial risk management, as the supplier will know in advance that its invoice has been approved and payment will be executed.

-Reduced problems in the payment of invoices.

In companies with a high number of suppliers, administrative tasks cause concerns among the Finance Department, so outsourcing this service improves the efficiency of the company.

Reduction of on-balance sheet liabilities

In recent years, the time taken by companies to pay their invoices has continued to increase, so the main concern of any supplier is to ensure that they are paid in a timely manner.

Confirming has proven to be a financial product that provides a response to both debtors and suppliers, allowing them to anticipate and ensure the collection of their receivables, accounting for this entry as cash.