Confirming or reverse factoring is presented as the opposite tool to factoring, since confirming manages the payment invoices instead of managing the collection invoices.
The confirming or reverse factoring, is the alternative that companies have to manage the payments due to their suppliers and that these have the option to make liquidity of the same before the due date.
Therefore, a confirming contract 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 the 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 dedicated to the management of payments to suppliers is saved.
-Our supplier can anticipate 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, since the supplier will know in advance that its invoice has been approved and the payment will be executed.
-Reduction of problems for the payment of invoices.
In companies with a high number of suppliers, administrative tasks cause concerns among the Finance Department, so outsourcing this service achieves an improvement in the efficiency of the company.
-Reduction of liabilities on the balance sheet
In recent years, the payment term in which companies make their invoices effective has continued to increase, so the main concern of any supplier is to ensure the collection of their sales in due time and form.
Confirming has proven to be a financial product that provides an answer to both debtors and suppliers, allowing them to anticipate and ensure the collection of their receivables, accounting for this entry as cash.
