Supply Chain Financing (Reverse Factoring):

In a typical factoring transaction, smaller clients which have large end debtors (i.e. Walgreens, Costco) will want to factor accounts receivable so they do not have to wait the 30+ day terms for payment. With reverse factoring, a factoring company approaches the large end debtor and establishes a relationship to access their supplier base. This can be achieved in 2 ways: pay the suppliers to take advantage of early payment discounts or the large debtor offering its suppliers the option of financing with PWW.

If the large debtor has early payment discount terms with their suppliers, instead of paying supplier directly and having cash leave the company, the large debtor can have PWW issue payment and charge a lesser fee than the discount. For example, Walgreens may have an agreement with its suppliers of 2%/10 net 30. They can tell PWW to pay supplier to take advantage of the 2% and PWW can charge Walgreens 1.5% payable in 30 days.

The other option to utilize large debtors is to have them refer their suppliers to PWW to factor or receive PO financing. In this situation, PWW relies on the creditworthiness of the large end debtor and uses its current large network of suppliers as a source of clients.

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