Reverse Factoring & Supply Chain Finance Calculator
How much interest arbitrage and working capital liquidity can an anchor corporate buyer unlock across its MSME supplier network through Reverse Factoring?
Financial Inputs
Annual procurement volume eligible for the early supplier financing program.
Normal payment window allowed to the anchor buyer.
Day on which the bank/fintech pays the supplier on buyer invoice acceptance.
Cost of working capital / unsecured loans for small MSME suppliers.
Discount rate offered by banks based on anchor corporate credit rating.
TReDS / fintech platform transaction fee.
Annual Supply Chain Interest Savings (Arbitrage)
Against annual procurement of ₹5000 Lakh on 60-day credit terms:
Permanent Working Capital Injected to Suppliers
7,53,42,466
Total Program Financing Charges
76,54,110
Supplier Baseline Standalone Cost
1,01,71,233
Key Financial Takeaways
- Against annual procurement of ₹5000 Lakh on 60-day credit terms:
- Paying suppliers early on Day 5 under an Anchor-led Reverse Factoring program injects ₹753.42 Lakh in continuous working capital liquidity across your vendor base.
- By replacing supplier standalone financing (13.5% p.a.) with the anchor corporate credit rate (8.5% p.a.), the supply chain saves ₹25.17 Lakh annually in net interest arbitrage.
Frequently Asked Questions
What is Reverse Factoring and how does it differ from standard factoring?
In standard factoring, the seller initiates financing on their receivables. In Reverse Factoring (or Approved Payables Financing), the anchor corporate buyer initiates the program with a bank. Once the buyer digitally accepts the invoice, the bank pays the supplier on Day 3–5 at the buyer’s lower interest rate, and the buyer repays the bank on Day 60–90.
Does Reverse Factoring count as bank debt on the buyer’s balance sheet?
Under Indian AS and IFRS guidelines, as long as payment terms are consistent with customary commercial practices and invoice payment extensions are reasonable, reverse factoring payables are classified as trade payables rather than financial debt.
Calculators on this platform provide indicative mathematical estimations based on industry-standard financial appraisal models (including Tandon Committee Method II, Nayak Turnover Method, and standard compound amortisation).
They do not constitute a formal facility sanction, credit commitment, or legal advisory from SME PAISA or any partner banking/NBFC institution. Final terms, interest margins, security stipulations, and credit sanctions remain strictly subject to formal credit appraisal, audited balance sheet verification, CMA Data assessment, and risk committee approval by institutional lenders.
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