Payables Finance

Buyers encourage Sellers to sell individual or multiple outstanding invoices to a Funder at a discount, normally receiving extended payment terms as part of the program. This allows the Seller to receive cash payment for these invoices prior to their original maturity date at a lesser value.

Payables finance is commonly structured through a service agreement between Funder and Buyer and a Receivables Purchase Agreement (RPA) between Funder and Seller. Payables finance relies on the creditworthiness of the Buyer where the Buyer identifies invoice(s) for which it has given a commitment to pay and the Seller has the option to sell the invoices to a Funder at a discount. Payables finance is commonly granted without recourse and also often advanced at 100% of the invoice value.

Payables finance is initiated by the Buyer, acting as the ‘anchor party’, and the Buyer will normally negotiate for extended payment terms with their suppliers in return for access to the funding Program (or as part of the overall implementation scheme).

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