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Recourse and reverse factoring are two financial tools commonly used by businesses to improve their cash flow. Even though they share the same goal of providing immediate access to funds, they still have various distinctions. However, it is important to know more about these two. Here we will discuss the key differences between recourse and reverse factoring. Recourse Factoring In recourse factoring , the seller remains liable for the debt if the retailer’s customers fail to pay. The factoring business may make efforts to collect the amount on behalf of the seller; however, this is not guaranteed. If the factoring company fails to collect the amount, the seller may be required to repurchase the invoice and collect the debt directly. Therefore, while recourse factoring provides immediate cash, the seller deals with the ultimate risk of non-payment. Reverse Factoring Reverse factoring is a financing technique that involves a third-party financial institution (e.g., bank, fact

When our payments are stalled or delayed, it displeases us all. Now imagine what businesses would do if they were in a situation where their payment is stalled or delayed. One of the ways that is used by many businesses to deal with such problems is bill discounting . In this blog post, you will know what bill discounting is and other information related to it. After developing a general understanding, you will get clarity on how to effectively use it to improve your cash flow. What is bill discounting? Through the use of a financial mechanism called bill discounting, companies can turn their outstanding invoices into quick cash. In essence, a firm sells its bills to a factoring provider at a discount in exchange for an upfront lump sum payment. Types of bill discounting ●     Disclosed Bill Discounting: A traditional form where all parties are aware of the factoring company's involvement. The factoring company can collect the outstanding balance directly from the buyer. ●

TReDS is known as Trade Receivables Exchange Discounting System. It is an electronic platform that is designed to facilitate the financing and discounting of trade receivables for micro, small, and medium enterprises (MSMEs) and other enterprises in India. This blog post will guide you on how to choose the right TReDS platform for your needs. Understanding TReDS Before searching for a TReDS platform , it's essential to understand how it works and the benefits it offers. How does TReDS work? ➢    Invoice Uploading: Sellers (usually small or medium enterprises, SMEs) upload their invoices to the TReDS platform. ➢      Invoice Verification: The platform verifies the authenticity and eligibility of the invoices. ➢   Invoice Discounting: A financier purchases the invoice from these sellers at a discount, providing the sellers with immediate cash. ➢    Payment Collection: The financier collects the payment from the buyers when the invoice becomes due. What are the benefits of