FCI, the umbrella organisation for independent factoring companies around the world, with more than 400 members in 90 countries -  members accounting for close to 60% of the world domestic volume, 84% of international and 64% of the total - have announced they are moving into reverse factoring.

New service based on Demica platform

FCI have announced that its new supply chain initiative FCIreverse will be based on the Demica platform. FCIreverse will enable FCI’s network of 400 banks and independent factoring firms to easily partner and fund their clients’ suppliers anywhere in the world. Demica, a rapidly growing London based fintech and specialist provider of working capital solutions to major corporates and banks, will open its multi-funder platform to FCI members on a pay-as-you go basis to remove any barriers to adoption of FCIreverse. Demica already enables the funding of over $60bn of trade receivables a year for over 3,000 large corporates and SMEs in Europe, North America and Asia.

Reverse factoring

With over $100bn of funds in use and growing at a rate of over 20%, reverse factoring, also referred to as confirming or approved payables finance is one the fastest growing segments of trade finance. Used extensively in retail, manufacturing and service sectors, the product allows buyers to enable their suppliers to access low cost working capital and mitigate the trend in longer payment terms.

Global delivery to SME’s

Supply chains increasingly operate on a global basis with suppliers in many countries, but domestic banking regulations, local currency payments and the need to onboard suppliers in many languages makes it challenging for any financial institution other than the largest banks to provide a global service to their clients. 

FCIreverse will enable member banks and factoring companies to seamlessly finance their clients’ suppliers anywhere in the world by partnering in the background with other FCI members that have the necessary licences & operational capabilities to onboard suppliers in countries where they themselves are unable to operate. This will help to open up the reverse factoring market beyond the large corporates with revenue greater than $1bn that are to date the primary market using this product. 

FCI believe their ‘pay-as-you go model’ with Demica will allow smaller FCI members that focus on companies with less than $1bn in revenue to be able to economically offer reverse factoring in this underserved market, substantially increasing the amount of working capital available to the world’s SMEs.

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CTMfile take: Offering reverse factoring supply chain finance to SMEs is vital for the global economy.