Reverse factoring

: a step forward in the supply chain finance

Abstract

The present dissertation analyses macroeconomic circumstances associated with a greater use of reverse factoring in the Portuguese market. What is distinctive about reverse factoring is that it behaves not only as a payment service but also as a financing instrument. The former means that the financial institution takes care of the client's whole process of payment to suppliers. The later helps less creditworthy firms, which generally cannot access any other type of funding from the banking sector, to finance their production cycle. By conducting regression analysis, no relation was found between reverse factoring and economic growth. Behind this result may be the case that some firms use this instrument more when the economy is growing, whereas other firms may use it more when the economy is declining. Moreover, the liquidity side argument is supported by the fact that reverse factoring is greater when days payable outstanding of the State increase. Such finding reveals an inherent cultural dimension of this instrument, namely when referring to Southern European countries' payment practices.

Date of Award	2014
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Ricardo Reis (Supervisor)