Supply Chain Finance & Corporate Treasury
Reverse Factoring (SCF) Arbitrage & Savings Formula
Calculate Supply Chain Finance (Reverse Factoring) ACT/360 Early-Payment Discount Fee, Supplier Day-10 Net Cash Proceeds, Supplier Interest Savings vs Standalone Borrowing, and Participation Viability.
Unlock working-capital DPO extensions by pricing SCF off the buyer’s credit rating!
In traditional receivable factoring, the factor underwrites a small supplier’s messy customer portfolio and charges SME risk spreads (12%–18%). In Reverse Factoring (Supply Chain Finance / Payable Finance), an investment-grade enterprise buyer irrevocably approves the supplier’s invoice for maturity on Extended_DPO_Day (e.g., Day 100), allowing the program bank to advance 100% of invoice value (less a low buyer-risk discount) on Early_Cash_Day (e.g., Day 10)! Using standard commercial ACT/360 money-market day count over Accelerated_Days = Extended_DPO - Early_Cash_Day, SCF_Discount_Fee = Invoice * r_SCF * (Accelerated_Days / 360), while Supplier_Interest_Saved = Invoice * (r_Supplier - r_SCF) * (Accelerated_Days / 360)!
Verify on Approved_Invoice = $1,000,000 (B2), Buyer_Extended_DPO = 100 days (B3), Supplier_Early_Cash_Day = 10 days (90 accelerated days = 0.25 ACT/360 year, B4), Buyer_Backed_SCF_Rate = 0.06 (6.0% p.a., B5), and Supplier_Standalone_Rate = 0.14 (14.0% p.a. SME revolver, B6): SCF Bank Discount Fee is $1,000,000 * 0.06 * (90 / 360) = $15,000.00 (E2); Supplier Day-10 Net Cash is $985,000.00 (100% advance with zero reserve holdback!, E3); and Supplier Net Financing Savings vs drawing its own 14% credit line ($35,000) is +$20,000.00 (E4), confirming "Accretive SCF Arbitrage (Supplier Saves)" (E5)!
| Reverse Factoring SCF Metric ($1M Invoice, Net 100 -> Day 10, 6% SCF vs 14% SME) | Formula | Verified Output |
|---|---|---|
| SCF Bank Discount Fee ($) | Invoice * r_SCF * ((DPO - Early_Day)/360) | $15,000.00 (90 Days Accelerated) |
| Supplier Day-10 Net Proceeds ($) | Invoice - SCF_Discount_Fee | $985,000.00 (Zero Reserve Holdback) |
| Supplier Net Interest Savings ($) | Invoice * (r_SME - r_SCF) * (Accel/360) | +$20,000.00 (-$2,500 @ 15% SCF) |
| Supplier Adoption Gate | r_SCF < r_Supplier_Standalone | Accretive SCF Arbitrage (Supplier Saves) |
Reverse Factoring Supplier Net Interest Savings Formula
Validate Invoice > 0, 0 <= Early_Cash_Day < Extended_DPO, and positive ACT/360 rates r_SCF and r_Supplier!
=LET(in_v, B2, dp_o, B3, er_d, B4, r_sc, B5, r_sp, B6, IF(OR(in_v <= 0, er_d < 0, dp_o <= er_d, r_sc <= 0, r_sp <= 0), "Invalid SCF Tenor", LET(ac_d, dp_o - er_d, ROUND(in_v * (r_sp - r_sc) * (ac_d / 360), 2))))Investment-Grade Supplier Mispricing Check (r_SCF > r_Supplier)
Test onboarding an A-rated tier-1 supplier whose own commercial paper rate is below the SCF bank spread (set B5 = 0.15, B6 = 0.14): E4 turns negative (-$2,500.00) and E5 flags "Unattractive SCF Rate (Use Own Credit)"!
=IF(ISTEXT(E4), E4, IF(E4 > 0, "Accretive SCF Arbitrage (Supplier Saves)", "Unattractive SCF Rate (Use Own Credit)"))Try the example
Use the original values or change them to test your understanding.