Invoice factoring has been the dominant means for supplier to access faster payment of their receivables. The complexity of factoring on the accounts of customers and suppliers deters many from using factoring. Either all invoices are committed to factoring, which may not be a supplier's preference or selected invoices are financed, leaving a complexity for AP departments to manage. However, there is a better way through Crossflow advance payments, which doesn't have the complexity of factoring and enables simpler balancing of accounts for both the customer and the supplier.
Advanced payments through Crossflow is a financial arrangement where a supplier assigns the right to its accounts receivable (i.e., outstanding customer invoices) to a third-party financial institution, with Crossflow acting as intermediary, in return for advance payment for that receivable. Crossflow provides immediate cash to the supplier at a discount, and the right to that payment is assigned from the supplier to Crossflow acting on behalf of its institutional funders. Crossflow takes over the responsibility of collecting the outstanding payments from the customers on behalf of the funders.
When auditing a company's accounts that involve advance payment such as Crossflow, several key considerations should be taken into account:
Magda Rozczka is CEO at Crossflow. After completing her postgraduate MBA, Magda led product development within the insurance sector at ING and Zurich. Magda represents Crossflow on the Bank of England Decision Maker Panel, which influences UK interest rates, and has represented Crossflow as part of HM Treasury’s Women in Finance initiative.