Attractive financing options
The sale of customer receivables (factoring) is a widely popular form of financing in the automotive industry. Since 2009, Daimler AG has also been offering it as a possibility to suppliers. Through the Daimler Reverse Factoring Program, which provides suppliers with liquid funds quickly and inexpensively. In particular in a challenging business environment and when investments in future projects are requested, the program is of interest. Therefore in 2018 some suppliers joined the program.
Suppliers can sell their receivables from Daimler to the financing bank — immediately after they have been created. The financing bank is Postbank, a subsidiary of Deutsche Bank. The decisive difference from classical factoring: Daimler AG as customer is managing the program and thus actively involved in the process. Since the receivable is confirmed by Daimler, the factor focuses on the default risk of Daimler AG, which enables getting an advantage with respect to the margin. As a result, the financing costs are significantly lower than in traditional factoring programs. And, this is not the only value added of the program.
Schematic diagram of the "Daimler Reverse
A variety of reasons in favor of the program
Daimler Reverse Factoring was called to life during the financial crisis in 2009. It was to provide liquidity for suppliers that were particularly hard hit by the crisis. And that at an earlier time and at better conditions than those for their own financing. In the meantime, the focus of the model has evolved. Increasingly, well-financed companies are also making use of the offer. Through it they can optimize their working capital since the payment is generally made about five days after the goods delivery. Other reasons why suppliers use the program include the following:
- The financing interest is attractive. Because the bank sets the risk in line with the very good credit rating of Daimler AG.
- The liquidity is provided on a weekly basis.
- There is no security retainer as in traditional factoring.
- The additional source of financing stabilizes the financial structure and reduces liabilities. The debt capacity increases.
- The offering is flexible – not all receivables have to be sold early at all times.
In order to arrive at a win-win model for both partners, Daimler AG gets an extended payment term (+30 days); which is used for the payment to the factor.
Interested suppliers are provided with further information on the Daimler reverse factoring program by their contact persons from Daimler Procurement or directly from Daimler Treasury (email@example.com).