Supply chain finance is also known as reverse factoring and is differentiated from regular factoring by one key detail. Under a factoring arrangement, it’s the supplier who initiates the funding process by selling their invoices to a third-party factor, who the buyer later pays in-line with the original payment terms. In reverse factoring, it’s the buyer who initiates by requesting the factor pay the supplier. This means that factoring involves the supplier drawing on credit, while in reverse factoring it's the buyer’s credit rating that’s important.