Factoring, a traditional financial tool for collecting accounts receivables, is a powerful and reliable way to maximize cash flow for businesses. Through factoring, a business can trade its receivables for an almost immediate payment from a third-party financier, who will then collect from the customer directly. Reverse factoring, meanwhile, flips this process around on its head: Instead of businesses approaching a third-party financier to purchase their accounts receivables, customers voluntarily approach the financier in order to obtain extended payment terms. In other words, instead of trying to optimize cash flow, reverse factoring allows businesses to optimize customer relationships by offering customers longer payment terms.