What is confirming in supply chain finance?
By the Vanguard Verify desk · Published 2026-10-25 · Updated 2026-11-01
Short answer: "confirming" is another name for payables finance, also called reverse factoring. A buyer approves its suppliers' invoices, and a bank or other finance provider offers to pay those suppliers early at a discount, relying on the buyer's irrevocable promise to pay the full invoice on the due date. It is not the same thing as a bank confirming a letter of credit.
The Global Supply Chain Finance Forum (GSCFF) — made up of the ICC Banking Commission, BAFT, the Euro Banking Association, FCI and ITFA — publishes the Standard Definitions for Techniques of Supply Chain Finance. Its guidance on payables finance lists "Approved Payables Finance, Reverse Factoring, Confirming, Confirmed Payables" among the alternative names for the same buyer-led technique.
How confirming works, step by step
- The buyer sets up a programme with a finance provider. Under the GSCFF description, the buyer agreement includes an unconditional, irrevocable obligation to pay accepted invoices in full on the due date, without set-off or counterclaim.
- Suppliers are onboarded. The finance provider runs its own know-your-customer checks on each supplier and signs a supplier agreement.
- The supplier ships and invoices the buyer as normal.
- The buyer approves the invoice and sends a payment instruction to the finance provider. The GSCFF notes that in all cases for this technique the invoices have been approved for payment by the buyer.
- The supplier chooses to wait for the due date or take early payment, less a discount. Because the buyer is usually the stronger credit, the cost is based on the buyer's risk, not the supplier's.
- On the due date the buyer pays the finance provider.
Confirming vs other kinds of "confirmation"
Commodity traders often mix these up. They are different instruments with different promises behind them.
| Term | Who makes the promise | What is promised |
|---|---|---|
| Confirming (payables finance) | The buyer, to the finance provider | Pay approved invoices in full on the due date |
| Confirmed letter of credit | A confirming bank, in addition to the issuing bank | Honour a complying presentation under the credit (UCP 600) |
| Bank comfort letter | Usually no payment undertaking | A statement about a customer, not a guarantee |
See confirmed letter of credit explained and what a bank comfort letter is for the other two.
What to check if you are offered confirming
- Name the finance provider and check it on the official register of its financial regulator.
- Confirm the buyer runs the programme. The invitation should come from the buyer or its bank, and you can confirm it with the buyer's procurement or treasury team using contact details from the buyer's own website.
- Read the supplier agreement. Check whether the invoice purchase is with or without recourse to you, and what happens if an invoice is disputed.
- Work out the real cost: the discount rate, the reference rate it is based on, and any platform fees.
- Check the buyer itself in its company registry and on GLEIF if it has an LEI.
Red flags
- An intermediary, not the buyer, says it can "get you confirming" on a single commodity deal for an upfront fee.
- "Confirming" is offered against a leased SBLC or a "bank-to-bank MT799" rather than approved invoices from a real buyer.
- The finance provider cannot be found on any regulator's register.
- You are asked to send invoices or bank details before any agreement is signed.
Confirming is a mainstream, bank-run product used by large buyers. The risk is not the technique itself but people who borrow the name.
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FAQ
Is confirming the same as reverse factoring?
Yes. The Global Supply Chain Finance Forum lists confirming and reverse factoring as alternative names for payables finance, a buyer-led programme.
Who pays the finance provider in confirming?
The buyer pays the finance provider the full invoice amount on the due date, under its irrevocable payment obligation in the programme agreement.
Is confirming the same as a confirmed letter of credit?
No. In a confirmed letter of credit a second bank adds its own undertaking to honour a complying presentation. Confirming in supply chain finance is early payment of invoices the buyer has approved.
Can a supplier start a confirming programme?
Payables finance is buyer-led. The buyer sets up the programme with a finance provider and invites suppliers to join.
Vanguard Verify is run by Vanguard Trade Capital Goods Wholesalers DWC-LLC, Dubai South, Licence 14282. This answer is general information, not legal or financial advice.