Selective factoring is one of the available options when looking at invoice discounting and factoring solutions. When it comes to invoice finance for small businesses, it’s worth looking into all of your choices – so what is selective factoring, and what are the benefits of using it?
Selective factoring lets you choose which invoices you release the funds from with a specific customer. This gives you a more flexible option, as you might otherwise need to factor all the invoices from a specific client. This could often work, but if you’re after more flexibility, it’s worth looking at selective factoring options.
Selective factoring can help companies who need increased cash at certain periods, such as during peak trading seasons. Often, there are a few different characteristics to a selective factoring plan – you can select which customers you wish to factor, you can select which invoices you wish to factor, and you can submit invoices only when you need the extra funds.
This all means that businesses can have increased flexibility and gives better control over cash flow. Though there may be slightly higher fees as selective factoring is less easy for lenders to predict than traditional factoring services, this can often be worth it for the added control.
For seasonal businesses especially, selective factoring offers a particularly suitable solution. As traditional factoring will mean you might be submitting invoices that don’t necessarily need factoring, your costs wouldn’t necessarily be lower even though fees may be less. In this case, selective factoring can be attractive as a solution.
So, if your business is looking into invoice finance solutions to solve cash flow or late payment problems, then selective factoring is something else to consider – especially if you’re looking for that extra bit of control.