At one time or another, many businesses will need a quick, one off cash injection – but where do you go for help? Whether you’ve been hit by an unpredictable expense or bill or if you just want to increase your potential by investing in a growth opportunity, Spot factoring, or selective factoring, is a flexible way to introduce quick cash into your business. Though invoice finance can offer longer term finance programmes with factoring and invoice discounting, spot factoring is a great short term measure for a number of circumstances.
Selective factoring allows you to factor a single invoice as a one off, so you can receive an advance on the value of a single transaction. Longer term factoring or discounting plans are often structured around monthly payments and recurring business. However, spot factoring means you can harness the factoring benefits without committing to a long term plan. It means you can obtain the extra cash flow your business needs.
Spot factoring works in a similar way to traditional factoring arrangements. Your factoring lender will review the invoice, confirm your goods and services have been delivered and check out the credit-worthiness of your debtor. Once this is all sorted, they can release a percentage of the invoice’s value, which is typically up to 90% of its total value. You get your cash, and once the customer has cleared their debt, the factoring lender releases the rest of the invoice’s value, minus a small lending fee.
As it’s a one off transaction, there could well be a minimum invoice amount and the eligibility requirements on time frame and value might be stricter. However, if you’re after a flexible and accessible way to get hold of a one time cash injection, then spot factoring could really help. There’s no obligation to undertake more factoring services – but you may just find that factoring could help your business to grow.