What is Spot Factoring
A spot factoring deal – is just as it sounds the whole ledger can be factored or just a single invoice, in other words, “spot factoring”.
Spot factoring is priced for risk as there is nothing else to offset against if the customer doesn’t pay.
The process for approval, verification, and funding is the same as for a whole ledger.
Oversight and general conduct of the customer are monitored more closely for two reasons. The first is that there are no other invoices to off-set against in the event of non-payment of the invoice. Secondly, the size of these invoices is usually in the hundreds of thousands.
How to use the Spot Factoring facility
Using a facility that allows you to finance a single invoice, or a small group of them, has advantages over other solutions. Single invoice finance:
- Offers flexible funding solution so you only use the facility when you need it
- Is available to start-up business with limited trade history as it is the strength of the customer that the factor is concerned with not how long the business owner has been operating.
- Can provide the support needed for acquiring materials that enable the business owner to accept or bid on larger tenders and projects.
- Assists with being able to offer competitive trading terms such as 30 or 60 days to customers while still getting the benefit of immediate payment.
- As with all factoring facilities no real estate security is required