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Spot Factoring

Spot factoring refers to an invoice finance arrangement where businesses can choose to fund individual invoices. It allows businesses to sell single invoices with a view to receiving early payment, which in turns improves cash flow and raises cash for the company’s costs and purchases.

spot factoring - business owners in their shop benefiting from spot factoring

Other services such as discounting or traditional factoring will usually see a firm receive advance funding for all of its invoices. However, spot factoring – also known as single invoice factoring or selective invoice finance – allows businesses to select one or more invoices at a time from their ledger to be funded.

How does it work?

  1. Select the invoice(s) that you wish to factor. This can be either an individual invoice or multiple invoices from your ledger
  2. Your funder can provide you with an agreed cash advance, which can be up to 100% of the value of the invoices selected
  3. When the invoice is due, the funder receives payment from your customer, then makes the remainder of the balance available to you, minus the agreed fees

What are the pros and cons of spot factoring or selective invoice finance?

Some of the perks of spot factoring may be immediately apparent, but other benefits aren’t necessarily so obvious. Here’s a quick breakdown of the key things to bear in mind when considering this type of selective invoice discounting agreement for your business.

Advantages of spot factoring

Disadvantages of spot factoring

How much does spot factoring cost?

Spot factoring operates in much the same way as most factoring arrangements. Fees vary between providers and arrangements, but usually it will be a percentage of the total invoice value.

However, with spot factoring you have no obligation to factor any other invoices or to meet minimum charges. There is also a high likelihood that you won’t need to provide a personal guarantee.

Compare spot factoring companies

Many providers will make agreements for selective invoice factoring. As with any other type of finance, it’s important to compare spot factoring companies before making your final choice.

Fees and advance percentages vary between providers, and there may be one company that fits your requirements better than another. This is how Touch Financial can help. Our team of consultants will listen to your financing needs and put together a shortlist of providers for you to choose from. This consultation is free and there is no obligation to go with any of the facilities we recommend.

Alternative products

For multiple invoices, it will be more cost effective to explore an invoice factoring or invoice discounting arrangement.

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