Advance of up to 95% of the value of your invoice (usually a large invoice with a value more than $45,000)
Depends on the product and on your payment terms (e.g. 30, 60, 90 or 120 days)
A monthly rate of 0.5-5% of the invoice value (rate will vary according to the lender, your business profile and the length of the factoring period) plus set-up fee – factoring is usually more expensive on a per invoice basis than whole ledger facilities.
From 24 hours to 2 weeks
To finance specific (large) invoices rather than your entire sales ledger (in order to ease cash flow and to minimise late payment and debt) – and to hand over credit control to your lender
A broad range of businesses with B2B invoices (e.g. seasonal businesses, those with occasional large projects and those with just a few debtors) – lenders require a minimum trading history and minimum turnover
Spot factoring is a type of selective invoice finance, i.e. a way of borrowing money using your unpaid invoices. It’s similar to selective invoice discounting in that it allows you to finance specific invoices (or customers). The lender will take over credit control for your selected customers.
Spot factoring, like selective invoice discounting, allows you to unlock finance by selling specific unpaid invoices at a discount to a lender in return for a cash advance. You’re not handing your entire sales ledger over to a lender, as you would be with normal factoring or invoice discounting.
This can be useful if you take large orders from one customer, but your other invoices are smaller or irregular. By using selective invoice finance you can get advances for your large invoices, leaving the smaller ones unaffected.
As with normal factoring, spot factoring is ‘disclosed’ – after all they will be paying back your factoring provider, not you.
You hand over credit control for the specific invoices you’ve chosen to finance to your finance provider. If you’d rather keep it in-house then you could consider selective invoice discounting. There other also other types of confidential invoice finance.
As with all types of invoice financing, your cash advance is a percentage of each invoice’s value. Once your customer has paid an invoice, the lender pays you the remaining balance minus their fee.
With spot factoring and selective invoice discounting, the individual invoices you choose to finance don’t have to be from the same customer – you decide which ones you finance and which ones you choose to handle yourself.