- 20 Dec
Spot Invoice Finance
I had a conversation the other day, with a colleague who follows my blog posts on LinkedIn, and he said "you must get loads of business from LinkedIn?", not a lot I replied - in fact I can't remember the last time someone contacted me directly via LinkedIn. Then, coincidentally, a couple of days later, I receive a request for spot invoice finance via LinkedIn!
Spot Invoice Finance
The term "spot" is more commonly associated with purchasing currency. It means buying currency at the current market exchange rate, called the "spot rate".
However, in the context of invoice financing, "spot" is interchangeable with the word "selective". It just means that you can select the transactions that you want to submit to the invoice finance company, to be prepaid. Prepayment is the provision of a percentage of the value of the transaction, or receivable, that is paid to the supplier up front, before the customer pays. The remaining balance of the value of the receivable is passed to the supplier (less the fee for using the service) when the customer (or debtor) pays. You can find out more by reading our guide to invoice financing.
Spot factoring is applied to facilities that include prepayments and credit control, whereas spot invoice finance (or spot invoice discounting) tends to be prepayments only, with the supplier maintaining their own credit control procedures.
Demand For Selective Invoice Finance Flexibility
As I have mentioned previously, the demand for these selective style arrangements is significantly smaller than the demand for revolving, whole turnover arrangements, however there is still a clear demand. Many people feel that spot facilities will be cheaper, as they can choose which receivables to discount. It is true that you can control the cost that way, but if you want to maximise the level of funding, a revolving facility is likely to be the most cost effective method.
Many people are attracted to the flexibility of spot facilities. They don't normally have any notice of termination requirements, you just stop sending invoices to the discounter - and often there isn't even a requirement for a personal guarantee from the company's prime movers. Despite this flexibility, there is often more work involved with managing a spot facility. Some revolving facilities allow the user to upload their sales ledger, in the background, with minimal intervention.
Whatever your requirements, we are likely to be able to help you find what you need, just call Sean on 03330 113622 for a free discussion in confidence, and without obligation or credit searches.