Spot Factoring Information, Quotes & Prices
Products using the term "spot factoring" have become increasingly common within the factoring industry in recent times with a rise in the number of invoice finance companies that use this to describe their products.
Factoring is a financial service whereby the invoice factoring company provides their client with funding against their invoices as they raise them. The factoring service also includes access to collections support, although the type, and quality, of service, provided differs between factoring companies.
What is Spot Factoring?
Essentially it is a selective factoring facility where the client can decide which invoices they want to factor. The client can select individual invoices, single debtors or in some cases all of their invoices to receive funding against. In some cases, the term is also being used to describe what could be called individual invoice discounting service i.e. similar to selected invoice factoring but with the client undertaking their credit control activity.
How Does It Work?
The client enters an agreement with the spot factoring company, but there is normally no requirement for minimum amounts of invoicing to pass through the facility. The client can select individual invoices or batches of invoices against which to receive funding. This means the client can adjust the funding that they receive as they wish. In some cases, spot factoring is subject to a single charge from the spot factoring company but you would need to check the charging structure for each particular provider.
You can also use an invoice auction approach whereby potential investors bid for the opportunity to fund against your invoices.
The price of spot factoring varies between providers but to compare quotes for spot factoring please contact us for a quotation.
Product Terminology: Spot Invoice Finance, Spot Factoring & Spot Invoice Discounting
"Spot" invoice finance facilities could also be termed as "selective invoice finance" and work as described above. "Spot factoring" includes a credit control service whereas "spot invoice discounting" is just funding where the client handles their credit control. "Spot invoice finance" would technically include both factoring and invoice discounting however the term is commonly used to describe "spot invoice discounting". Once again we can advise you on the options available.
The Benefits of Spot Factoring
Traditional factoring facilities often expect a regular amount of business each month from the client and the facility can be subject to minimum charges or fees. With spot factoring the client can factor a single invoice if they wish, with no obligation to factor their other invoices or to meet any minimum charges. This can make spot factoring a very flexible way to fund a business as it allows the client company to dip in and out of the funding as they need.
Where the fees are levied via a single charge, it can make the cost of the facility very controllable and easy to predict for the client business to be able to budget accurately.
As with any form of factoring, it releases the cash that is tied up in your unpaid sales invoices so that you can use it in your business for any purpose.
Case Study
This is a link to a case study about a client that we have helped: Spot Factoring Help Case Study
How To Get Spot Factoring Help & Prices
Most companies will qualify and we can help you by introducing you to the various "spot factoring" companies within the UK.
This is an example of the price of a selective invoice finance facility and you can find more general information about pricing here.
This is information about whole turnover financing which is an alternative.
To find help and the price for your business, without obligation, complete a QUOTATION REQUEST we will provide you with independent guidance from industry experts.
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 upfront 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 against invoices and credit control, whereas spot invoice finance (or spot invoice discounting) tends to be prepayments only, with the supplier maintaining their 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. You can indeed 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.
