As a trusted finance broker, we connect you to flexible spot factoring solutions. Finance specific invoices without long-term commitments. Get started now!
Spot factoring, also known as single invoice factoring, is a financing option for businesses in the UK (and elsewhere) that allows them to sell individual invoices to a financial institution (the factor) to access immediate cash.
Unlike traditional invoice factoring, which involves an ongoing relationship with the factor, spot factoring is a one-off, transaction-based arrangement.
Spot factoring allows businesses to sell individual invoices to a funder on a one-time basis.
Here is how Spot Factoring works:
1.
Select specific invoices
In spot factoring, a business can choose to factor only specific invoices, rather than all its outstanding invoices.
This flexibility allows the business to address immediate cash flow needs while maintaining control over which invoices are involved.
2.
agreement and verification
The business agrees with the factor details for the specific invoice they want to factor.
The factor will typically assess the creditworthiness of the customer associated with these invoices to determine the risk and the terms of the deal.
3.
Advance and collection
Once the agreement is in place, the factor provides an advance on the selected invoice, typically ranging from 70% to 90% of the invoice value, within a day or two.
The factor then takes over the responsibility of collecting the payment from the customer on the selected invoice.
4.
Final Settlement
After the customer pays the invoice, the factor deducts their fees, including a discount fee and other administrative charges, and the remaining balance is remitted to the business.
The business can then choose to factor additional invoices as needed, making spot factoring a flexible financing option.
Spot factoring is especially suitable for businesses that have occasional or sporadic cash flow needs and don’t want to commit to a long-term contract with a factor.
It provides them with the flexibility to use factoring services on a case-by-case basis, addressing specific cash flow challenges without tying themselves to a continuous factoring arrangement.
Fast & Flexible
Expertise & Experience
Tailored Solutions
Spot factoring offers several benefits for businesses looking for quick and flexible financing solutions.
In addition to these benefits, spot factoring can also free businesses from the administrative burden of collecting payments and managing credit control for specific invoices.
It provides a straightforward and accessible means of securing working capital when needed while allowing businesses to maintain control over their overall financial strategy.
Flexibility
Businesses can choose which specific invoices to factor, giving them the flexibility to address immediate cash flow needs on a case-by-case basis. This flexibility is especially valuable for companies with irregular or seasonal cash flow patterns.
Companies can use spot factoring to finance invoices from customers with inconsistent payment histories or those considered higher risk. This helps mitigate credit risk and ensures that businesses receive payment promptly.
Spot factoring provides a rapid infusion of cash, typically within 24 to 48 hours of invoice submission. This quick access to funds allows businesses to cover operating expenses, invest in growth opportunities, or meet unexpected financial demands.
Spot factoring does not require businesses to commit to ongoing arrangements. This makes it an attractive option for businesses that want the benefits of factoring without a lengthy contractual commitment.
The cost of spot factoring can vary depending on the specific factors and the terms negotiated in the agreement between the business and the factoring company.
Here are some common factors that can influence the cost of spot factoring:
Discount Fee: Typically, a percentage of the invoice value, ranging from 1% to 5% or more.
Service Fees: Additional charges for services like administrative or processing fees.
Invoice Volume: The more invoices you factor in, the potential for volume discounts.
Customer Creditworthiness: Higher fees may apply for customers with weaker credit.
Duration: Extending the agreement can increase the overall cost.
Additional Services: Services like credit control or collections may add to the total cost.
Yes, you have the flexibility to select specific invoices for spot factoring, allowing you to address your immediate cash flow needs strategically.
No, spot factoring is a one-time transaction or can be used on a case-by-case basis. There is no requirement for a long-term commitment.
Yes, you retain control over your customer relationships. The factoring company’s involvement is primarily limited to the collection of payments on the selected invoices.
Yes, spot factoring is often used for high-value invoices, providing businesses with quick access to a significant portion of the invoice amount.
“Jonathan from Smart business Finance is always there to offer advice and to point us in the right direction to any questions we have and to tell us of the best deals for finance for our company. We have no problem in saying we as a company would use these people at any time“.
East Coast Logistics Ltd
‘We have dealt with the Team at Smart Business Finance for over 3 years. They introduced me to my finance partner and have since helped to source a credit protection policy for me. Jonathan has gone above and beyond for me through our business transitional period.
Higher Healthcare
“Extremely helpful and friendly; they found the best service that suited my business needs. Always checked in to see that I was happy with the services after. Their dedication to ensuring my satisfaction and the exceptional level of service they provided truly exceeded my expectations.”
Prioritising People
When choosing a factoring company, businesses must decide between independent factoring companies and traditional bank factors. In this blog, we will discuss four reasons why independent factoring companies are the better choice for businesses.
Invoice finance offers a wealth of benefits for businesses, yet it is often faced with scrutiny, due to the misconceptions that cast doubts on its
Both types of facility enable a business to release cash early from funds tied up in both existing and ongoing sales ledger balances. There are,
Ready for a smart business finance solution? Call us at 01246 792082
Smart Business Finance is an independent business finance broker based in Chesterfield.
