Spot Factoring

“Spot” or “Selective” Factoring is a relatively new, but very fast growing area of finance.

Unlike “whole turnover” Invoice Finance arrangements, this type of facility enables a business to select individual invoices to raise finance against.

Spot Factoring is aimed at businesses that have good quality customers, who pay promptly to agreed credit terms. It is most suitable for companies that have an occasional working capital requirement (ie when the quarterly VAT or rent payments fall due), as opposed to businesses with an on-going cashflow need.

It is an interesting solution for companies that operate in contractual industries, as stage payments can often be financed through a Spot Factoring facility, and also for companies that have a large percentage of their turnover with one or two debtors.

We have even arranged spot factoring alongside a conventional Invoice Facility, in situations where the “whole turnover” facility caps the funding against the largest debtor(s). By removing this customer from the main agreement, and funding it through spot factoring, it maximises the finance available to the company.

There are now numerous providers of this type of finance, but they all have subtle differences in their approach, and both costs and security requirements can vary significantly, so it is just as important to seek expert advice as with more traditional Invoice Finance arrangements.