The Advantages of Spot Factoring for Companies
If you need a quick injection of cash but you’re not ready to commit to a term factoring contract, spot factoring may be an option for you. Factoring as a whole is known for its flexibility, which is why one of its most prominent features is the option for spot factoring.
Like regular invoice factoring, spot factoring allows companies with a cash flow shortfall to get an advance on their open invoices. What makes it different from a typical factoring contract is that spot factoring is a once-off service.
Find the five main advantages of spot factoring below.
Single Invoice Funding
Spot factoring is offered for immediate payment on individual invoices. Spot factoring allows a business to use a customer invoice to obtain immediate funding for unforeseen or urgent expenses, for cash flow and financial obligations, or to fund an opportunity to grow the business.
Spot factoring gives businesses choice and flexibility in factoring. This allows businesses to try out a factoring company before opting for any long-term or contractual arrangements.
Additionally, while the immediate payment is a benefit, the final payment on the invoice will be less than the factoring fee. This could impact a business’s bottom line. For some businesses, it could make better sense to spot factor specific invoices.
No Credit Check Required
Businesses that cannot get loans due to bad credit (or no past credit record) can easily obtain immediate payments on factored invoices as an alternative ‘self-funding’ option. No credit checks are required for spot factoring.
No Collateral Required
Similarly, with spot factoring, there is no need for a business to have assets, or risk assets, for collateral – as they would have to, in order to obtain funds through a loan.
The easy, quick application process and immediate part-payment on factored invoices offer fast funding for businesses to help them better manage their finances and cash flow. The fast turnaround can help a business meet urgent financial obligations, mitigating the risks of late payments or extended payment terms on customer invoices.
If you’re interested in spot factoring, contact us for a factoring rate quote today!