What is spot factoring?
Spot Factoring and Selective Factoring describe the process of raising finance against individual invoices. It means releasing cash locked up in invoices, one invoice at a time.
Spot factoring or single invoice factoring is a new alternative to traditional wholesale factoring facilities.
- Spot factoring facilities provide greater flexibility and enable you to sell a single invoice or bundle of invoices when you need it most
- Without entering into lengthy and potentially expensive contracts
- Spot factoring allows faster access to capital
Spot factoring is defined as the purchase of a single “once off” invoice as opposed to full or repeat factoring. If not disclosed, it can be known as selective invoice discounting. A defining feature of small and medium sized businesses in the UK is the volatility of their monthly cash flows. Traditional factoring can be ill-suited to these cash flow fluctuations: minimum monthly fees penalise companies at times when they do not need to draw down on funds.
What are the draw-backs of whole-turnover factoring?
- Loss of control of your credit function,
- Overly aggressive chasing of your outstanding invoices which damages client relationships,
- Prevalence of all-asset debentures and personal guarantees as security,
- Exclusion of certain classes of invoices which limits actual funding provided.
MarketInvoice offers selective invoice discounting where there are no personal guarantees, no contracts, no hidden costs or all asset lines and the only obligation is to repurchase your invoice if your customers do not pay. Importantly, using MarketInvoice is completely confidential to a business’ end customer and no notification is necessary. Companies maintain control of their invoice collection procedures and customer relationships. With Marketinvoice you raise working capital on your terms. Prospective sellers on the MarketInvoice exchange can typically access capital within 1-2 days of signing up.