Want to fund individual business invoices? Spot factoring could be the solution for a fast access to finance.
Spot factoring is a type of invoice finance. This solution provides businesses with quick access to funds by financing individual invoices.
A business will choose to factor individual invoices on a case-by-case basis. This can be a useful option if there are significant differences between the values of the invoices you raise.
The key difference between spot factoring and the similar financial product, selective invoice finance, is that the provider takes ownership of your credit control. This means they will handle your credit control function for the invoices you choose to finance.
Spot factoring is an easy way to access cash owed to you in invoices. Here’s how it works:
| Advantages of spot factoring | Disadvantages of spot factoring |
|---|---|
| Your business won’t be locked into a prolonged relationship with your customer, giving more freedom to adapt your financing strategy as the business evolves. | While spot factoring provides quick access to cash, there are fees that incur which could affect your profit margins. |
| You get to choose which invoices to finance. This means businesses can avoid factoring invoices from customers that have a history of late payments or other issues. This reduces the risk associated with non-payment or disputes. | When your business uses spot factoring, you give control over the collection process to the invoice factoring provider, which could impact your relationship with that customer. |
| Spot factoring provides an immediate injection of funds into your business. Instead of waiting for customers to pay their invoices, you can access a portion of the invoice amount upfront. | Spot factoring can involve higher fees compared to invoice factoring where multiple invoices are factored. |
Spot factoring is only suitable for companies that raise invoices to other businesses. This means it might not be suitable for companies that operate as business-to-consumer, such as ecommerce, retail, or merchant businesses.
To be eligible for spot factoring, your business will need to:
Draw down funds in as little as 48 hours, so your business can get the cash it needs fast.
With access to over 100 UK lenders, you can quickly compare all your options to find the best fit for your business.
Our team of dedicated funding specialists are always on hand to answer any queries and support your application.
Beyond spot factoring, discover other funding solutions that suit your business needs, all from your Capitalise account.
Capitalise is an FCA regulated platform dedicated to UK businesses. Our mission is to help businesses to take control of their financial health. We support business owners by providing easy way to access over 100 lenders and compare their loan products. Our advanced platform makes intelligent matches and ranks lenders, based on their past successes, to help businesses select the best funding solution.
Capitalise also enables businesses to check their own Experian business credit score to better understand their financial health. Plus businesses can check the credit profiles of the companies they work with to reduce risk.
Yes, your customer will be informed when you use spot factoring. As part of the process, the spot factoring company often contacts the customer to provide payment instructions. This transparency helps ensure a smooth payment collection process.
Yes, one of the key advantages of spot factoring is that you have the flexibility to select specific invoices to factor. This allows you to manage your cash flow strategically and address any urgent financial needs.
Most businesses that operate on a business-to-business (B2B) model can use spot factoring, provided they have outstanding invoices from creditworthy customers. However, eligibility and terms may vary depending on the spot factoring company's criteria.
If the customer fails to pay the invoice, the factoring company may either request repayment from the business or assume the risk, depending on the type of factoring agreement. Non-recourse spot factoring means the factoring company assumes the risk of non-payment, while recourse spot factoring means the business is responsible for repaying the advanced funds if the customer doesn't pay.
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