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What is spot factoring?
Spot factoring, aka single invoice factoring, is a relatively recent product in the UK and it is growing in popularity year on year. We understand the benefits of this product for many B2B businesses and as a result, we work with a range of lenders to offer spot factoring for a cash injection solution.
Traditional factoring can be a long term commitment to deal with a company’s ongoing cash flow finance needs whereas spot factoring is a short term arrangement to deal with a specific financial need.
Acting as a financial stop gap, spot factoring provides you with the working capital you require so you don’t fall behind on your liabilities. Cash is usually made available within 24 hours and charges for this facility are based on how long funds are lent and the percentage that is being advanced.
What will the factoring company do for my business?
You raise the invoice you would like to factor against and send a copy of it to your lender; your factoring company will then advise your customer that the invoice has been sold and they will also confirm that the sale between yourself and your customer is complete.
Your factoring company makes the cash available to you, based on an agreed percentage, within 24 hours providing your business with an instant cash injection. Your lender takes charge of collecting the debt from your customer and once payment has been received, the remaining balance will be provided to you, minus the factoring company’s fees.
Factoring companies are keen to check the credit worthiness of your customer before agreeing to factor the invoice instead of examining your business’ finances like a bank would do to approve funding.
What are the benefits of spot factoring invoices for my business?
We listen to your business’ needs and work hard to find the factoring company which can offer you exactly what you need including:
- Flexibility and quickly arranged – Cash is usually available within 24 hours limiting the effects of slow paying customers on your business and cash flow.
- Up to 90% of the invoice value made available – Leaving you with cash to plug financial gaps, meet your liabilities and keep working on your projects.
- No long term contracts – Each transaction is separate so without a long-term contract there are no exit fees.
- Cost-effectiveness for one-off transactions – Compared to the cost of entering a long-term invoice finance contract which perhaps your company does not need, spot factoring is cheaper and more beneficial financially.
- Having the ability to use the facility only when you need it – When business is good and customers pay on time, you don’t have to use the facility but it will still be available for you when you need it.
- No minimum annual fees, set-up fees or exit fees – You only pay what you need to, there are no hidden charges.
Are there any risks associated with spot factoring?
- It is not suitable if you need to raise finance regularly – Spot factoring can be more expensive for regular use therefore switching to a regular factoring facility may be cheaper.
- The size of your invoices – Generally factoring companies are looking to finance large invoices.
So if you need a short term financing solution to plug a shortfall due to an unexpected late payment, spot factoring could be beneficial for your business. Call us now for further information or to get a free, no obligation quote.
Some of the partners we work with...
From a funders perspective, I find that the team at WF Financial Solutions, really take the time to understand the customers’ needs and wants and with their vast experience are able to match them with the correct funders. This really helps the funders to build a fast and trustworthy relationship to ensure any facilities are provided in a timely manner.
- Wayne Spratt, Business Development Manager, Bibby Factors Yorkshire
Why choose us?
WF Financial Solutions is an independent broker of invoice, asset and trade financing solutions with links to lenders of all sizes and specialties. WF Financial Solutions has helped many clients through a range of lenders and their varying services and we are proud to offer advisory and introductory services to finance providers that suit your needs.
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Trading internationally, buying an asset or looking to refinance, we’ll help you get the best deal.
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