What is Spot Factoring?

Need a quick one-time infusion of cash for your company? Spot factoring just might be the answer.

This business financing solution enables a company to receive an advance on a single outstanding invoice.

While traditional factoring arrangements are often structured on the expectation of monthly reoccurring business, spot factoring can be a one-time transaction. Also known as single invoice factoring, the business can obtain the working capital they need without lengthy contracts or ongoing commitments.

A Factor will review the invoice, confirm the goods or services have been delivered, and underwrite the credit worthiness of the debtor. Once the factor is satisfied they will advance a percentage of the invoice to the business, generally 70 to 90 percent of the amount billed. The balance is kept as a reserve to be released upon payment of the invoice less the factoring fee.

Since the transaction is based on a single occurrence a company offering spot factoring is likely to set a minimum invoice amount to make the accounts receivable purchase worth their time, effort, and investment.

While a factor might hope for future business, there is no obligation for the client to use these services in the future. This makes single invoice factoring a viable business financing strategy for companies that do not use or expect to use factoring in their normal course of business.