10 Ways Spot Factoring Can Boost Your Business Success

Running a business comes with its own set of challenges, especially when it comes to managing cash flow. There are many financial solutions available, and each one has its pros and cons. We’ll be discussing the advantages of spot factoring and how it can help boost your business.

What is spot factoring?

Spot factoring is a financial solution that helps you get access to immediate cash in exchange for selling your select invoices to a factoring company. Spot factoring is different from invoice factoring as it allows you to factor some specific invoices for a short term.

The process of spot factoring 

Here’s how spot factoring works:

• Your business provides products or delivers services to a client.
• The business experiences a delay in receiving the funds.
• The business sells the invoice to a factoring company to receive immediate cash.
• The factoring company provides 70-90% of the invoice value at once.
• The business uses these funds to resume its business operations.
• When the factoring company receives the complete payment, it pays the business the remaining funds minus the factoring fee.

Who benefits from spot factoring?

All types of businesses can benefit from factoring, as it allows them to sell specific invoices instead of selling all their operating invoices. SMES, startups, and other companies looking for a short-term financial solution to get access to cash can especially benefit from spot factoring.

10 Ways Spot Factoring Can Boost Your Business Success

Spot factoring can support your business growth in multiple ways : 

Quick access to cash  

With spot factoring, you can easily get access to 70%-90% of the total invoice value at once. Usually, the funds are delivered within one week after the spot factoring application is accepted. 

Flexibility 

Spot factoring lets you choose which invoices to sell for immediate funding. You have the authority to factor the invoices of your choice, as there is no obligation to invoice a minimum number of invoices, like in invoice factoring. While using spot factoring, businesses factor the invoices with a large payment spread over a long period.

Short-term commitment

Spot factoring is a short-term commitment. There is no contract binding you for long-term factoring. You can use the service when needed for as few as a single invoice.

Easy to set up

The process of getting approved for spot factoring is easy to set up. It has a quick application process since it is short-term, with a higher approval rate. That’s why even small businesses just starting can benefit from it with ease.

Improve supplier relationships

When a business has consistent access to cash, all of its operations remain in check. It can easily pay its suppliers on time, without delaying payments. This is especially important for new businesses that want to establish a smooth relationship with their suppliers.

Support business growth

Quick access to cash helps you support your business even during times when payments are not received. Instead of waiting for a client to pay you over time, months or even years, you get urgent access to the payment, so you can keep operating your business.

Less financial stress

Delayed payments can be stressful. The time and money spent managing delayed payments can add up over time, diverting your attention from the main business operation. With spot factoring, the factoring company takes over the administration so you can focus on your business tasks without stress.

Better customer service

When your finances are under control, you’re not stressed, and your suppliers are paid on time, you’re guaranteed to continue delivering high-quality products that automatically boost your business growth. With better products and undivided focus, customers will feel satisfied with the service.

Late payment issues

Late payment issues can be a real hassle to deal with. When you work to spot factor your invoice, the factoring company assumes the risk of non-payment in general cases. Instead of late access to funds, you can get urgent access to cash, and your clients can continue to pay the invoice amount to the factoring company gradually.

Avoid loans

When you need financial support, spot factoring is one of the best ways to gain it without taking bank loans that could put your business at risk of negative credit scores in the future. Before choosing a factoring company for spot factoring, do your market research to get an idea of the current fee trends and terms. This will help you work with expert factoring companies that offer reasonable rates, matching your business needs. For more help with choosing a factoring company for your business, ComparedBusiness is here to help you.