Do you have a high-value invoice that your customer is taking so long to pay? If so, you can use spot factoring to receive the amount tied to your pending invoice on the same day. Instead of chasing payments or taking out another loan to make ends meet, spot factoring offers a fast and convenient alternative for various businesses.
In this post, we’ll discuss invoice finance and spot factoring, as well as how it can help your company. Keep reading and see why it might be time to partner with a local factoring company near you!
What is spot factoring?
Spot factoring, also known as single invoice factoring, is a financing solution in which businesses sell an invoice to a factor for immediate funding.
Unlike traditional factoring, spot factoring involves one high-value invoice as opposed to a set of smaller invoices.
But much like any factoring service, you’ll receive up to 98% of the invoice value right away, and factors like Factoring Express will take over the collections.
With this, spot factoring offers financial relief to businesses as large invoices tend to get paid longer than other accounts receivables. In fact, some of these invoices may sit on your in-house collections team for 30, 60, or even more than 90 days. That translates to a stalled cash flow, which can easily impact the operations of a small or medium-sized business with limited resources.
But with the help of a Florida factoring company like Factoring Express, you can turn this huge invoice into instant cash. You’ll receive your much-needed working capital to accommodate more orders instead of waiting for clients to settle their outstanding balances.
How spot factoring can benefit your business
Here are some reasons why more and more businesses are partnering with spot factoring companies like ours:
1. No need to wait for customers to pay
With factoring companies like Factoring Express, there’s no need to wait 30, 60, or 90 days to get your invoices paid. Once you’ve delivered the orders and invoiced your customer, you can send it directly to us for instant funding.
At Factoring Express, we can turn your unpaid invoices into cash on the same day. This way, you’ll receive your working capital without chasing after clients or making time-consuming follow-ups.
2. Reduce back office responsibilities
Aside from funding your outstanding invoices, factors will also take over the collections. So, while you stay busy with your daily operations, we exhaust all means to collect your invoice.
Once your customer pays, we’ll send you the remaining balance minus our small spot factoring fee. This means your back office staff will have more time to handle other administrative tasks.
3. Get resources to accommodate more orders
When large invoices remain unpaid, businesses also have to step back from accepting more orders due to a lack of resources.
For example, when a trucker delivers an expensive load, and the client doesn’t pay right away, he doesn’t have enough cash for fuel and vehicle maintenance. So, instead of going back on the road to deliver more hauls, the trucker will have to park his truck and chase after customer payments.
This is exactly the problem spot factoring for trucking companies helps solve. When a trucker sells us their huge invoice, we fund it on the same day. That means he can accept more loads, have enough money for fuel, and cover any operational expenses needed to fulfill his freight deliveries.
4. Pay suppliers and employees on time
For vendors who provide products to customers, paying suppliers and employees on time is often a struggle when huge invoices remain unpaid.
The good thing is that factoring services can easily solve this cash flow issue. When you spot-factor a large invoice, you’ll receive the amount tied to your pending receivables. That means you can pay all your financial obligations without resorting to loans or credit lines.
5. Keep your credit lines intact
Instead of exhausting your credit lines whenever your cash flow gets tight, you can use spot factoring for instant funding. After all, spot factoring has no interest rates, no tedious paperwork, and no collateral needed.
Instead, you can leverage your ARs to inject instant cash into your business in exchange for a small factoring fee.
So, when opportunities to expand arise, you can maximize your credit lines to acquire additional equipment, hire more people, and open new locations.
6. Avoid ‘bad’ customers
Another great thing about spot factoring is you also get free credit checks on your customers. This way, you’ll know whether a customer has a good payment history before you fund the invoice with us. It saves you from potential recourse in case the customer doesn’t pay.
It will also help you make informed decisions about whether to continue working with certain customers.
When should you consider using spot invoice factoring
Spot factoring might be the financial solution you’re looking for, especially if you’re struggling with any of the following:
- Your large unpaid invoices are causing a strain on your cash flow.
- You have to pass up on more orders because unpaid invoices are keeping your working capital ‘hostage’.
- You’re resorting to bank loans or lines of credit to cover your daily operational expenses.
- Your customers are struggling to pay large invoices in one go, and you want to offer better payment terms.
- Your business is still reeling from a bad debt, and your credit score doesn’t qualify you for a bank loan.
- You need extra cash during seasonal fluctuations, and you have large pending invoices.
- You’re tired of chasing after payments, especially for high-value invoices that take time to get paid.
- You’re losing too much money on short-term, high-interest loans for your business due to unpaid invoices.
If you or a business owner you know is dealing with any of these situations, it might be time to partner with a factoring company like Factoring Express. Unlike loans, you won’t pay any interest rates on our financing option, and you will also get to unlock quick funding on the same day.
Questions to ask before hiring a factoring company
There are many factoring companies in Florida, but not all of them would be a suitable partner for your business. So, to make sure that you’re getting funding from the best factor, you should ask the following questions during the initial consultation:
1. How long have you been in the industry?
An experienced factoring company will have years of expertise. This means that they have worked with countless businesses and funded millions’ worth of invoices.
At the same time, their years of operation will speak volumes about their funding capacity and ability to keep up with your business’s growing funding needs. In general, a factoring company that’s been in business for at least 5 years would be a good option for your business.
While experience is crucial in every industry, we can’t emphasize it enough for factoring. After all, you’ll want to have peace of mind knowing that your high-value invoices will be funded as you need them.
2. What are your fees associated with spot factoring?
In general, you’ll have to ask about their pricing model. For example, here at Factoring Express, we offer flexible variable pricing with rates as low as 1.99%.
Aside from that, you should also inquire if the factor requires a minimum or if they have termination fees. At Factoring Express, you wouldn’t have to worry about any of these aspects because we don’t impose minimums, and you’re free to cancel our factoring service anytime.
3. Do you offer recourse or non-recourse factoring?
When spot-factoring a high-value invoice, this is a very crucial question you shouldn’t forget to ask.
Basically, there are two types of factoring: recourse and non-recourse. With recourse factoring, you’ll have to either buy back or replace the invoice if your customer fails to pay. In short, you’ll be financially liable in case the factoring company fails to settle the balance after rigorous collections.
The upside is that factors like us conduct intensive credit checks to ensure that your customer has a good paying history before funding the invoice.
Meanwhile, non-recourse factoring frees you from this potential liability. You won’t be demanded to buy back or replace the invoice, but the fees will be much higher, and not all ARs will be eligible for this kind of funding.
Ready to try spot factoring? Partner with Factoring Express today!
Do you have more questions about factoring? Or do you need urgent funding for your unpaid invoices? You can partner with Factoring Express today to unlock quick business funding on the same day.
The best part is we don’t have long-term contracts, minimums, or termination fees. You’re free to factor in eligible invoices anytime you need extra cash for your business. Whether you’re running a trucking business, contracting company, healthcare practice, staffing service, or whatnot, you don’t have to wait to get paid when you partner with us!
Contact us today to start your 1-week free trial! You’re free to walk away if you’re not happy with the results – no strings attached!
