Spot Factoring: A Single Solution to your Multiple Worries

While going through a business news website recently, found an interesting piece. It contained some information on instant financing and also had examples of some companies and their views. Once such example was about a small IT company that faced difficulties to arrange working capital it needed urgently for buying some computers and expanding their office space a little. Considering their past experience with banks, the company tried an alternate way. It contacted a factoring firm, sold a single invoice worth $40,000 with 30 day term, and received the same amount of cash after deducting a discount fee. This is process is known as Spot Factoring or single invoice factoring. Getting finance at that time saved the IT Company from an awkward financial situation.

Instances like above are increasing rapidly since conventional financing has become elusive in recent times. At the same time there has not been sufficient and accurate information about alternate financing, especially for the small businesses. These businesses have been at the receiving end of all the strict financial policies enforced by the government and the banks. It looked like a death trap for the small businesses, but thanks to financing through factoring as it emerged as a true ally for these businesses.

Through Spot Factoring or Account Receivable Financing method, you can reduce your receivable payment cycle by selling your account receivable invoice to a factoring company. The company will assume the responsibility to collect the invoice amount from your customer (s). There are other advantages of this factoring as there are no setup fees, minimum annual fee, penalty and long term agreement.

More than anything else, factoring provides great flexibility and convenience in terms of when and how you need the funding. Also, a factoring company responses quickly, usually within a few days, where a bank will take months to reply and process your application. Also, relationship building with a factoring firm is much easier since their executives understand the clients’ needs and offer more flexibility. In emergency situations, they can even expedite the funding procedure to help their clients, whereas a bank will outright reject your request. If you still have any inhibition, you can just call a factoring company for an informal conversation or simply put your personal details on their website, and an executive will call you back. You need to clear all your doubts before making a move.