On The Spot

Single invoice financing is also known as spot factoring. This is when a company is only interested in factoring one invoice, one time. Most of the time the invoice being financed is a high dollar amount. Generally, factoring companies will not do spot factoring due to the risky nature of the transaction. If there is a problem with the account debtor paying the one particular invoice there will be little or no recourse available. So the first step would be to determine the creditworthiness of the customer who owes on the invoice. Unless they are a household name Fortune 100 company, there’s not going to be much appetite to fund. Also a factoring company will look closely at the terms in the contract. Is the language specific enough regarding payment for completed services? But the predominate reason a factoring company will be reluctant to do spot factoring is the amount of work that goes into getting the account started with the client and doing proper due diligence on the client’s customer. A factoring company would much rather rely on an ongoing factoring relationship with a variety of account debtors.