Single, Spot or Selective Invoice Finance

What is the difference?

The world of business finance can seem confusing and having three different names for the same product doesn’t help to make it any clearer or friendly for business owners.

Quite simply spot, selective and single invoice finance all refer to the same product. The product (for ease we’ll call it selective invoice finance for this blog post) allows you to ‘select’ an invoice or invoices you have outstanding with your customers and receive the cash locked away in those unpaid invoices straight into your business cash flow.

Using your unpaid invoices as assets allows your business to have access to your money. So rather than waiting 30, 60, 90 or even 120 days to be paid, you could receive up to 80% of the value of those invoices straightaway.

A selective facility works in three easy steps:

  • Choose one or multiple invoices that you want to fund
  • Receive up to 80% of the invoice(s) value
  • When your customer pays, the provider’s fees are deducted and you receive the remaining balance.

Benefits:

  • Releases cash into your business quickly enabling you, for example, to buy materials, pay wages, fund growth plans
  • Unlike full factoring or invoice discounting you are not having to use your whole ledger
  • Choose one or multiple invoices to get more money into your business quickly – you retain control of your finances and you choose the invoices you want to fund

Considerations to think about:

  • Some providers will charge a full monthly fee, even if your facility is required, for example, for just 20 days. Or they could charge you an additional month’s fee if your facility over runs into the next month by just 1 or 2 days
  • Other providers will charge you a simple fixed daily rate based only on the time you have used the facility
  • Some providers may have hidden fees or charges – make sure you read the small print
  • Security in the form of debentures and personal guarantees may be required

The birth of alternative finance has provided business owners across the UK with access to a huge choice in funding options beyond that which the traditional high street banks have been able to offer. Take the time to do your research and see what is available and best suited to you and your business.

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