Single Invoice Finance is a great solution when a business urgently needs working capital for a short period.
It is also known as spot factoring or selective invoice factoring.
A finance company offering this product will buy just a single invoice from you, but will also buy more depending on your needs.
You are in charge
At the end of the day, you are in charge of the transactions deciding what and when you will sell.
Any business seeking short-term finance can benefit from single invoice finance. It is particularly handy for start-ups lacking a track record strong enough to interest a bank. Businesses with poor credit histories are also considered.
As long as your customer acknowledges the debt (it is a disclosed arrangement) and agrees to pay the invoice on time. the finance company will most likely do the deal.
A typical advance amounts to 80% of the value of the invoice although in certain circumstances the lender will go to 90%. When the customer pays you receive the outstanding amount less the finance company’s fees.
Single invoice finance can be a little more expensive than the longer term facilities, but that is because the finance company only takes security over a single invoice rather than your entire debtor’s ledger. In most instances, security over your home is not required.
Compared with obtaining most other forms of debtor finance, single invoice finance can be a very quick and flexible way to raise funds.
There are no long term contracts. Once the invoice you have financed is paid, the relationship with the financier is over.
You can turn the facility on and off as the need arises.
It’s more expensive than other forms of debtor finance.
Your customers are advised of the arrangement and asked to verify the invoice.