Spotlight On – Selective Invoice Finance

What is Selective Invoice Finance?

Selective invoice finance is an alternative to more traditional invoice finance where you must process all invoices through the facility.  This type of invoice finance facility is also known as single or spot factoring.  Selective invoice finance enables businesses to release funds tied up in individual unpaid invoices. By using the facility on an invoice to invoice basis, you are able to access funds quickly when and as cash injections are required.

How does it work?

It’s fairly straight forward and simple. The first step is to identify the invoice or invoices you wish to factor. Approval is then required for factoring the chosen invoices and the finance provider will confirm the fee. Dependent on your business sector you can receive up to 95% of the value of the invoice. The funds are normally available within 24 hours of invoice submission.  The invoice balance less the lenders fee is paid when the customers pays the invoice in full.

What are the differences between Spot, Single and Selective Invoice Finance?

There is no difference, all these terms are used to describe Selective Invoice Finance.

What are the advantages?

Selective Invoice Finance is often used to support cash flow at key points during the month. For example, to meet payroll and supplier payments. It can also be used for the purchase of business assets or just used to smooth out cash flow peak and troughs. The funds are available quickly and you are not tied into a twelve-month contract as with more traditional Invoice Finance.

What are the disadvantages?

It can be more expensive than traditional Invoice Finance Facilities where you are tied into a twelve- month contract and must process all sales invoices through the facility.

What businesses qualify?

This varies from lender to lender but normally all trading styles qualify although there are often requirements for a minimum level of turnover or projected turnover.

Can I apply with bad credit?

You can apply with bad credit but will still need to satisfy lenders underwriting criteria.

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