The economic circumstances during this last year of 2009 has been is very tough for small business owners, so these times call for creative solutions to help a small business run smoothly. In order to sustain and grow businesses need some cash on hand. And when outstanding invoices stack up, single invoice factoring , also known as spot factoring, is one tactic that many companies have discovered can help them get by.
Factoring is one of the oldest and most widely used forms of funding for businesses. Standard invoice factoring has been around for about 4,000 years, but now there are a number of innovative new factoring solutions especially for small businesses who find it difficult to attract conventional funding. Single invoice factoring, or spot factoring, enables companies to get short-term working capital and improve cash flow and grow their businesses
Since most companies do not get paid immediately for delivered products or services, spot factoring benefits businesses that do not get paid for 30, 60 or 90 days by advancing up to 90 percent against the company’s invoices. A factoring company like The Interface Financial Group (IFG) purchases selected invoices at a discount. Spot factoring companies first typically look at the creditworthiness of the client’s customers. They can often fund within as little as 24 hours, and they do not expect to buy 100 percent of a company’s receivables, so there are no minimum or maximum sales volume requirements.
Most factoring companies have professional rates that are competitive. Each and every client’s circumstances will vary and so this may have an impact on the fees that are charged. Each invoice purchase is a separate transaction and does not form part of a portfolio lending approach. The transaction is modeled as a buy-sell transaction. Spot factoring service companies are user friendly, flexible, cost effective, and most of all, fast. If a client chooses to offer further invoices to the invoice factoring company, the total transaction time is often reduced to just up to eight hours.
Here are the specific details about how IFGs single invoice factoring works. IFG will undertake a due diligence that often takes one to two business days. Once this step has been completed the client is at liberty to offer invoices for purchase. Upon receipt of the invoices, the spot factoring company will check the credit of each debtor named on the invoices provided. They make sure that the sale represented has been satisfactorily completed. After this has been accomplished, the debtor is advised of the purchase of the invoice by the spot factoring company, and the client receives their funding.
At the end of the credit period the debtor will then pay the spot factoring company directly, completing the transaction.
For more information on factoring , call The Interface Financial Group (IFG) at 877.210.9748.