Invoice Factoring vs. Spot Factoring

Just as people need constant cash flow in order to maintain their household budgets, business owners need cash flow in order to stay on top of their regular expenses. In the same way, sometimes homeowners run into emergency situations where they need money right away; you as a business owner may experience these situations as well. No matter your scenario, factoring services offered by J&D Financial can help you to get the cash you need quickly. Your particular cash-flow need will dictate whether you would benefit most from invoice factoring vs. spot factoring—two completely different factoring options.

According to J&D Financial, invoice factoring is helpful for businesses that wish to preserve their continual cash flow. With invoice factoring, a company will factor its entire monthly accounts receivable. However, spot factoring involves factoring a single invoice rather than the full monthly accounts receivable. Spot factoring is recommended for businesses that require quick capital.

Invoice factoring happens to be less expensive than spot factoring since the latter involves more risk to the factoring company. A company offering spot factoring services simply assumes a greater amount of risk when buying one-off invoices associated with customers with whom they are not necessarily familiar. Even if these customers are creditworthy, their payment histories have not been established.

On the other hand, when a business factors invoices monthly, chances are that most of the invoices being factored are linked to repeat customers. As a result, the factoring company can feel more confident that the business’s invoices are collectible, which means the company is more willing to buy them at lower prices. Both invoice factoring and spot factoring can be helpful, depending on your unique financial situation. Through J&D Financial’s factoring services, you can keep your business monetarily healthy even when unexpected financial situations arise or when customers keep you waiting for weeks to finally be paid.

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