Spot, selective, and singular invoice finance are all different names for the same product.
While other invoice finance options require you to put your entire sales ledger down as security and are advanced a portion of the total amount, with spot invoice financing, you instead chose to finance a specific invoice or a series of selected invoices. This is typically used by companies who undertake large jobs and have a significant amount of money tied up in a particular invoice from a one-off project.
Spot invoice financing provides the borrowing company with much more control compared with other invoice finance options. A director can choose exactly which invoices they wish to use in order to obtain finance rather than putting their entire ledger up as security.
The amount of money you can be advanced against an invoice will vary, but it is typically around the 80–90% mark. When your customer pays the invoice in full, you will be forwarded the remaining amount following the deduction of fees and charges levied by the finance company.
As with all invoice finance options, lenders place more emphasis on your customer’s’ payment history rather than your own creditworthiness when considering whether you are eligible for this type of funding. Therefore, you should only see spot invoice financing as a viable option if your customer has a good track record of settling their payments on time and in full.
Spot invoice financing tends to be used when waiting for payment from one particular debtor is having a negative effect on cash flow. If you are looking for a solution to ongoing, unpredictable cash flow cycles, you may want to consider ‘whole of ledger’ invoice finance options instead, such as invoice discounting and invoice factoring which can provide you with regular injections of cash throughout the month.