June 2017
M T W T F S S
« May    
 1234
567891011
12131415161718
19202122232425
2627282930  
RSS
Follow by Email
Facebook
Google+
http://www.alanmilburn.co.uk/category/spot-factoring/">
Twitter
SHARE
  • spot factoring creditIn business, alternatives can either make or break you. It’s nice to have them because it allows entrepreneurs to weigh down which would best fit their needs but at the same time it can also be a trigger that sets things ablaze with others failing to acknowledge the option that bests suits their case. That said, we decided to put spot factoring and traditional credit, two very popular options in the financing world, side by side. Let’s get to know how similar or different they are and which situations best call for them.

    DEFINITION

    Spot Factoring – It is a type of financing that involves the use of a particularly chosen sales invoice from which immediate cash is to be derived from. Its value shall be advanced prior to its maturity in exchange for the right to collect against it.

    Traditional Credit – This refers to bank loans, mortgages and similar other arrangements where a certain sum is granted by a financial institution like a bank on the premise that it shall be repaid with interest on or before a pre-agreed time period and shall be secured by a collateral such as real estate properties, corporate and/or personally owned.

    APPLICATION

    Spot Factoring – What makes it a favorite option among businesses lie in its ease of application. There are far lesser requirements to submit given that providers bank not on the company’s creditworthiness but that on the customer to whom the invoice is attached to instead.

    Traditional Credit – Because the risks for the providers are higher, creditworthiness of the business is a huge factor to be considered making requirements and application long and tedious. Things like financial statements, credit score and history shall be taken into account.

    TIME

    Spot Factoring – The application process is so fast that it almost happens instantaneously. Several providers can release cash within a day’s time which is why spot factoring and other receivables financing methods are widely used for cases that cal for immediate cash flows.

    Traditional Credit – Since we’re talking about bigger digits and higher risks, bank loans and mortgages can take as much as several weeks to months before an approval is garnered. Moreover, providers may prove to be particularly strict and picky which is why many borrowers often end up declined.

    But at the end of the day, choosing between spot factoring and traditional credit depends on one’s needs. Just remember that although these two both provide cash, they differ in a number of ways for instance the former is no liability (no collateral and no interest) while the latter is.

  • ZerodebtEven the slightest hint on the topic of “business financing” can lead anyone to an immediate episode of anxiety and dread. It’s no secret that money matters can be complex, challenging and an absolute sore. They’re hard to come by and very sensitive in terms of spending and management. One wrong move and one’s beloved business goes down the drain. But this should not always be the case. Lucky for us, some alternatives were born out of need. Such was the case for spot factoring.

    Today, discover why this method might just change the way you see business financing.

    1. Zero Debt – Surprise! This method is no loan. In fact, it’s not a type of debt and does not fall under the liability category. In other words, it comes free of interests and collateral. Spot factoring is rather an asset transaction that allows businesses to derive cash out of a specific sales invoice thereby ultimately advancing its value prior to its maturity and collection.
    2. Quickie – Unlike other financing methods, it’s pretty fast. Businesses need not wait for weeks or months to complete the application process, get an approval and have cash released. Spot factoring can be arranged within a day’s time (the fastest possible) and we’re not even kidding.
    3. Free for All – Majority of funding methods available in the market are exclusive. They’re limited to more established entities with adequate capital and sterling credit score. This method begs to differ. It can be used by everyone from startups to small and mediums scale enterprises to conglomerates and even to recovering entities. The secret lies in the fact that the provider banks not on the company’s creditworthiness but rather on that of the buyer to whom the invoice is attached to.
    4. Cash Flow – Because of its “advancing” nature, there is a quick injection of cash into the system. This paves the way for better liquidity, increased cash that is readily available and a stronger working capital.
    5. Onetime Deal – As the name suggests, spot factoring is a onetime transaction. This is also the reason why it is likewise known as single or selective factoring. It does not involve lengthy contracts and only requires a onetime fee, a value agreed upon by all parties and can be anywhere from 5% or less of the invoice’s total value. Moreover, businesses can choose which receivable to use and when allowing for full liberty and flexibility.
  • spot-factoring-companiesCash is required to run a business. After all, you can’t expect to do so with liabilities alone. That would be a recipe for disaster and it sure wouldn’t make your venture look pleasing in the eyes of investors. This is why entrepreneurs take time to carefully study their options when it comes to raising financial resources. For a good number of entrepreneurs, this is accomplished with the help of spot factoring companies. But what do they do and when will you need their services? Here, take a look.

    When traditional loans are too expensive and restrictive…

    Not all companies can afford traditional credit options like bank loans and mortgages. They’re not only expensive and hard to apply for but they also come with low approval rates for many startups and small to medium scale enterprises. Moreover, the funds to be issued, if approved, are often restricted in terms of use which can be very limiting for a lot of borrowers.

    When collateral is required…

    Majority of financing options in the marker will require some sort of collateral, oftentimes a property or similar other valuable asset. Most companies wouldn’t want to risk both their commercial and personal assets if the worst happens. Spot factoring is a method that does not require any collateral as the invoice itself will suffice as a form of security.

    When there’s a need to hasten collections…

    Companies will want cash earned from sales to be reinvested back into the entity. But this cannot happen if trade receivables are left unpaid or at least hasn’t matured yet. In a usual scenario, a customer buys on credit which will bring about an invoice. This invoice will mature on a specific date and it comes with terms by which the customer is legally bound to pay. It therefore delays the actual receipt of cash thereby also deferring its reinvestment and use in the business. With the use of spot factoring, collection is hastened by virtue of the advancement of the invoice’s value.

    When cash flows need to be improved…

    Just because your sales are high doesn’t mean more cash for the company. Oftentimes, cash is locked up in customer invoices. This creates a negative impact on cash flows as more disbursements compared to what flows into the system. With spot factoring companies advancing the value of the said invoices, cash flows levels are improved and so are liquidity and working capital.


    Visit http://workingcapitalpartners.com to learn more about spot factoring.

    Tags: , ,