Selective Invoice Finance
Selective invoice finance: funding on your terms.
Sometimes you do not need a whole-ledger facility. Selective invoice finance, sometimes called spot factoring or single invoice finance, lets you fund particular invoices or customers when it makes commercial sense.
What it is
Selective facilities let you decide which invoices to put forward for funding. You might fund a single large invoice from a new contract, a particular customer who always pays slowly, or a run of invoices ahead of a seasonal peak. The rest of your ledger is left untouched.
Because there is usually no whole-turnover commitment, selective facilities can be a useful way to handle occasional pressure without signing up to an ongoing arrangement. The trade-off is that the cost per invoice tends to be higher than under a whole-ledger facility.
How it works
- Identify the invoice
You choose which invoice or customer account you would like to fund.
- Provider assesses it
The provider reviews the invoice and the customer's creditworthiness before agreeing an advance.
- Funds released
An agreed proportion of the invoice value is advanced to you.
- Settlement
When the customer pays, the provider releases the balance less their fee. There is no obligation to fund the next invoice.
Who it tends to suit
- Businesses with occasional rather than constant cash-flow gaps
- Firms winning large one-off contracts
- Companies that want to trial invoice finance before committing
- Businesses with one or two slow-paying customers
Advantages and considerations
Control over what you fund
Only the invoices you choose are financed. There is no requirement to route your whole ledger through the facility.
Lower ongoing commitment
Selective facilities typically avoid the minimum fees and notice periods associated with whole-ledger arrangements.
A way to test the water
Some businesses use selective finance to see how invoice finance fits before moving to a fuller facility.
Higher unit cost
Flexibility comes at a price. If you find you are funding most invoices most of the time, a whole-ledger facility is usually more economical.
Customer quality matters more
Providers assess each invoice on its merits, so funding depends heavily on the creditworthiness of the customer in question.
Common questions
Is selective invoice finance the same as spot factoring?
The terms are often used interchangeably. Spot factoring generally refers to funding a single invoice; selective invoice finance can also describe facilities where you fund chosen customers on an ongoing basis. The principle is the same: you choose what to fund.
Will my customer know?
Often, yes. Many selective facilities involve the provider verifying the invoice with your customer and collecting payment directly. Confidential selective facilities exist but are less common.
Is there a minimum invoice value?
Most providers set a minimum invoice size for selective funding, and it varies. We can help you understand where your invoices are likely to fit.
- Invoice Finance
- Invoice Factoring
- Invoice Discounting
- Selective Invoice Finance
Reading helps. A short conversation about your own business usually helps more.
Discuss your options