Selective Factoring or Spot Factoring

Selective factoring allows a business to choose which debtors to factor. They then notify all invoices for that debtor to the factoring company.

Spot factoring allows you to choose individual invoices to factor. This can be a one off invoice or a batch of invoices.

The major differences between the two are price and flexibility.

Spot factoring is very flexible and you can turn the tap on and off as you see fit. However, the interest rates can be high. Very high – 80% interest in some instances. That said if you have a short term issue and want to factor a single invoice for 30 days it could be your cheapest option.

Selective factoring requires a contract to be entered into and while you can choose the debtors you wish factor you are required to notify each invoice. The pricing structure is akin to a traditional factoring facility so if you are looking for a medium to long term solution selective factoring should be cheaper.

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