Single Invoice Factoring
This type of short-term finance funding allows you to quickly unlock cash from invoices you issue to your clients in days. There is no hassle of long-term tied in contracts.
You simply pick which invoice you wish to fund. Your customer needs to be credit-worthy (not too much to ask), but the funders will often provide bad debt protection as part of the package, thereby giving you peace of mind if your customer happens to go into administration or receivership while still owing you money.
With this in mind there is no need to fund all your sales ledger, making it a perfect fit for short term lending for any business needing working capital.
What is Single Invoice Factoring?
Single Invoice Factoring is when a business wants to fund one invoice in a timely manner without waiting for its customer to pay in their contractual payment terms of 30, 60 or 90 days. This type of borrowing is in contract to a traditional invoice finance facilities with provide funding against the entire sales ledger, single invoice finance allows you to release cash from individual invoices.
Your business can often have cash locked up in a one-off large invoice that puts you under pressure while you wait for them to pay. It’s quick, convenient and affordable.
You can draw down up to 85% of the invoice value for up to 120 days, but as with most financial products, the more you borrow and the longer it’s outstanding, the more you will pay. However compared to a whole-turnover facility it can save you a lot of money. There is no tie in and no minimum fee. You can use it when you want and as often as you want or just once and never again.
Types of invoice finance
SMEs needs tend to vary according to growth stage and the industry it is within. If you are unsure of what type of selective invoice finance facility will suit your business, here is a brief guide to the five main debt factoring options to help you work it out:
Single invoice discounting – Single invoice discounting is an invoice finance facility when a company’s unpaid invoice are used as collateral for a loan. With an single invoice discounting company, when sending out an invoice to customers a proportion of the total amount becomes available from the lender, which provides your business with a source of working capital throughout the month while you wait for the payment of your invoice to be processed.
With single invoice discounting, you remain in charge of your own credit control processes, meaning that you continue to a chase late payment and therefore your customers are not made aware of our involvement.
Selective invoice factoring – Selective invoice factoring is when a business sells a single invoice to a third-party company. It’s a form of selective invoice finance and will give your business an effective way to improve its cashflow position.
How does invoice factoring work, the single invoice lender will provide the credit control service to recover payment of the unpaid invoice. The lender will provider a credit control services with a single invoice factoring service, allowing you to concentrate on other areas of the business instead of chasing up late payments.
How does single invoice finance work?
Most businesses using a single invoice financing facility will choose to submit a large value invoice to a factoring company, in contrast to a low value invoices.
Once rates and charges have been agreed, the facility will allow up to 85% of the value of the invoice may be released upfront. The remaining balance is transferred to the business minus service fees once your customer has paid the outstanding amount
Most lenders in the UK pay in two instalments, the first covering the bulk of the receivables. The remaining amount usually 10-20% when your client settles their invoice, minus any factoring fee. A simple process of how single factoring works are as follows:
- You submit details of your business invoice to the factor to determine if you are eligible for the factoring facility.
- The lender will then assess the credit scores of your clients and will then offer their quote.
- Once you agree to the terms and conditions, the factor will advance you the money.
- Collection of outstanding invoice amounts with your customers will commence.
- Once the outstanding invoice amounts has been collected, the factor will pay you the remaining balance of your money, minus their fee.
Single invoice finance is only possible with business to business transactions. Each selective invoice finance provider will have their own set of conditions that determine whether a business is eligible, so the requirements for obtaining a factoring service will vary. Specifically, qualification may depend on the company’s turnover, and requirements will vary from industry to industry.
Why use Invoice selective invoice finance
Using a selective invoice finance facility you only pay for what you use, and only use the facility when you need to. You can finance either a single invoice debtor, or you can choose multiple debtors in order to meet your companies cash flow needs.
The flexibility of Selective Invoice Finance leaves you in charge of your facility, so you can have total reassurance you can pick the late paying customers you wish to fund.
Traditional factoring facility required a contract that can be as short as 120 days but is typically 12 months with 3 months notice to terminate. They also typically require every invoice to be factored meaning all your sales ledger, with a Single Invoice Facility there is no contract period, so no notice is needed during the arrangement simply switch it on and off as you need.
- It’s quick and easy to use, just send us the invoice, we will do the rest.
- Funds can be paid out in 48 hours.
- You can use the released cash for whatever purpose you want.
- You can use the service as and when you need it, No commitment.
- There’s no long term tied-in contract.
- It reduces the pressure to collect customer payments, as we will use our credit control services.
- It can lower time spent on administration since the lender assumes sole responsibility for collecting the debt.
- The Approval of the funding line is based more on the creditworthiness of your customer.
- Companies with adverse credit history welcome.
- We have fixed and transparent charges, so no surprises.
Benefits of Single Debtor Invoice Factoring
One great benefit of selective invoice Factoring can reduce the financial risks your business faces. Because all cash advanced is secured on invoices you have already issued, it avoids the danger that you will fall behind with loan repayments which is always present with traditional commercial finance. Single invoice factoring means:
- Improved cash flow with fast access to the cash you have already earned, but which is tied up in unpaid invoices.
- Versatile – provides a source of cash you can use as you need it
- Flexible – you won’t be committed to any funding facility or contract
- Ideal for high-value invoices or customers with long payment terms
- Funding is based on your customers’ creditworthiness – not yours
- Get 90% of invoice value as soon as you bill your customers
- Cleared funds can be in your account the day after you invoice
- Ideal for high-profit businesses that are growing and need the cash flow to fund additional growth
- Provides capital for your business, without having to sacrifice equity
Difference between single and selective invoice finance?
There are no differences between “spot factoring“, “single” and “selective” invoice finance, they all refer to the same funding product. over the years the financial product has been given different names by different lenders.
Does my business qualify?
If you operate a limited company and it is regretted in the UK you could be eligible for selective invoice finance. You business must have a turnover a minimum annual turnover of at least £100,000.
- UK Registered business
- Minimum trading of 6 months
- Limited, partnership and sole traders accepted
- Turnover at least £100,000 per annum
- Must provide goods or services to other businesses
Like to know more
Need more information on this type of funding for your business? The process is so simple, place an online enquiry and a Single invoice Specialist Brokers will contact you by return once we have received your enquiry.