Ozarks Capital Funding

When a company wants to set up an invoice factoring arrangement, the contract usually specifies that the term is for at least one year.  Because there is a lot that goes into setting up the relationship, factors would rather establish an ongoing funding situation.  What happens when a company only needs one invoice factored for the purpose of bolstering their working capital?

When a company only needs to factor on an occasional basis, it is called spot factoring.  Many funding sources shy away from this type of arrangement not only because of the complexity of due diligence, but also because of the risk involved.  In a traditional factoring relationship, there are several customers that are part of the arrangement.  Even with expert credit screening, there is a possibility that one or more debtors could default on their obligations.  But the risk is spread around and the factoring client simply replaces the unpaid invoices with new ones.

With spot factoring,  risk is magnified because there is only one invoice and usually no other recourse in the event of non-payment.   That’s why if you’re an owner of a company wanting to factor on an occasional basis, you should make sure that your customer has superb credit in an industry that is VERY stable.

We work with companies that will look at spot factoring deals under the right conditions.  Do you have this type of need?   Click here to get a free quote or call us at (417) 849-7394.