When Spot Factoring Companies Become a Good Idea

spot-factoring-companiesSpot factoring companies offer one of the two main types of receivables finance. They allow business entities to draw immediate funds from a specific invoice thereby hastening the collection and allowing for the receipt of cash even before actual maturity and payment collection transpires.

We all know that money is the lifeblood of any organization and without it, operations cannot push through. After all raw materials and labor need to be funded. Nope, they do not come for free. But when does involving the service of spot factoring companies become imminent and fruitful? We’ve listed down five scenarios below. Take a look.

Scenario # 1: Opportunity Loss

In business, a missed opportunity can tantamount to financial losses. But even if an entity wants to grab the chance, it can be hindered by its lack of resources or inadequacy of unrestricted liquid funds. This is a very common issue among many entrepreneurs in the world today. But with the help of spot factoring, this need not be the case anymore.

Scenario # 2: Cash Flow Deficit

Sales are not the sole driver of success. Oftentimes, a sale does not equate to cash given the presence of credit that creates receivables instead. Although an asset, receivables lock up cash within invoices up until they mature and payment is collected. This can create a negative impact on the business in terms of liquidity. To hasten collections and improve liquidity without eradicating credit sales, spot factoring can be employed.

Scenario # 3: Property Collateral

Unlike other financial institutions and providers, spot factoring companies do not require property collateral nor do they entail interest as the service is first and foremost not a debt or any other type of liability. This makes them available and reachable even t small and medium scale enterprises, startup companies and recovering entities.

Scenario # 4: Expense Averse

Since factoring invoices do not come with interest and collateral, it’s a more affordable type of financing as compared to other more popular alternatives. Moreover, its requirements are less expansive and meticulous thus the ease and convenience.

Scenario # 5: Time Constraint

Spot factoring companies also serve as any entrepreneur’s best friend in times when immediate cash is needed such as during emergency disbursements. Since these providers can release funds in as fast as twenty-four hours, they are unlike any other financing method available in the market. They run at the speed of light, figuratively that is.

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Spot Factoring Companies Explained

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