To me that is the most important factor – compare the benefits the facility offers against the costs and then establish which facility represents the best value to your business. This will allow any business owner to consider which facility represents the best value. It is also important to remember that the lenders offering the best rates can be among the most risk averse and as such your facility may be structured in a more cautious way.Īt Smart Factoring Quotes our approach is to explain the benefits and potential downside of any facility and along side this show the total annual costs involved. It is however imperative that any business owner looks beyond the headline rates and considers total costs when comparing facilities from an invoice discounting company. We monitor the market for the cheapest invoice discounting rates available at any one time.Īt present we have several invoice discounting companies who are actively competing on price and claiming they will not be beaten on price. If you are looking for the best invoice discounting rates it is well worth speaking to Smart Factoring Quotes. So is it the future? I am not sure but it is another valid solution for many businesses so it should be embraced. While rates for spot factoring may well be higher than the rates for whole turnover factoring, if you have a genuine short term requirement spot factoring will typically be your cheaper option in terms of pounds and pence!! Traditional factoring can attract minimum service fees and minimum contract periods which can mean if you have a genuine short term requirement traditional factoring can be expensive. Well the interest rate is 10 – 20 times more than what you will pay on a traditional factoring facility but your debt may only be outstanding for 30 days. But does this make it more expensive than traditional factoring? However, this can equate to an APR of circa 80%. Most lenders will quote a daily interest rate which sounds nominal. In short the interest rates can put some people off. This can be quite attractive to some businesses. In essence you can “dip in and out” as you need to. You can also revisit the “facility” further down the track if you have another invoice you wish to factor. It means that you can factor a single invoice and once that is paid you have no contractual obligation.
However, if you are looking for a short term solution to a cash flow “hiccup” then spot factoring can be ideal.
Obviously if you have an ongoing requirement to factor each invoice or the majority of your invoices it makes sense to seek a suitable factoring facility. We are talking about factoring a single invoice as opposed to factoring whole turnover as you would with a traditional factoring facility. Spot factoring seems to be gaining popularity within the UK and is a fairly common procedure in the US.