Selective invoice finance: funding on your terms.
Sometimes you do not need a whole-ledger facility. Selective invoice finance, sometimes called spot factoring or single invoice finance, lets you fund particular invoices or customers when it makes commercial sense.
- Commitment
- Invoice by invoice, or customer by customer
- Suits
- Occasional, seasonal or project cash-flow needs
- Flexibility
- High
- Cost per invoice
- Often higher than whole-ledger facilities
What selective invoice finance is
Selective facilities let you decide which invoices to put forward for funding. You might fund a single large invoice from a new contract, a particular customer who always pays slowly, or a run of invoices ahead of a seasonal peak. The rest of your ledger is left untouched.
Because there is usually no whole-turnover commitment, selective facilities can be a useful way to handle occasional pressure without signing up to an ongoing arrangement. The trade-off is that the cost per invoice tends to be higher than under a whole-ledger facility.
How a selective facility works
- 01
Identify the invoice
You choose which invoice or customer account you would like to fund.
- 02
Provider assesses it
The provider reviews the invoice and the customer's creditworthiness before agreeing an advance.
- 03
Funds released
An agreed proportion of the invoice value is advanced to you.
- 04
Settlement
When the customer pays, the provider releases the balance less their fee. There is no obligation to fund the next invoice.
The precise mechanics, timings and documentation vary between providers. This is the general shape of the arrangement.
Businesses it often suits
- Businesses with occasional rather than constant cash-flow gaps
- Firms winning large one-off contracts
- Companies that want to trial invoice finance before committing
- Businesses with one or two slow-paying customers
A note on suitability
Suitability depends on your customers, your invoicing and the provider’s appetite. A short conversation is usually enough to tell whether this structure is worth pursuing, or whether another form of invoice finance would serve you better.
Is invoice finance suitable for my business?Where it helps, and what to weigh up
No facility is right for every business. These are the points that most often decide the matter.
Advantages
Control over what you fund
Only the invoices you choose are financed. There is no requirement to route your whole ledger through the facility.
Lower ongoing commitment
Selective facilities typically avoid the minimum fees and notice periods associated with whole-ledger arrangements.
A way to test the water
Some businesses use selective finance to see how invoice finance fits before moving to a fuller facility.
Considerations
Higher unit cost
Flexibility comes at a price. If you find you are funding most invoices most of the time, a whole-ledger facility is usually more economical.
Customer quality matters more
Providers assess each invoice on its merits, so funding depends heavily on the creditworthiness of the customer in question.
Selective Invoice Finance questions
Answers to the questions we are most often asked about this type of facility.
The terms are often used interchangeably. Spot factoring generally refers to funding a single invoice; selective invoice finance can also describe facilities where you fund chosen customers on an ongoing basis. The principle is the same: you choose what to fund.
Often, yes. Many selective facilities involve the provider verifying the invoice with your customer and collecting payment directly. Confidential selective facilities exist but are less common.
Most providers set a minimum invoice size for selective funding, and it varies. We can help you understand where your invoices are likely to fit.
- The umbrella term
Invoice Finance
A way for businesses that sell on credit terms to access a proportion of the value of unpaid invoices before customers pay.
Learn more - Funding plus collections
Invoice Factoring
Release cash against unpaid invoices while the provider manages credit control and collects payment from your customers.
Learn more - Funding, you keep control
Invoice Discounting
Draw funds against your sales ledger while continuing to run your own credit control, often without customers being aware.
Learn more
Could selective invoice finance work for your business?
Tell us about your customers, your invoicing and where the pressure sits. We will tell you whether this structure fits, and what the alternatives are.
No obligation. We will tell you plainly if invoice finance does not look like the right answer.