A Smart Financial Plan That Sustains Your Business and Customers
If you want to know a fast and a reliable way of accessing some cash for your business in times where you have delivered a large order and got late to get paid the following article will teach you a smart financial decision you can make. This strategy will help you to cope up during not only delayed payments but also in times where uncontrollable damages occur to your business.
Introduction to the method
Single invoice factoring which is also called as spot factoring is a fast yet reliable way to secure some cash for your business when the customer delays payments for a duration like 30 to 60 days after you have delivered them your goods.
This method will help you to sustain your business as well as to sustain a healthy relationship with your customers without being a troublesome supplier.
What are the advantages of using this over other financial plans?
Traditional factoring services require contracts that can go up to 12 months. But spot factoring doesn’t need any long term contract, and you can end it when the deal is done so it can be used to solve one time cash flow crunches.
The spot factoring companies allows you to sell them a single or a set of invoices when you need without making you to enter a lengthy contract with them. But before you jump in be sure to do some research to find the best spot factoring company that suits you.
Details on the process and how it works
The process of spot factoring can be explained as follows.
- First your business provides goods or services to your customers and once they receive they delays the payments.
- So you send your invoice to a factoring company asking for an advance.
- The factoring company verifies your invoice and pays you most of the value of the invoice with a margin of 10 to 30 percent.
- So you get cash deposit within 24 hours so you can continue with your business.
- Later when your customer pays he pays to the factoring company.
- The company charges a fee for their service and sends in the remaining amount back to you.