Definition
Factoring a single invoice without a long-term contract.
Why it matters
Flexible but slightly more expensive.
Where it shows up in a deal
Spot factoring is arranged invoice by invoice: you bring a single large receivable, the funder credit-checks that one buyer, files its UCC and sends notice to that customer. There is no commitment to bring the next invoice, which is the whole point and also the reason it prices higher.
What it affects
- The funder recovers its onboarding and credit work on one transaction, so the rate carries that cost.
- Advance rates are typically lower than on a committed full-ledger program.
- It leaves you free to use the facility only when you need it, with no minimum to miss.
- Repeated spot deals with the same funder usually convert into a cheaper committed program.
A worked example
A single $60,000 invoice at an 85% advance and 3% for 30 days: $51,000 advances, the $9,000 reserve releases $7,200 after the $1,800 fee, and you receive $58,200. The same invoice inside a full-ledger program at 1.75% would cost $1,050.
The common mistake
Related terms
- Invoice FactoringSelling unpaid invoices to a factor for an immediate advance.
- Minimum VolumeA contractual minimum amount of invoices a client must factor each month.
- Discount RateThe fee a factor charges, usually expressed per 30 days or per 10-day increment.
- UCC-1 FilingA public notice that a lender has a security interest in a business's assets.
Questions about how spot factoring affects your facility?
Call (929) 658-8087 or request a written quote — no obligation, no credit impact.
