Growth takes positive cash flow, and over the past few decades, it has become harder and harder to access a business loan or line of credit from the bank. Factoring your invoices may be the best solution to help your company grow.
When factoring is your best option there are several things you need to consider, such as, how much cash flow you need at that time, how many invoices need to be factored and, and how do I get the best rate. Spot Factoring and Contract Factoring are two options you should consider when deciding what is best for your business. Both are great options, but one may be a better fit for your company than the other. But between the two options, which is best for your company?
Contract Factoring – Overview
Contract factoring simply means you factor ALL of the invoices for a particular project. Everyone knows, when you buy in volume things are cheaper, and it is no different with factoring. Contract factoring means lower finance rates and it gives you continuous cash flow that you can rely on for growth. If you are like most companies, you are bidding on many projects a week or month, not knowing if you will win one or 10. Contract factoring gives you continuous cash flow, allowing you to take on the next project and finance the startup without worry.
Spot Factoring – Overview
As the name implies, Spot factoring allows you to cherrypick which invoices you would like to have funded… as many or few as you’d like, as there are no long-term contracts, no monthly minimums, no obligations whatsoever. If you need funding, call us. If you don’t, don’t.
The downside of spot factoring is that it can be a more expensive option than contract factoring. And because it is invoice-specific, it does not give you continuous cash flow for the unknowns.
Both these options have their places. If you have questions about which is right for you, Contract or Spot Factoring, please give us a call at 865-670-2345 or use this form to get in touch. We are glad to help you determine which is right for your specific needs.
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