Summary: Spot factoring, often called selective invoice finance, involves selling individual invoices to a factor (lender) for an immediate cash advance, typically 70% to 90% of the invoice value. It offers greater flexibility than traditional factoring but generally carries higher fees per transaction, making it ideal for managing immediate, sporadic cash flow needs rather than continuous finance.

Summary: Invoice factoring is a powerful financial tool that provides immediate cash flow by selling your outstanding invoices to a factoring company (the Factor). The common misconceptions that factoring is solely for businesses in distress, prohibitively expensive, or forces you to relinquish client control are largely untrue, especially given the flexibility of modern UK factoring agreements.

Summary: Invoice factoring is generally not considered a loan, but rather the sale of a financial asset (your sales ledger receivables) to a third party (the factor). Unlike a loan, which creates a liability that must be repaid regardless of customer actions, factoring transfers the ownership of the debt. However, if the arrangement is ‘with recourse’, the underlying financial risk returns to your business, blurring the line between a sale and a secured advance.