If your business is the type that provides 30 to 60 day payment periods for customers and has now got into trouble due to a robbery, fire damage or due to a set of delayed payments, spot factoring is the best way you can use to manage your payroll at the end of the month.
Are they money lenders?
No they are not.These companies do not lend anyone money, instead they provide cash to another party only when they are able to purchase a valid invoice or a batch of invoices from the other party. Once they receive an invoice they evaluate itto check its validity.
If it’s valid they provide a cash advance upfront. Next they act as a third party and come between you and the buyer. When the buyer pays they take that payment and reduce all their service fees. Finally the remaining sum will be released to you.
What would I need to qualify?
In order to receive cash advances from such companies you should be a representative for a business that has been in function for at least 6 months that permits customers to have payment periods from 30 to 60 but not more than 120 days.
You will be asked to provide them valid invoices and obliged to bind to their terms and conditions and fee structures when signing up. You will be able to qualify for such a service even if your business runs on bad credit and unlike banks they will not ask for incomes, guarantors, for lending you cash advances.
What’s so great about it?
It’s a great method as it’s a short term contract you can cut off all the ties once the deal is over and choose to begin a new contract whenever you want it. There will be no obligations involved and you will not have to pay any debt at the end. It also allows you to receive cash within short durations mostly within 24 hours.
Two things to keep in mind
This method of factoring is very expensive so pay attention to their fee structure before signing up. Use it only in emergencies and not on a monthly basis or you will lose much of your profit to pay them.