How spot financing can help your company

A phone call comes in, you talk to a client, and before you know it you have taken one of the largest orders your company has ever seen! This is a wonderful phone call, but at the same time it's a bad thing as you use all of your cash reserves to complete the order and you hope this customer makes this big payment in a hurry. Unfortunately for a number of small businesses, they make the big mistake of not asking this big customer to make a deposit at the time the order was placed and then enroll in a payment plan.

Unfortunately lenders do not like to offer extra cash to small businesses to pay for the extra inventory they need to stay in business. So what can you do to close the cash flow gap while you are waiting on this big client to finally make their payments? A great option you have is known as spot financing or spot factoring. Spot financing is an as-needed financing option that is available to your company for large order such as the one described above.

Spot factoring is new to many small businesses as it is a short-term financing opportunity that provides just enough money to stay in business or to expand in a hurry.

How does it differ from traditional factoring? Factoring is when you sell off your past due invoices for cash now and the other company will collect the money. Spot factoring is an as-needed financing option. It's a one-at-a-time job where your cash flow is fine until the big order comes in and you suddenly need the extra money. Factoring is a consistent service that your company will enroll in.

How soon can you acquire spot factoring? The money will be to your account in about 24 hours after you have shipped the order to your client. Having the money in such a timely manner will help you to stay in business and to pay for your needed things like accounts payables. Why is spot financing so great compared to other options? Here are a few of the great advantages to spot factoring:

• Absolutely no upfront fees


• You have your money within 24 hours of shipping the order or invoicing the order with some firms.


• You don't need a credit check, just your financial records to prove that you have a strong company.


• You don't have to worry about a long-term commitment like you do with traditional factoring.

Trying to get by for 90 days while you wait for some of the payment from your larger orders is not the best way to do business. Do yourself a favor and use spot factoring to acquire the money you need so you can pay your employees and vendors.

The last thing you want to do is burn relationships with your vendors as they may never work with you again if you miss a single payment. Not only will it hurt relationships with them, it can also destroy your business credit rating, making it difficult to acquire future loans or lines of credit for your company.Spot factoring helps you to maintain a stronger cash flow when you get these big orders. This allows you to keep your big clients happy so that you don't turn them away but it also helps you to avoid getting in over your head and taking on orders that you really cannot afford to take on.

Having the ability to run your business without needing to worry about cash flow problems is the best way to reduce your stress load and to also keep your employees happy as they never need to worry about being paid.