Spot factoring involves the factoring of an individual invoice. In Selective Factoring, the seller or finance provider selects a range of invoices to be assigned to the finance provider, identifiable by a common feature, such as buyer name, governing law of the receivables, and production segment among others. The seller assigns all invoices or allowable invoices to the finance provider. The invoice bears a notice of assignment and the buyer is notified of the assignment of the receivables. The invoice bears no notice of assignment and the buyer is not aware of the factoring agreement between the seller and the finance provider. The Finance Provider does not have recourse back to the seller in the case of buyer default within established credit lines.Ĭonfidential or Non-Notification Factoring
The finance provider has recourse to the seller in the case of buyer default.
The finance provider becomes responsible for managing the debtor portfolio and collecting the payment of the underlying receivables Īlso denoted as Receivables Finance, Receivables Services, Invoice Discounting, Debtor Finance. Factoring is a form of Receivables Purchase in which sellers of goods and services that are part of a Physical Supply Chain sell their receivables (represented by outstanding invoices) at a discount to a finance provider (commonly known as the ‘factor’).
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