Factoring Single Invoices

7. October 2009 by admin.

Recently, I have noticed a larger amount of calls coming in from companies asking if we will factor a single invoice from a single client.  Of course I respond in the affirmative, but many times when I hear that question, I know what is coming next.  As part of our pre-qualification questionnaire, we inquire about the total amount of accounts receivable the company has.  The client normally responds with, “I thought you said you can factor a single invoice, why do you want to know about all receivables?”  I explain that an IFG spot factoring is a full recourse transaction, and is not intended to be used as the client’s dumping ground for delinquent accounts.  If an invoice becomes deliquent, IFG looks to exchange that invoice for another that the client has in their receivables portfolio.  IFGs Terms and Conditions document is quite clear about payment default and how it is resolved. 

I have found when a client begins the conversation with the single invoice question, they are often times looking to collect from a delinquent or deadbeat customer.  They have given up hope or don’t want to spend the time chasing the debtor, so they are trying to offload the bad invoice to us.  Many people do not understand the difference between spot factoring and collection activities.  Many feel that IFG should take over the collection activities for them.  While this may be more common among traditional factors, most factors operate on a full recourse basis. A little education about what spot factoring is usually clears this up quickly.

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