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Glossary · Factoring

Spot factoring

Also called: Single-invoice factoring, Selective factoring

Definition

Spot factoring is selling a single invoice, or a few chosen invoices, to a factor without a long-term contract or any obligation to factor future invoices.

Carriers use spot factoring to cover a cash gap without signing a volume contract. Per-invoice fees are typically higher, and there are no monthly minimums or termination fees.

For the factor, spot deals concentrate risk. The carrier chooses which invoices to sell, and it rarely picks its fastest-paying broker. You do full onboarding work for one invoice, with no relationship or payment history to lean on, and a one-off deal gives a fraudster no reason to stay.

The legal trap is an existing lien. If the carrier already has a whole-ledger factor whose UCC-1 covers all accounts, that earlier filing generally ranks ahead of you under UCC §9-322, and the debtor may already have that factor's NOA. Run a UCC search before you buy, even for one invoice.

Sources

  1. 01UCC §9-322: Priorities among conflicting security interests · Cornell LII

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