Spot Factoring vs. Contract Factoring

Invoice factoring isn't one-size-fits-all. Two of the most common structures are spot factoring (factoring a single invoice) and contract factoring (an ongoing agreement to factor many invoices). They serve different needs.

Spot factoring

Spot factoring — sometimes called "single-invoice factoring" — lets you factor one invoice at a time, as needed. There's no long-term commitment and no requirement to factor your whole ledger.

Best for: irregular cash needs, a single large invoice, or businesses that only occasionally need to bridge a gap.

Trade-offs: because each invoice is underwritten individually and there's no volume commitment, per-invoice fees tend to be higher, and not every invoice may be approved.

Contract factoring

Contract factoring is an ongoing arrangement: you agree to factor some or all of your invoices over a set period. The factor gets predictable volume; you get a streamlined process and usually lower per-invoice fees.

Best for: businesses with steady invoicing that want predictable cash flow and a hands-off process.

Trade-offs: you commit to a minimum volume or term, and you may be expected to factor most or all of your eligible invoices — less flexibility to pick and choose.

How to choose

If your need is occasional and you want maximum flexibility, spot factoring keeps things simple. If you invoice regularly and want the lowest cost and least friction, a contract arrangement usually wins. Many businesses start with spot factoring to test the waters and move to a contract once the volume justifies it.