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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Selective invoice finance (spot factoring)

What is selective invoice finance, and how does it differ from whole-ledger finance?

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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

Selective invoice finance, also called single-invoice finance or spot factoring, advances money against individual invoices or customers that the business chooses, rather than against its whole sales ledger. It suits a business with a few large, slow-paying customers or an occasional cash gap, and it usually comes without long minimum terms. The financier is relying on one debtor and one invoice at a time, so it checks that customer's credit and confirms the invoice is genuine and undisputed, and it charges more per invoice than a whole-ledger facility, where the spread of debtors carries part of the risk.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// WHAT IT IS NOT

Invoice discounting and factoring usually cover the whole sales ledger; selective invoice finance covers only the invoices the business puts forward, one at a time.

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