What is Single-Debtor Financing?

Last Modified : Jun 05, 2024

Reviewed by: Bruce Sayer

Single-debtor financing, also known as single-invoice factoring or spot factoring, is a financing solution where a company sells a single invoice or accounts receivable to a non-bank lender to obtain immediate cash. Unlike traditional factoring, which involves selling a batch of invoices, single-debtor financing allows businesses to access funds tied to a specific invoice, providing a flexible and targeted approach to managing cash flow.

How Single-Debtor Financing Works

  1. Invoice Selection: The business identifies a specific invoice that it wishes to finance. This is typically a large invoice with a reputable debtor, ensuring lower risk for the lender.
  2. Lender Evaluation: The non-bank lender evaluates the creditworthiness of the debtor (the company that owes money on the invoice) rather than the business seeking financing. This focus on the debtor’s reliability makes single-debtor financing accessible to companies with varying credit profiles.
  3. Funding Agreement: Once the invoice is approved, the lender and the business enter into a funding agreement. The terms include the advance rate (percentage of the invoice value provided upfront), fees, and repayment terms.
  4. Advance Payment: The non-bank lender advances a significant portion of the invoice value, usually between 70% and 90%, to the business. This immediate cash infusion can be used to cover operational expenses, manage cash flow gaps, or invest in growth opportunities.
  5. Invoice Collection: The debtor pays the full invoice amount directly to the lender according to the original payment terms. The lender then deducts its fees and advances the remaining balance to the business.

Benefits of Single-Debtor Financing

  • Flexibility: Businesses can choose which invoices to finance based on their immediate cash flow needs, making it a highly flexible option.
  • Quick Access to Cash: The process is faster than traditional financing methods, often providing funds within a few days.
  • Credit Profile: Since the lender focuses on the debtor’s creditworthiness, companies with less-than-perfect credit can still access financing.
  • No Long-Term Commitments: Unlike traditional lines of credit, single-debtor financing does not require long-term contracts, allowing businesses to use it on an as-needed basis.

Example Scenario

Consider a mid-sized manufacturing company, ABC Manufacturing, that has just secured a large order from a reputable retail chain, XYZ Retail. The order is worth $100,000, but XYZ Retail’s payment terms are 60 days. ABC Manufacturing needs immediate cash to purchase raw materials and cover operational costs to fulfill the order.

  1. Invoice Selection: ABC Manufacturing selects the $100,000 invoice issued to XYZ Retail for financing.
  2. Lender Evaluation: A non-bank lender evaluates XYZ Retail’s creditworthiness and approves the invoice for financing.
  3. Funding Agreement: ABC Manufacturing and the lender agree on an advance rate of 85% and a fee of 3%.
  4. Advance Payment: The lender advances $85,000 (85% of the invoice value) to ABC Manufacturing.
  5. Invoice Collection: XYZ Retail pays the full $100,000 to the lender after 60 days. The lender deducts its 3% fee ($3,000) and transfers the remaining $12,000 to ABC Manufacturing.

In this scenario, single-debtor financing provided ABC Manufacturing with the necessary funds to fulfill a large order without waiting for the 60-day payment period. The flexibility and speed of this financing solution helped the company maintain smooth operations and seize a growth opportunity.


Single-debtor financing from a non-bank lender is an effective tool for businesses needing quick access to cash tied to specific invoices. It offers flexibility, speed, and accessibility, especially for companies with varying credit profiles or those seeking short-term financing solutions without long-term commitments. By leveraging single-debtor financing, businesses can better manage cash flow, meet immediate financial needs, and support their growth objectives.


ABOUT eCapital

Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.

We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.

Cal Navatto Headshot

As a trusted financial advisor to private equity groups, middle-market executive teams and corporate restructuring professionals for more than 30 years, Cal is adept at originating, structuring and negotiating asset-based lending and invoice factoring credit facilities for businesses across the US.

Prior to joining eCapital, Cal held the position of Vice President - CIT/Commercial Services Group, a subsidiary of First Citizen's Bank. He has also served as Senior Vice President, Finance at UMB Bank and NewStar Business Credit and Vice President, Business Development at First Capital.

Cal received his Bachelor of Arts in Economics from Montclair State University.

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