Factoring & Invoice Discounting in the UK

5 Ways To Reduce Invoice Finance Costs

  1. SWITCH  LENDER
  • Invoice Financiers rates vary considerably at any one point in time and significant cost reductions can be achieved by approaching the competition.
  • Not all lenders actually want your business. Their current appetite for risk, funding limits, company size or even industry sector can fluctuate and determine how competitive new offers might be.
  • You could spend a significant amount of time getting quotes, preparing documents and meeting with Business Development Managers. Carefully select which lenders to approach or even better go through an independent broker who can reduce the work load, hassle and get you to the two or three that can provide a better deal.

 

  1. REVIEW & RENEGOTIATE
  • If you have been with your funder over a year, formally review rates, terms and funding limits with your funder.
  • Invoice Financiers do not like losing clients so they may reduce rates or look to improve service levels to prevent losing a good client. Remember, their lending criteria changes regularly so don’t make assumptions. If possible talk to an independent broker who might be able to give you an opinion.

 

  1. CONSIDER ALTERNATIVE INVOICE FINANCE OPTIONS
  • The invoice finance market continues to evolve and many options are now available, there’s single invoice finance, internet auction platforms, selected debtor finance, optional credit insurance and many others.
  • If you have a few credit worthy customers then consider single invoice or selected debtor finance and avoid signing long term agreements.

 

  1. FOLLOW THE RULES
  • Banks don’t like rule breakers. Most facilities will charge you (often quite significant fees) in the event that you step outside your agreement. These can often be seem as ‘hidden charges’ but they will be in the agreement you signed.
  • Talk through these additional costs with an independent broker to gauge their opinion.

 

  1. CONSIDER OTHER FUNDING SOURCES
  • Invoice Finance is not always the most appropriate form of commercial finance as a business develops, grows or contracts. Larger companies in particular will have greater scope to optimise and extend funding lines through ‘structured’ finance deals. This might narrow the number of lenders.

 

Just Commercial Finance have either reduced the fees or increased lender funding limits in almost 82% client enquiries. Those savings are passed on directly to your business.