Invoice Discounting Costs
Invoice discounting costs are significant and it is important you fully understand how they are applied by each lender. When making a comparison it is imperative that you consider total invoice discounting costs.
Invoice discounting costs include the headline rates which are:
Service fee: this is the fee that the lender charges for operating the facility. It is typically charged as a percentage fee on each invoice and ultimately your gross annual turnover. Some lenders do offer a flat fee.
Discounting fee: this can be equated to the interest charged on an overdraft facility and it is the fee charged on the amount you actually borrow.
When comparing invoice discounting quotes many businesses simply compare headline rates. However, it is important that you consider any additional fees also.
Additional Invoice Discounting Fees
Invoice discounting fees can include:
Set up fees or arrangement fees: this is a fee that is typically charged for setting up the facility.
Survey fees: lenders will usually want to undertake a survey on your business as part of their due diligence. Some lenders offer this free of charge while others charge a fee for it.
Take on fee: this may not be an additional fee as such but this is important to consider. It is the service fee that is applied to the outstanding invoices at take on and can be a significant cost.
Audit fees: lenders will typically want to audit your business. It is important you understand what charges are applied for this and what frequency they will take place. Some lenders include the price of audits within the service fee while others might charge ?1,000 an audit. If the frequency is quarterly this is an additional ?4,000 a year to consider.
Re-factoring fees: some lenders will charge a fee on invoices that are outstanding after a certain number of days.
CHAPS fees: the cost of same day money transfers can be a significant cost for some business and we have seen them range from ?7.50 right through to ?50.
Does cheap invoice discounting exist?
Cheap invoice discounting is often requested by our clients. There is always a cost attached to invoice discounting but it is fair to say that the difference between the cheapest invoice discounting facility and the most expensive can be dramatic.
At Smart Factoring Quotes our market knowledge and wealth of experience allows us to source the cheapest invoice discounting facility for your business. We consider total costs which having read the above we are sure you will appreciate is incredibly important.
We want you to fully understand not only the benefits of invoice discounting but also the costs and other implications involved. Only with this full picture can you truly understand which invoice discounting facility will be best for your business.
For a bespoke indication of invoice discounting costs for your business why not use our free online quotation tool. This will provide you with a quote based on your turnover, sector and the value of your outstanding invoices.
Smart Factoring quotes would welcome the opportunity to work with you to source and structure the best possible invoice discounting facility for your business. Contact us today on 0845 863 0738
