We’re on a mission to make finance more transparent. You need to know what you’re paying when you borrow money. Too often in invoice factoring, the real cost is hidden behind a maze of different fees – over 40 in some cases!
The basic costs of any invoice finance facility are your service fee (there’s usually a monthly minimum) and your discount rate (which acts a little bit like an interest rate on what you’re borrowing).
But the real cost of factoring can run quite a lot higher than just these headline fees.
Don’t assume you only get charged for really unusual things that take a lot of work, you’ll find it almost impossible to avoid some of these extra charges (and some are mandatory).
We thought it was time to get some transparency around these hidden costs so read on for a short list of some of the extra services you’ll be paying for, and a very rough guide of what you might be charged (numbers can vary a lot from provider to provider).
As you’ll see these additional services can soon mount up and if you’re a growing business owner that is NOT great news. Notably many of these fees aren’t actually listed out in your contract, but in separate policy documents you’ll have to find yourself.
Examples of ‘Disbursements’
Copies of any reports £40-60
Copies of legal documentation £100- £120
Credit check on a debtor £15
Invoices or any supporting docs not supplied within £55
72hours of assignment
Breach of invoice finance agreement £350 minimum
Audit visit £500 minimum
Cancellation of audit visit £559
Recalling BACS £45
Payments to third parties £270-290
Payment request outside of normal processing hours £200
(often less than three hours a day)
Overpayments exceeding one week £590 or 6%
Early CHAPS transfer £300/ 3%
Standard solicitors letter £30-40
BACS bank transfers are usually free though you will be pleased to know.
These are just some of the fees you can face in traditional invoice finance. There are many, many more – and some carry much larger charges.
If you’re in an invoice finance facility, take a look through your contract and see if you can find all the fees and work out what you’re paying for.
Or, you could do away with hidden fees altogether and speak to us!