Many businesses choose to not review their Invoice Finance facilities as they see making the switch as being a long winded and time-consuming task. When switching facility there is no gap in funding as the new provider will buy out your previous funder. In some cases, with an improved facility, you will get an instant cash advance the day you make the change.
When should I review my Invoice Finance Facility?
If your business experiences an increase in turnover your Invoice Finance facility should react to these changes. As well as hopefully increasing your funding line you should see a decrease in the service fee. Typically, the higher a business’s turnover is, the lower the service fee should be. Likewise, if there is a significant drop in turnover and you find yourself paying a monthly minimum fee, this is a key indicator for a review.
Some providers have minimum turnover thresholds, so when you first looked at invoice finance you may not have had the full market to choose from. As your turnover increases you will unlock other funders who may be cheaper or have a better suited facility for your business.
As your trading history develops the more attractive your business becomes to market. It may well be when you first started looking at invoice finance, your business did not suit several providers due to the business’s infancy or size.
If you have reached your funding limit you will be unable to drawdown any more cash from your facility even though there are invoices there to finance. If there is resistance from your provider to increase your review limit, it is worth looking at alternative options to not stunt the growth of your business.
Similarly, you may find yourself capped with specific customers. This could be down to several reasons but most commonly either a concentration restriction or a credit limit on your customer that needs to be increased. Although concentration limits are common, not all lenders have these restrictions and they become even less of a concern if your business uses Bad Debt Protection.
If you fall under any of these circumstances and would like to review your current arrangement Compare Factoring offers a free assessment of your current funding situation.
What does our free review look like? We will:
• Assess the suitability of your current lender and explain to you how this may differ with other providers.
• Review how much you pay and make sure that this is in line with market rates.
• Give you reassurance that your current funder is right for you or look to gather quotes so we can show you how we can improve upon your current facility.
We can complete a review within a 10-minute call and give you an instant guide on whether it is worth exploring other options. Please feel free to get in touch if we can add value on your review.
Invoice Finance is a perfect way to help your business manage cashflow and to remove the headache of late payers. There are a number of ways that an invoice finance facility can be structured and it can be tailored to your preferences.
Why not try our “help me choose tool” to allow us to support you in making the right decision for your business in 4 easy steps?