The week completed, 24th April 2015

Interest Rates can vary hugely across both commercial and consumer borrowing. The Bank of England Base rate has been 0.5% since March 2009 which should bring borrowers access to cheap funds.

Consumer borrowers see some spectacular rates with annual percentages  reaching the thousands in the worst cases and in the commercial borrowing world there are some incredibly high rates too, giving business borrowers a far higher charge than may be appropriate or expected.

Within the invoice finance sector there can be an unhealthy masking of the true interest rate charged for funds used. One such example this week sees a business utilise funds at a described rate of Base Rate plus 2.5 (subject to a minimum base rate as determined by the lender).

The key point here is the ‘subject to a minimum………….’ line. When a rate is quoted thus its probably not unreasonable to expect the Base rate to be the aforementioned Bank of England figure. In this case the actual base was 7.5%.

What is frustrating is the opaque nature of the description and it ought to be incumbent on lenders to be clear on charges, rates and security. Sadly, within parts of the invoice finance community, there are massive discrepancies between the headline description and the reality.

Funders use a number of different ruses to hide the true charges. As an independent broker Factoring Partners is ideally placed and suitably experienced to guide a business through the charges, imposed by invoice financiers, including those that are a little less than clear.



Locally Stratford grinds to a halt this week end (as it does most days, traffic wise) to celebrate a well known birthday.