Reduce My Invoice Finance Bill
If your business already uses some kind of invoice finance it may be possible to reduce the fees charged, either the interest rate on funds drawn or any service/commission charge.
The first thing to remember is that your business is important to your funder and they will not want to say good bye to you. The cost of new business, i.e getting you to sign on the dotted line in the first place, is really high so your funder has a massive interest in maintaining you as a client for as long as possible.
To coin a phrase ‘if you dont ask you dont get’ so never be worried about a straightforward request to reduce charges. It never does any harm to be prepared in advance of this request so a conversation with an experienced broker will help here as they will be able to advise on how market competitive your current rates are.
Check your interest margin. Invoice financiers charge interest on funds used and the rate will normally be expressed as a percentage above Base Rate. With Base Rate 0.5% and no immediate sign of any rise, funds are cheap, AS LONG AS your funder is applying a true Base Rate.
In many instances funders will add the phrase ‘subject to a minimum base rate of……’ and invariably this will be a lot, sometimes an awful lot, higher than the true base rate
Keep tabs on the smaller charges, items such as drawdown fees (how you receive funds), funding facility amendment charges, renewal fees, debenture registration fees & others can add up to a material sum. All are negotiable, up to a point, so dont be worried about trying to reduce them.
Dont breach the agreement as this can give your funder the chance to apply some serious costs. However trivial you may deem a breach of an agreement, the funder will take it seriously and a whole raft of penalties can be applied. These may come across as disproportionate and significant so be careful for any accidental breaches.
Early exit fees are an issue. Should a business wish to exit an agreement earlier than contractually agreed then fees will probably apply and, as with fees for breaching an agreement, these can be significant. Exercise caution when leaving an agreement and make sure the terms and costs are fully understood.
There are a number of ways of reducing the overall cost and the above represents by no means a definitive list but they (the above) are all relatively easy to implement.