Comparing invoice discounting quotes for the first time can be quite complicated. There are so many different aspects of a deal, from interest rates, refactoring charges and service fees. The cheapest is not always best because credit limits for individual clients and prepayment percentages must also be taken into consideration. There is no point going with the cheapest deal if you are only going to get 50% of your expected funding. XL Business Finance has been helping businesses for over 10 years compare quotes and help the customer get into the nitty gritty of things.
There are two main charges to an invoice discounting facility. The interest rate for the money borrowed and the service fee. The interest rate is usually a percentage over base rate and is comparable to a bank overdraft rate. Some finance companies charge a min base rate and some link to LIBOR. Bank base rate is not always the same so it is always worth taking into consideration.
The service fee is a percentage of annual turnover however beware some invoice discounting companies charge a refactoring charge. This can be as much as 1% of any invoices that go over 90 days. Whilst this will not be a problem if your debt turn is good it is worth noting because if your customers take longer to pay it will increase the cost of the facility.
An invoice discounting will also charge a take on fee which can be anything from a few hundred quid to a percentage of the arranged facility.
Tags: invoice discounting
