• Leaving Invoice Finance Before The End Of Your Notice Period.

    Notice for termination periods for invoice finance.Leaving your invoice finance company, before the end of your period of notice of termination, is often possible although many are unaware of this option.

    Termination Notice Periods

    When you enter into a whole turnover invoice finance arrangement, it usually comes with a minimum contract period and a period of notice of termination (selective arrangements often have no minimums or notice periods).

    The minimum contract period is often 12 months, which is the minimum period that the agreement must run for. Some providers offer much shorter contract periods e.g. monthly rolling arrangements.

    The period of notice of termination, is often three months, which is the amount of notice you need to give, after the expiry of the minimum period, in order to leave the arrangement. As stated above this is typically three months, but may differ in some cases.

    Can You Leave During The Notice Period?

    One of the common misunderstanding is we come across is that clients believe that they are unable to leave their invoice finance company until their notice period has been completely served. This is not normally the case.

    The reasons for leaving one provider to go to alternative are varied. They include making cost savings on the fees, increasing the amount of funding provided and improving the service levels that are delivered.

    Many clients are unaware that they can often leave within the period of notice of termination, although they may incur an early termination fee. This may not be the case if poor service is able to be proven by the client.

    In cases where a prospective client is looking to move providers in order to take advantage of a substantial cost saving, there may be a financial case for incurring the termination fee in order to benefit from the cost savings. For example, on average, we have been able to achieve average cost savings on fees quoted elsewhere of 34% for our clients. This could be a significant amount of money that may well outweigh a early termination fee.

    Are you worried about reprisals from you provider? You probably don't need to worry about this - see our article about the reality versus common fears around termination.

    Paying An Early Termination Fee

    If you leave an arrangement without giving the required period of notice of termination, the provider may be entitled to charge you an early termination fee (see your agreement for details). There are some ways that you may be able to get help paying any such fees.

    There is the possibility that the new invoice finance company will assist in paying, or part paying, the termination fee in respect of the previous funder. Alternatively, the new funder may be prepared to provide some form of overpayment to you, in order to cover this fee.

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