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• 15 Jun

  7 Warning Signs Your Invoice Finance Facility Is No Longer Competitive

  Determining whether your invoice finance facility remains competitive is not always straightforward. If you already use invoice finance, factoring or invoice discounting, it can be easy to leave the facility running in the background and assume that everything remains competitive.

  However, funding markets change, new products become available, and providers sometimes reserve their best pricing for customers who ask for a review.

  If you have not checked your rates or facility terms for a year, there are probably savings or improvements to be found. The benefit may not just be a lower cost. In many cases, businesses can also improve the structure of their facility, increase funding availability or move to a product that better suits how they now trade.

  In Summary: If you have not reviewed your invoice finance facility in the last 12 months, your funding requirements have changed, or your provider is not discussing improvements, it may be worth benchmarking your facility against current market options.

  CHECK MY FACILITY NOW

  1. You Have Not Reviewed Your Rates For Over A Year

  Invoice finance pricing can change over time. A facility that was competitive when it was first agreed may no longer be the best option available. If your turnover has increased, your debtor book has improved or your trading record is stronger, you may be in a better position to negotiate than you were when the facility started.

  Many businesses simply do not ask. Funders will not always volunteer a reduction, even when one is available. A simple review can often identify whether your service charge, discount charge or other fees are still in line with the market.

  Changes are often at the provider's discretion; if you ask, you may be surprised by what they offer.

  2. Your Provider Leaves You To Get On With It

  Good service is helpful, but being left alone completely is not always a positive sign. If your provider rarely contacts you, never suggests improvements and does not offer periodic pricing reviews, they may be happy to leave the existing arrangement untouched.

  In some cases, providers may be reluctant to raise the subject of a review because it could lead to a request for better terms. That does not mean they are doing anything wrong, but it does mean you may need to take the initiative.

  3. You Are Only Speaking To Junior Staff

  Day-to-day contacts are often helpful, but they may not have the authority to agree to meaningful changes to your pricing or funding structure. If you ask about reducing rates and the answer is vague, delayed or negative, it may simply be that the person dealing with you cannot make that decision.

  Where a facility is material to your business, it is worth requesting a proper review from someone with the authority to discuss pricing, prepayment levels, product structure, and any restrictions that affect your cash flow.

  4. Your Prepayment Level Feels Too Low

  Some businesses focus only on the headline cost of invoice finance, but the amount of funding released can be just as important. If your provider advances a lower percentage of approved invoices than you could obtain elsewhere, you may be leaving working capital tied up unnecessarily.

  There may also be newer options available. For example, some providers can make use of partial government guarantee schemes to support higher prepayment levels in suitable cases. We have written separately about the Growth Guarantee Scheme, which succeeded the Recovery Loan Scheme.

  5. Your Facility No Longer Matches Your Business

  A business can change significantly after an invoice finance facility is first arranged. You may have grown, taken on larger customers, changed sectors, won contracts with different payment terms or started exporting. The product that suited you originally may no longer be the best fit.

  We have found many cases where the improvement was not just a cheaper facility. The better answer was sometimes a different product, a revised structure, additional funding, improved prepayments or a provider with a greater appetite for the client’s current trading pattern.

  6. You Are Paying For Features You No Longer Need

  Some facilities include services or protections that were useful at the outset but may no longer be essential. Others may have been structured in a way that made sense when the business was smaller or riskier, but is no longer appropriate.

  This does not mean you should remove valuable protections without advice, especially where bad debt protection or credit control support is important. However, it is sensible to check whether the overall package still meets your needs and whether you are paying for elements that no longer provide sufficient value.

  7. Your Provider Will Not Discuss Alternatives

  A competitive provider should usually be willing to explain how your facility compares with current options and whether improvements are possible. If every request for a review is dismissed, delayed or avoided, that may be a sign that you should benchmark the facility elsewhere.

  That does not automatically mean you need to move. Sometimes, an existing provider will improve its offer once it understands that you are reviewing the market. However, you will not know what is possible unless you check.

  Understanding The Options Available

  If your current facility no longer appears competitive, it is worth understanding the wider range of invoice finance products available. Depending upon your circumstances, alternatives may now be a better fit for your organisation.

  For a broader overview of invoice finance, including factoring, invoice discounting, costs, benefits, eligibility and provider comparison, see our main Invoice Finance page.

  How To Check Whether Your Facility Is Still Competitive

  The first step is to compare your current costs and facility terms against current market options. That should include both the cost of the facility and the practical benefits, such as prepayment percentage, flexibility, credit control support, customer concentration limits, contract restrictions and whether the product still suits your business.

  You can start by using our free Invoice Finance Cost Benchmark Checker. It is designed to help you compare your existing invoice finance costs against benchmark figures. If it doesn't beat the benchmark, you may benefit from a full review.

  You can also read our detailed page about invoice finance costs to understand the main types of charges and what affects pricing.

  Want Help Reviewing Your Facility?

  FundInvoice helps businesses compare invoice finance, factoring and invoice discounting facilities from a range of UK providers. We can help you check whether your existing facility is still competitive and whether there may be savings, better funding levels or a more suitable product available.

  There is no charge to the customer for using our service. We are paid commission by the provider if you proceed with a facility that we introduce.

  Call us on 03330 113622 or request a comparison to see whether your current invoice finance facility can be improved.

  FAQs

  How often should I review my invoice finance facility?

  As a general rule, it is sensible to review an invoice finance facility at least once a year. Changes in turnover, customer quality, funding requirements and market competition can all affect the terms available.

  Can I reduce the cost of my invoice finance facility without moving providers?

  Sometimes. Existing providers will occasionally improve pricing or amend terms following a review. However, businesses often find it useful to compare alternative options first so they understand what is available elsewhere.

  Is the cheapest invoice finance facility always the best option?

  No. A competitive facility should balance cost, service, funding levels, flexibility and suitability for the business. The lowest headline cost does not always produce the best overall outcome.

  Can I increase the amount of funding available from invoice finance?

  Potentially. Some providers offer higher prepayment percentages than others, and some facilities can benefit from additional support mechanisms such as government-backed guarantee schemes where applicable.

  What are the signs that my invoice finance provider is no longer competitive?

  Common signs include outdated pricing, low funding levels, limited flexibility, poor service, lack of proactive reviews and an unwillingness to discuss improvements to the facility.

  Does changing the invoice finance provider always involve changing products?

  No. Some businesses move to an equivalent facility with improved pricing or funding levels. Others discover that a different product structure is better suited to their current circumstances.

  COMPARE INVOICE FINANCE QUOTES

  By Glenn Blackman