• Invoice Discounting Fees

    Invoice discounting fees and hidden charges.

    Invoice discounting fees can be very different across the marketplace. Below we take a look at how prices vary between invoice discounting (ID) companies and how to avoid hidden fees.

    Invoice Discounting Fees

    The charges for ID can be broken down into three types (note that they can be combined or operate differently in some cases):

    1. Administration fee - typically a percentage of the value of the invoices that you submit for funding. This can be between 0.25% and 4% of the invoice value.

    2. Discount charge - this is similar to interest and charged on the amount of funding you are using. Typically between 2% and 3.75% over bank base rate.

    3. Other fees - these are other charges. They might be for overpayments, audits or other reasons. You should ask any provider for a copy of their full tariff of charges. In this way, you can avoid any hidden fees that you didn't expect.

    There is a more detailed explanation of invoice finance costs that you should see. It explains how not all facilities work in the same way.

    Example Fees

    If you are looking for examples of the fees that you might pay for invoice discounting, we have covered that with some examples of charges. The charges tend to change according to the size of your business. The bigger your turnover, the lower the fee percentages tend to be. However, the costs are also driven by risk and workload. If your business is considered high risk, or high workload, the charges will be higher.

    Pricing Research

    We are constantly checking prices for clients, and we have conducted extensive pricing research. You should be aware that in one comparison for a client, we found an 86% pricing difference between the top and bottom of the market. Therefore, it is very important to shop around rather than accepting the first price you are given.

    It can also be the case that not all facilities are similar, You might find that the invoice discounter offering the lowest price doesn't offer as much funding. These additional factors may also affect your decision making in addition to just the invoice discounting fees.

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