Cost of Invoice Discounting Examples
Invoice discounting costs are normally in three parts, although you can also request a single fee structure to make things simple:
- Administration charge - normally a percentage of turnover or a fixed fee per month.
- Discount charge - charged on the funding you take, that works in a similar way to interest on a loan.
- Other charges - there may be further additional charges e.g. for CHAPS transfers.
These are examples of the cost of invoice discounting facilities - the examples are indicative only* (we may be able to improve on them in some cases). To find out what the actual cost would be for your business please complete a QUOTATION SEARCH REQUEST or call us on 03330 113622.
You should note that the example costings below are only examples, to give you an idea of the likely level of charges. There are always offers and discounts available from providers that are seeking to acquire your business. We may well be able to improve on the figures shown in the pricing examples below.
Select Invoices or Discount Them All
The following examples assume that you want to discount all of your sales invoices. This will unlock the maximum amount of funding and enable you to continue to benefit from ongoing finance. If you only want to discount one invoice or a few, you can get a selective arrangement for which the costing will be structured differently and you only pay for the transactions you choose to get funding against. The approximate cost is about 2% per month.
Assuming you want to finance all your invoices, for an entire year, the following are examples of the likely costs.
Invoice Discounting Facility Cost Examples
Small Startup Business - £75,000 Sales Turnover Per Annum - Invoice Discounting (finance released £10,625)
- Administration Charge - flat fee = £3,000 + VAT per annum
- Discount Charge - 3.75% over bank base rate - £409 + VAT per annum
- Equivalent to £26.74 + VAT per month, per £1,000 borrowed
Small Business - £250,000 Sales Turnover Per Annum - Invoice Discounting (finance released £35,417)
- Administration Charge - 1.7% of turnover = £4,250 + VAT per annum
- Discount Charge - 3.25% over bank base rate - £1,186 + VAT per annum
- Equivalent to £12.79 + VAT per month, per £1,000 borrowed
Medium Sized Business - £1,000,000 Sales Turnover Per Annum - Confidential Invoice Discounting (finance released £141,667)
- Administration Charge - 0.6% of turnover = £6,000 + VAT per annum
- Discount Charge - 2.5% over bank base rate - £3,683 + VAT per annum
- Equivalent to £5.70 + VAT per month, per £1,000 borrowed
Larger Business - £3,000,000 Sales Turnover Per Annum - Confidential Invoice Discounting (finance released £425,000)
- Administration Charge - 0.25% of turnover = £7,500 + VAT per annum
- Discount Charge - 2% over bank base rate - £8,925 + VAT per annum
- Equivalent to £3.22 + VAT per month, per £1,000 borrowed
To find out what the actual real cost would be for your business please complete a FREE QUOTE SEARCH REQUEST or call us on 03330 113622.
*Notes about the indications above
The above examples assume the outstanding sales ledger to be 2 months sales and funding of 85% of outstanding sales invoice to be provided. The examples use typical numbers of debtors and invoices and do not include ancillary charges that may be incurred. The bank base rate is assumed to be 0.1%. VAT may not be payable on the Administration Charge in some cases. Other charges are not shown. Fees rounded up to nearest £1.