Where To Get Invoice Discounting Help

An invoice discounting arrangement is a long term agreement that can make a major impact on how your business is managed and how it develops in the future. Before you enter into this kind of agreement, it’s essential to get professional invoice discounting help and advice to ensure you don’t make choices you might later regret.

At Touch Financial, we offer impartial, expert advice to ensure you find the right facility for your business. We’ve been providing invoice discounting help to small and medium businesses for many years, so we’re aware of the potential pitfalls and can help you avoid them. For example:

The level of advance
Not all providers will offer the same levels of advance. And you may find that discounters apply limits you weren’t expecting. Customers looking for a 90% advance on the value of invoices, for example, sometimes don’t qualify for this amount.

It’s important to be realistic about the level of advance that your business will raise, but there’s no point incurring unnecessarily stringent limits. Touch Financial can identify providers that are less likely to apply such limits, enabling you to release higher levels of funding.

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The minimum service fee
If your turnover is less than expected, it’s standard practice for the invoice discounter to make a ‘top up’ charge either  annually, quarterly or monthly. Bear in mind that  choosing to pay monthly may appear to save you money, but if your turnover is irregular from month to month you could end up paying more.

In addition, the amount of the minimum service fee can vary significantly from one provider to the next. With invoice discounting help from Touch Financial, you can be sure that the level of minimum fees comes under scrutiny.

The setup fee
Invoice discounters incur their greatest costs at the beginning of their arrangement with you, while setting up the facility. It’s not unusual for providers to charge a setup fee, and this fee is likely to be highest with providers who don’t insist on a minimum contract (as they have to cover the risk of early leavers). It can be complicated working out the pro’s and cons of the options available, but invoice discounting help from Touch Financial can make it easier to see the wood for the trees.

The refactoring charge
Some invoice discounters will charge a fee if your customers exceed the agreed credit period – this is to cover the extra work they have to do to chase payment or instigate legal action – but it isn’t standard. It’s definitely worth checking whether potential providers apply this refactoring charge.

Miscellaneous charges
Check what miscellaneous charges that will be applied – for example, for audits, electronic transfers, bank charges and re-invoicing. They can add up to thousands of pounds.

Minimum contracts
The standard contract for an invoice discounting facility is 12 months, although some companies insist on longer. Switching providers before your contract is up could cost you dearly, so it’s essential you understand what a provider is going to do for your business before you sign on the dotted line. If you want to end an agreement prematurely or without giving the required amount of notice, you will be liable to pay a termination fee.

Invoice discounting help from Touch Financial identifies the business support you need, and the discounter best suited to providing it.

Limits on funding
Some providers will set a limit on how much funding you can draw down. It is not usually difficult to increase this limit as your business grows, but check whether your provider will charge you to do this and how much notice they will need. Don’t be tempted to  establish an unnecessarily high lending limit, as this may increase the levels of other charges.

Limited concentration
Some discounters will refuse to fund a high concentration of debt in one or very few customers. If a high proportion of your business comes from a single source, this could be a serious problem – if you are aiming to ease cashflow, the last thing you’ll need is for the discounter to disallow a large invoice. And if you are trying to grow your business, having to turn down contracts to fit in with your discounter’s concentration limits will not sit well.

It can be invaluable to get invoice discounting help in this area. At Touch Financial, our expert advisers can introduce you to discounters offering concentration levels appropriate to your business needs.

Personal guarantees
In certain circumstances, some discounters will only offer a facility if you are willing to give a personal guarantee. If this is the case, you need to be crystal clear about the implications of this kind of guarantee and your obligations.

Get free professional invoice discounting help from Touch Financial

We can help you avoid the pitfalls and find a positive working relationship with the most suitable invoice discounting provider for your business. Call now to speak to an experienced consultant about the options.

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Also in this section:

• The difference between factoring and invoice discounting
  
• Selecting an invoice discounting company
• Where to get invoice discounting help
• Invoice discounting UK wide